Effects of Economic Downturn on Tech Industry Unclear

Kachina Shaw

I recently attended a meeting at which the participants took a quick quiz designed to assess their general attitude toward their own abilities. The one item on the list that stuck out like a sore thumb and engendered a lively discussion was, "I spend time reading the news everyday." We rated the amount of time spent on a scale from 1 to 5, with 5 representing the most time. I didn't have to think more than a second before marking my paper with a 5. It's part of my job, and I know that even if it weren't, I'd still be a news junky. And that's a good thing, right?

 

Turns out that that's not necessarily true. The test counted being a news junky as a mark against my optimism about my abilities, and the world in general, because of the high level of negativity in the reporting of the events of the day. All that bad news from all corners puts a damper on the reader's world view.

 

It looks like eternal optimist Steve Ballmer is working on not getting dragged down by all the bad news, just like me (hey look, we have something in common!). Reuters quotes him today as saying, "At least, for now, people are feeling, I won't say optimistic, but better than you would be feeling if you are watching CNBC all day." That is his take on his industry's attitude in the face of the economic disaster that is making its way through the U.S. markets and around the globe.

 

That said, there is no doubt that the effect on the tech industry of failures and closings in the financial services industry will lower sales projections drastically. A Bloomberg piece puts the reduction in technology expenditures by the financial industry at 20 percent -- from $21.9 billion in 2008 to $17.6 billion in 2009 -- according to Larry Tabb of the Tabb Group. That could play out as a $4.3 billion loss for Microsoft and Cisco, which the piece lumps together as the biggest losers.

 

Forrester remains relatively optimistic about continued growth in tech over the next year, albeit slow.


 

And another interesting wrinkle in the mix, which could act to balance out some losses, is the availability of lots of experienced technical folks, recently separated from their financial services IT jobs, on the lookout for new positions -- and possibly willing to work for a more modest salary than they received on once-high-flying Wall Street.



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Sep 28, 2008 3:24 AM upal upal  says:
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