Is Tech Industry Recession-Proof?

Ann All

Though it's nearly impossible to get a consensus from economic analysts, it's beginning to look as if the U.S. economy is already in the midst of a recession. This post from ChangeWave's HotWire blog includes results of the company's recent survey of American companies -- and pessimistic results they are, with reports of negative capital spending, an uptick in canceled orders and declining sales projections.

 

Yet the tech industry appears to be somewhat impervious to the tanking economy -- at least for now. Plenty of high-tech companies in Massachusetts are hiring, reports Boston.com.

 

The article makes a point that I blogged about back in January: Companies with lots of global business, like many tech companies, are better positioned to withstand a slowing U.S. economy than competitors that conduct the bulk of their business in America.

 

The SVP of software engineering at SeaChange International, which produces hardware and software for the on-demand video industry, notes that his company has seen increased demand from South America, Europe and Asia. He says:

If there's a slowdown, our business is spread across so many regions that it's not really affecting us.

According to the article, Massachusetts gained some 8,400 jobs in professional, scientific, and technical services in 2006, along with 2,100 jobs in scientific research and development and another 800 in the information sector, which includes software publishing. During the same period, it lost 2,600 jobs in manufacturing and 3,300 in construction, two industries hit hard by the slowing economy.

 


In addition to their global reach, some tech companies also enjoy an advantage because their products are designed to help businesses contain their costs. The article cites several examples, including BladeLogic, a provider of data center-management software that just agreed to be purchased by BMC, and Fast Search & Transfer, a search provider being purchased by Microsoft.

 

Another heartening sign for America's tech industry, writes Dana Blankenhorn on ZDNet, is the still-strong desire of start-ups from around the world to establish operations in America, often in Silicon Valley. The falling value of the U.S. dollar is offering them some creative ways to do it, Blankenhorn says, as illustrated by Dutch software company Hippo's recent purchase of San Francisco development company BlueSunrise. (As you can probably tell by the whimsical names, the two companies specialize in open source.)



Add Comment      Leave a comment on this blog post
Mar 20, 2008 6:29 AM Bill McIntosh Bill McIntosh  says:
This is a good point to consider. I don't think you really think about it when you're in America it's in the middle of a "recession." It makes sense that if it's only happening in America, and your business is spread so broadly all over the world, it wouldn't really effect you, or least not as much to where it would become a big threat to your business. Reply
Mar 20, 2008 6:30 AM Bill McIntosh Bill McIntosh  says:
This is a good point to consider. I don't think you really think about it when you're in America it's in the middle of a "recession." It makes sense that if it's only happening in America, and your business is spread so broadly all over the world, it wouldn't really effect you, or least not as much to where it would become a big threat to your business. But aren't other regions of the world slowed down by their own economy at other times? How would that effect your business if it was happening at random times all over the world? Reply

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