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The Government is predicting that revenue from the digital sector, now worth £240m to design, will increase by 106 per cent over the next 12 months. Are groups such as Razorfish and Grey Interactive, which have recently laid off staff, shortsighted in their approach?

‘We also believe the digital sector is set for solid growth over the next year. The potential of digital is only just being realised. Far from being short-sighted, from Razorfish’s point of view, undergoing the extremely painful process of reducing capacity is necessary to ensure profitability. It also enables us to be in a position to play a major role in digital’s future.’

Stephen Fletcher, Managing Director, Razorfish (London and The Netherlands)

‘Razorfish is having to address urgently some difficult problems which cannot be ignored in the hope that business will pick up in a few months’ time. Reckless over-expansion, poor management and ineffective integration of acquisitions have left many consultancies in the sector in a sorry state. Razorfish’s share price is worth less than 2 per cent of what it was a year ago. It is losing money and its cash is running out, so it has no alternative but to cut costs and become profitable quickly. The alternative [for such groups] could be bankruptcy before the end of the year.’

Peter Matthews, Managing Director, Nucleus

‘No. They’re doing exactly the right thing. These businesses have long been about much more than design. They are now squarely in the sights of the management consultancies and integrated mega-agencies. Retrenchment is inevitable as these big firms bring their huge resources to bear and as the capital markets dry up. This is a time for patience and hard work, not for aggressive expansion. The survivors will prosper in the [inevitable] recovery.’

Steve Bowbrick, Chief Executive Officer, Another.com

‘It’s not the design groups that are shorttermist, it’s their clients. Razorfish and Grey Interactive are businesses like any other. I am sure they have been able to keep their key players. Businesses must realise that a dip in share prices does not mean that the revolution of e-commerce is over, or that the importance of design in their strategic thinking is no longer required.’

Clive Grinyer, director of design and innovation, Design Council

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