Is the tech industry levelling out after Covid?

4 May 2023

The tech industry has been on an upward trajectory over recent years. The shift to virtual remote working during the pandemic led to tech firms rapidly scaling up their operations. That meant mass hiring and huge growth.

But recently, large-scale layoffs at tech companies have led to speculation that the big tech boom is over.

Recently, Meta announced 10,000 job cuts, following a cull of 11,000 jobs in November 2022. Amazon, Twitter, and many other big tech companies have all slashed their workforces.

Silicon Valley Bank, which almost half of all venture-backed US startups use as their sole account, also collapsed in early March. This has exposed the financial vulnerability of many young tech companies.

So, is this the end of big tech? Or simply a levelling out after the heady highs of the last few years?

The end of big tech’s high risk, high growth strategy

Perhaps due to the speed and scale of their success, tech companies are often seen as risk-takers. This still applies to many tech startups, and it’s one of the reasons investors panic when there’s a hint of uncertainty.

Big tech is now big business. Companies like Meta and Alphabet belong to a stable industry that provides utilities to billions of people. So, the high risk, high growth strategy can’t apply any more.

Consolidation can be the best path. So, while mass layoffs are never a good sign, it does signal that big tech may finally be growing up.

A business case for building your tech stack

Technology is now a fundamental utility. It’s fully embedded in our lives, and there’s no going back.

Technology is essential for growing your business. Investing in the right software is no different from investing in your staff or your workplace. You need it to perform, to compete, and to get results.

As business owners, we need to relook at the benefits technology brings. Time is one of our most important and least understood resources. Implementing the right software, allows staff focus on what they’re good at.

Building your tech stack during a recession

22% of business owners don’t feel their company is ready for the looming recession. It can be tempting to hunker down and yes, you need to look after your business in the short term. But if you don’t look forward, you’ll end up stagnating in the long term.

Technology can help businesses push forward through difficult economic times. Companies like Netflix, Airbnb, and Uber grew out of recession. All businesses should look beyond the next few months and consider how you can capitalise post-recession.

The risks of playing it safe

While the media focuses on large-scale, it’s important to remember that these firms are far from failing. In 2022, Meta made profits of more than $23 billion and Alphabet made approximately $60 billion.

So, investing in tech isn’t a risk for your business. The risk lies in playing it safe, and allowing your business to stagnate.

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