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What Technology Segments Might Benefit From The Economic Crisis?

During economic crisis there are always opportunities for a few, and none more so than in the IT industry. In UK retail, we saw both Tesco and Sainsbury's report good results in Dec 2008, while other retailers like Marks and Spencer were down double digits. It could very well be the same case across the technology industry. We will review five segments that may benefit from the global downturn.

Green IT: If the UK government launches a strong policy framework that creates a long-term value proposition for carbon-emission reductions, it could spur investments in this sector. In the US earlier this week, Obama pledged to invest heavily in green R&D in his inauguration speech. Imagine a company getting tax breaks from supporting the development of new technologies that will reduce global emissions such as virtualisation, videoconferencing, and thin clients, as they are able to lower costs as well as boost green credentials. With the "right" legislation, suppliers with a solid track record in sustainable IT might win more business in 2009 as the environment & timing works in their favour.

Offshoring Services: IT solutions that shift cost from a capital to a variable expense, while focusing on productivity increases and cost reduction, will win more business in 2009. The demand for IT outsourcing might ramp up later in the year, and offshore organisations are likely to reap the biggest benefit as they can be most competitive on costs. However, due to the slow down in IT development, we might see those companies exhibit slower growth - though few expect to contract in the coming year.

Business Intelligence: Other areas that could do well include business intelligence as it offer opportunities to increase productivity through improved data management. More importantly, if a company automates a lot of data gathering and data analytics through enhanced BI technologies, it will be able to reduce headcount, and deliver sustainable cost savings. Secondly, business leaders should be keen to invest in initiatives that will help improve the integrity of their financial data.

SaaS: We could see good times ahead for software as a service (SaaS). Wikipedia defines SaaS as "where an application is hosted as a service provided to customers across the internet." By eliminating the need to install and run the application on the customer's own computer, SaaS alleviates the customer's burden of software maintenance, ongoing operation, and support. SaaS can also conceivably reduce that up-front expense of software purchases, through less costly, on demand pricing. SaaS lets software vendors control and limit use, prohibits copies and distribution, and control all derivative versions of their software". In a nutshell, SaaS provides tighter control on cost and risk - which will be very attractive in 2009.

Consulting and Integration Specialists: As stock prices have continued to slump for most of 2008 and have now reached historically low levels, it may trigger a rise in mergers and acquisitions - which could create significant opportunities for IT consulting and systems integration organisations.

As with any industry there are those who benefit during a bubble, and those that can capitalise on a recession. Those companies that can take advantage of the above, and other opportunities that arise in the current environment can still be very successful in 2009.  

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