Tech Sector to Weather Economic Storm


  • Author Peter Surowski
  • Published May 26, 2020
  • Word count 837

Nobody’s denying that the U.S.—and likely the world—are about to feel an economic slowdown. Some are expecting recession or full-blown depression and the unemployment rate to exceed 10 percent. But web and software development—and most of the technology sector—have been growing much faster than the average employment sector for many years.

So many in the tech fields are wondering, how is the economic downturn going to affect them?

The short answer is, they’re going to be a whole lot better off than most people, according to many experts. And here are the three main reasons why.

Reason 1: Websites just became more important

For many businesses, their website just became their only way customers can interact with them. So their websites just became a lot more important, and many don’t have the talent in-house to make the improvements they need to serve their customers online.

Many independent IT and wed developers have actually gotten more busy since the shutdown, despite other employees going on furlough or layoffs, said Joshua Knapp, co-owner of AnHonestHost, a small hosting service based in Riverside, California.

"I am seeing a spike in activity (from independent IT and web dev clients), especially for developers that have had a working relationship with businesses that may have not had their website the forefront of their marketing and sales strategy," Knapp said. "Businesses are having to adapt an online first mentality."

His own clientele count has seen a spike because many companies are looking for a new host to handle the sudden increase in web traffic to their sites. "In some cases, the hosting provider may suspend the (company’s) site because of too much activity, or other issues that are now becoming more apparent due to the increased load on the hosting provider’s servers," Knapp said.

One tech businesses that has taken advantage of this opportunity is Studio54, a London-based web development agency.

"We have happened on a niche to help us sustain our income through this," said Scott Krieger, founder and head developer at Studio54. "We are helping businesses that are not online getting online quickly to help them sell their products and services, such as restaurants that don’t offer delivery before but have now pivoted, since they can’t allow people to eat at their premises anymore."

Reason 2: The field is about to be less crowded

A lot of companies are about to go out of business, which will eliminate a lot of competition from the field for those companies that survive. And businesses that are most likely to go belly up are the ones who have been neglecting their online strategies, said David Moise, President of Decide Consulting, a software and IT consulting firm in Houston, Texas.

"We expect web developer and other IT/software roles to rebound quickly," Moise said. "If the COVID crisis has taught us anything, it has taught us that the further a company is along a company is on the digital transformation spectrum, the better they are doing and the more likely they will leapfrog competitors."

Reason 3: In bad economies, freelancers get busy

When the economy turns south and companies have to lay off full-time staff who receive retirement and medical benefits, freelancers and outside agencies often fill the void. Almost every small business needs a website, and most don’t have someone in-house to run it—and if they did, that person could be laid off. That’s more business for the outside tech businesses.

"I’ve seen a 25 percent increase in business due to COVID-19. Every retailer and restaurant is scrambling to get products online to maintain some level of cash flow," said Brian Robben, CEO of web development agency Robben Media.

Robben has advice for any developer hoping to take advantage of the lockdown. "Send a custom email to every restaurant in your city offering to build them a website with a purchasable gift card feature, carryout system and even merch," he said. "The same goes in reaching out to retailers who don’t have an E-commerce store to sell their apparel. The opportunities are endless for web developers when the world is stuck at home and still shopping online."

Fast facts

Web development has been growing at 13 percent and software development has been growing at 21 percent, both much faster than the growth for the average of all U.S. job sectors, which is 6 percent, according to the Bureau of Labor Statistics.

The International Labour Organization, a United Nations agency, has forecast that the virus shutdown will wipe out 6.7 per cent of working hours globally in the second quarter of 2020 – equivalent to 195 million full-time workers.

Four sectors will likely be hit hardest: food services, manufacturing, retail and business and administrative activities.

Twenty-three states had jobless rate increases from a year earlier, 3 states had decreases and 24 states and the District of Columbia had little or no change. The national unemployment rate rose by 0.9 percentage point over the month to 4.4 percent and was 0.6 point higher than in March 2019.

Peter Surowski is the Outreach Director for WP Code Camp, a WordPress-based coding boot camp. This article was first published on WP Code Camp's blog, The Loop.

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