3-minute read - enough time to switch off from work and enjoy half your lunch 🌮
Nobody likes to talk about recessions, but unfortunately, they happen. Many companies are going through bouts of lay-offs/redundancies right now, cutting down as much as 20% of their workforce, according to International Business Times.
Workers are rightfully nervous about their own jobs. Some didn’t have to worry about this before; in 2020, the tech industry actually grew. Should they be worried now? Is tech recession-proof?
Certain industries are more prone to take hits during a recession than others. Companies that represent non-essential/discretionary spending like restaurants, entertainment, and travel are typically the first to go–we all saw the ramifications of that from COVID.
Analyst Mark Mahaney shared with Business Insider that he and his colleagues view recession risk as real and examined which companies would fare better than others. Factors included inflation, discretionary spending, and consumer demand. They predicted that companies like Amazon, Spotify, and Google would continue to thrive while Twitter, eBay, and Etsy may not.
Lay-offs/redundancies are occurring now because companies over-hired technology workers in 2020 to meet the period of rapid growth in the tech industry. Modern Recruiters reported that 45,000 tech redundancies occurred in 2022, more than double the amount of tech workers that were laid off in 2020.
It’s definitely not all doom and gloom if you’re working in tech.
Gartner conducted a survey of 128 CEOs and CFOs that found tech jobs to be the last on the chopping block. (For those curious, M&A jobs were at the top of their list.) Randeep Rathindrian, Vice President of Research for Garter, noted the importance of tech in his report, saying, “Despite the cost, companies are turning to digital investments to improve efficiency and protect margins”.
An interviewer from Forbes Magazine asked Paul Otellini, the CEO of Intel in 2008, how the company would respond to that year’s recession, and he answered without hesitation that in times of downturn, Intel would invest in research and development, continue to look for talent, and move forward with expansion plans.
Otellini's reasoning for this “business as usual” approach was that technology would always be growing and evolving and that there would always be a future need for tech. So far, he’s been right.
Currently, major corporations are facing this projected economic downturn with a similar mindset. Apple has moved forward with its plan to build a new $1B campus in Austin Texas, and Google plans to house another 25,000 engineers in an expansion of its Google Village in San Jose.
Research from Avasant showed that in 2022, companies are investing in growth in their technology departments, with 35% of IT budgets focused on growth, as compared to 25% in 2019. Despite economic uncertainty, the same study showed that IT budgets are actually increasing by a median of about 5%.
Technology is ever-evolving, and this won’t be stopping anytime soon. We’re in the midst of moving a formerly analog world into an entirely digital one, which takes a lot of time and human input. And think of all the technology that’s yet to come, with the Metaverse and virtual reality.
Tech has weathered multiple recessions and come out stronger every time, so it’s likely that it will do the same this time around. Though some companies have experienced layoffs / redundancies, many others have open roles. These tech roles are proven to be essential during a crisis as enterprises scramble to change strategies and meet goals.
Companies (the smart ones at least) have learned that investment in tech has a direct correlation to the investment of their future, and are doing their best to increase their IT budgets. Many have learned the hard way that cutting corners on innovation isn’t really helpful at all, and leads you to be behind the curve later on.
Ultimately, no job can be 100% recession-proof, but tech is pretty close. Many tech jobs are being cut right now, but there is still significant projected growth in many tech areas, such as cloud and infrastructure, and many companies are continuing to expand and invest in their tech departments.
So while tech may not escape a recession completely unscathed, it’s sure to be a booming industry for years to come.
