Tech Sector to Weather Economic Storm
- Author Peter Surowski
- Published May 26, 2020
- Word count 901
Nobody's denying that the U.S.—and likely the world—is about to feel an economic slowdown. Some expect a recession or full-blown depression and the unemployment rate to exceed 10 percent. But web and software development—and most of the tech 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.
Reason 1: Websites just became more important
For many businesses, the web just became the 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 web developers have gotten busier since the shutdown, despite other employees suffering furloughs or layoffs, said Joshua Knapp, co-owner of AnHonestHost, an independent hosting service in Riverside, California.
"I am seeing a spike in activity (from independent IT and web developer clients), especially for developers who have had a working relationship with businesses that may not have had their website at 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 problems 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 that 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 along the digital transformation spectrum a company is, the better they are doing and the more likely they will leapfrog competitors."
Reason 3: In bad economies, freelancers and agencies 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 have to fill the void. That's more business for the outside agency or freelancer.
"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."
Though some clients have tightened their budgets for their marketing because of the uncertainty that the lock down presents, but they'll likely be increasing their budgets once things begin to return to normal, said Josh Eaton, president of Reaktiv Studios, a WordPress development agency based in Temecula, California.
"I think that consultants and agencies that are well run will still have plenty of opportunities next year as companies reduce in house staff and have to outsource more web work," he said.
If you want to get into freelancing, some experts say now is a good time. Here are three tips to build your clientele.
Job market 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 percent 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 saw 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.
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