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Recession Proof: Why You Should Invest in Tech During a Downturn

Streamlining your tech can help you maintain momentum during a downturn and be ready to hit the ground running when markets bounce back.

Rahul Khosla
Author Rahul Khosla
Ellipse 7
Author George Sanchez
Published On Sep 19, 2022

According to Forbes, there have been 13 recessions since World War II. Three were in the 21st century and many experts warn another is on its way, predicting at least a 50% chance of a recession in the next two years. Some experts argue it’s already here, while still others insist we’re only experiencing a downturn.

Whatever you want to call them, these economic slumps happen more frequently than most people realize, and they are generally much less ominous than some would make them sound. And markets tend to bounce back after a downturn – often returning even stronger.

So as we experience this current downturn, the question all business owners should be asking themselves is: will we make it to the bounce back?

If you are sure the answer is yes, then make no mistake: now is not the time to pause your growth and hold steady. Now is the time to level up.


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Use it or lose it

Maybe you’re a big brand — a traditional skincare brand that’s publicly traded. You’re much larger and much more diversified than the upstarts threatening to eat into your market share. But you’re not leading the charge when it comes to digital, giving younger, more agile competitors an edge.

As investors tighten their belts in times of economic downturn, upstarts lose the luxury of being able to burn through hundreds of millions of dollars. They’re going to have to pull back to survive this moment if they want to make it to the bounceback.

As an established, financially sound company, you now have the edge. Your bigger balance sheet means you have runway to continue to invest — and when the markets do come back, you’ll be poised to pull ahead.

Or at least you’ll be able to keep up with the competition, who’s already hard at work leveraging their own financial stability to invest in tech. A new CNBC Technology Executive Council survey shows that more than three-quarters of tech leaders expect their organization to spend more on technology this year. What’s more, not a single executive said they’ll be spending less.

In fact, research firm Gartner’s predicts spending on data center systems will grow 11.1% this year, up from 6.4% growth last year. Meanwhile, software expenditures are expected to rise 9.6% this year and 12% next year.

It’s already baked in

The growth in spending is no surprise: Tech is no longer just back office support. It’s something that every department head incorporates into their budgets, not simply as a line item but baked into the core of each department’s operations. Today, every department runs on tech in one way or another.

So it makes sense that companies are prioritizing their tech investments, especially in the face of this current downturn. It isn’t just a matter of getting an edge over competitors who pause: It’s a matter of keeping up with everyone else who’s choosing to leverage tech to sprint ahead.

So, back to the question: Will you make it to the bounceback? If you’re still not sure of your answer, that means investing in tech now isn’t just a power move: It’s one of survival.

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Momentum is critical

Momentum is important. It is real. You can feel it in every aspect of life, and business is no exception. If you choose to pause during this downturn, you risk losing that momentum you worked very hard to create. Building it back up again when the market inevitably returns will be extremely hard for many reasons, especially if you skimp on tech

Your product might not work as fast. It might not be as friendly to use because the norms have changed. If you're not fixing bugs, keeping tabs on latest versions, and upgrading systems so that you're not inheriting any vulnerabilities, you’ll quickly fall behind the pack.

Depending on how long this downturn is, there's a lot of things that can happen that could leave your customers unhappy at the same time that the rest of the market is locking in their loyalty. In fact, 62% of boards say improved customer loyalty is the top expected outcome of becoming more digital. Because it’s a digital world for your customers now, too — and they’ll go with the products and companies that are keeping up with the evolving digital ecosystem, regardless of the downturn.

In other words, if you choose to pause now, you won’t be starting up again from that same point you left off. You’ll be starting from behind on your own path, as well as on the playing field. And without momentum, it will be very hard to catch up.

Now for the good news. Your tech can help you keep that momentum, if you know how to unlock its potential.


Opportunities abound

Cutting personnel is the last thing you want to do at this moment. Good people are every business owner’s best asset, especially if they’ve grown along with you. They know how your system was built and how it functions. They have internalized all that knowledge. They are incredibly difficult to replace.

Regardless of how much documentation you have, bringing in a new team could wind up requiring more of an investment than you plan for. You might even end up spending more than you saved by making cuts thanks to recruiting fees, lost time, or other hidden expenses. Even worse, competitors can snap up any talent you cut loose, making it nearly impossible for you to get them back.

So the first step is to look for places you can use your tech to streamline how your valuable talent works. Consider hybrid workforce models, challenging workflows, and rebalancing in-house versus outsourced talent. Move communications to cloud-based SaaS platforms that push the powers of collaboration to the next level. There are so many ways to use tech to connect your talent more efficiently, empowering them to focus on what they do best.

Of course, the benefits of upping your tech go well beyond leveraging talent. You can find more opportunities to automate processes. You can harness AI to help detect potential risks, which can be particularly helpful when mitigating downturn issues like supply chain disruptions. You can use data and analytics more intelligently to inform your decision making at every level.

Unlocking your tech’s potential can most certainly help you keep that hard-won momentum, carrying you safely to the bounce back. But you have to do the work: You must refocus your strategy in order to find the places where you can extend the value of the tech you already have baked in. 

If you aren’t sure how to harness your own tech internally, you should definitely consider finding a partner who can help with that — and fast.


We are here for it

At Heady, we plug into a client’s team as an extension to fill in any gaps that might emerge as markets continue to evolve. And if it’s not just a matter of filling a gap but filling a void, we’re here for that too, by building whole teams that integrate seamlessly with a client’s internal infrastructure.

Our no-nonsense, reliable approach to working with clients facilitates our ability to tap into our proven pool of global talent to place just the right people into just the right teams, scaling and fine-tuning as we grow together.

That's our specialty, our core competency. That's what we do every day. Which is why we see this downturn as an opportunity not just to survive, but to accelerate and build with the intention to scale.

Because like most downturns before it, this one too shall bounce back. And when it does, those who lean into their tech will be ready to fly forward, leaving the competition behind.

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Author

Rahul Khosla
Ellipse 7

Author

George Sanchez
Group 739-1

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