The Tech Industry Winter is Good for Business
A downturn in the technology sector could prove to be very good for other industries. Here's why.
With all the all the talk of a looming recession, whether it be short and shallow or long and complicated, one can't be blamed for thinking the the rolling rounds of layoffs in the tech sector doesn't bode well for any sector in industry. But the belt tightening and the gloom of the tech industry does have a silver lining for other industries and certain parts of the technology sector.
Businesses will hold out on buying new digital services and products, especially large IT investments. They'll look at how they can better leverage what they already have and perhaps invest in addressing technology debt and building information and knowledge management. Industry will also look at how to actually make us of AI and improve their digital business models. It will be a focus on improving productivity. This is good.
A recession and decline in new technology investments across multiple industries may also be of benefit to Artificial Intelligence (AI) as it begins to revolutionise multiple sectors. For the past nearly two decades, AI has remained largely in the experimental phase outside the tech industry itself. AI remains and will for sometime yet, very good in solving problems in one particular area. But with Generative AI (GAI) and new tools like chatGPT and DALL-E 2, it will start seeping into more sectors of the economy.
While the tech winter may not be good for new products and services, especially from tech giants like Apple, Google, Meta, Oracle and Microsoft, it will be good for other tech companies. Especially in the IT services world. Many companies will scale back new initiatives for new solutions, and will instead look at reducing their technology debt and improving what they have. ERP systems may be enhanced, data management improved.
This is also a great time for many industry sectors to look at their information and knowledge management programs. It may be surprising but few non-tech sector companies, especially small to medium sized businesses, realise that they already have great knowledge management tools. They just haven't taken the time to make proper use of them.
Many businesses will have some time for their IT teams and service providers to help them clean up their internal tools, platforms and services and find productivity gains.
This is a time of catch up and a time to build out on existing tools and make the most of them.
We can expect that with all the layoffs in the tech sector, those who left companies are going to come up with new business and product ideas. They are going to innovate. While the large tech companies that did all the layoffs aren't going to have a heavy emphasis on R&D as they spend more time on shareholder value, new startups who can disrupt them will start to pop up.
While it may be hard on growth plans, shareholder value and profitability may well come from some time to double down on leveraging the technology a business already has and finding improvements in productivity and evolving digital business models.