US firms get more out of IT than UK rivals

Three pieces of government-backed research have confirmed that effective use of IT can give companies a "significant" productivity boost.

The research shows significant productivity gains are possible when employees use computers and have access to the internet. But it also found that US organisations operating in the UK are better at using IT than UK companies.

UK manufacturing companies appear to achieve an extra 2.9 per cent in productivity for each 10 per cent of their employees that use the internet.

Well-planned use of IT can help the UK increase productivity and compete in the global economy, said Alun Michael, minister for industry and the regions, in a statement.

But he added: "Our counterparts elsewhere in the world are working hard to harness the economic benefits of ICT. We must not be complacent - we must do the same if we are to remain competitive."

The first paper, It ain't what you do it's the way that you do IT from the Centre for Economic Performance at the London School of Economics, found that US multi-national enterprises in the UK are eight per cent more productive than their UK counterparts. The researchers said more than 80 per cent of this productivity advantage can be explained by better use of IT.

It said: "US firms in the UK seem better placed to use information technology."

The second paper, from the Office for National Statistics, found the potential for an IT-fuelled productivity boost is particularly strong in newer manufacturing firms.

UK manufacturing companies appear to achieve an extra 2.9 per cent in productivity for each 10 per cent of their employees that use the internet. In newer firms, this rises to 3.4 per cent.

The third paper, by the Centre for Economic Performance, found IT investment has a significant effect on productivity across manufacturing and services in the UK economy.

John Higgins, director general of tech supplier body Intellect, added in a statement: "Countries that adopt, adapt and absorb the benefits of ICT, services and applications quickly and deeply will achieve significant benefits in terms of productivity, innovation, growth and quality of life and significant competitive advantage over countries that don't."