The last few years have been tough. First, the whole world had to deal with the Covid-19 pandemic, and then came the Russian invasion of Ukraine and Hamas’s attack on Israel. These events have caused many companies to rethink their operations and drastically cut back on spending.
Many companies have turned to outsourcing experts to help keep operations running. In fact, spending on outsourcing IT services is expected to rise to $519 billion in 2024, a significant increase from 2019. As expected, this growth trend started during Covid-19 as companies tried to manage the crisis.
So, what will the software industry look like in 2024? Well, it is expected to earn a whopping $650 million. That sounds pretty good, doesn’t it? But it’s not all smooth sailing. There are challenges ahead. Changes in how companies invest their money will affect how much they take in and spend. Plus, where you can host your data online could increasingly depend on politics. And in the coming year, you’ll hear a lot about automation, industrial clouds, and sustainability.
However, while some economists are optimistic, others believe the global economy could deteriorate this year, which could have significant implications for the software industry. Given the slow economic growth, tight financial situation, and strained relations between countries, things will likely remain unpredictable.
That’s why we think it makes sense to be prepared for the possibility of a future crisis in 2024. In this article, we’ll discuss how to prepare and look at some great examples of businesses that survived the major recession in 2008.
What Would a 2024 Crisis Bring?
The International Monetary Fund (IMF) expects a global economic slowdown in 2024, with growth falling from 3% in 2023 to 2.9% in 2024, with the strongest growth expected in the US and large emerging markets. Let’s take a look at the critical factors that are affecting the economy in 2024.
Geoeconomic Fragmentation
Experts believe that inflation (i.e., a rise in prices) won’t go up as much as expected. They also think it’ll be easier to find work and get loans in 2024.
Now for the not-so-good news. Many economists agree that tensions between countries will continue to escalate, which could affect the functioning of the global economy. They also believe the stock markets will become more turbulent over the next few years. Furthermore, they expect countries to remain more isolated instead of working together.
The IMF says that the global economy could lose up to 7% of its strength if countries start making it more difficult to trade with each other. And the poorer countries could feel this loss even more than the rich countries.
Diverging Regional Growth Dynamics
Different parts of the world are growing at different rates. Things are going quite well in South and East Asia, but growth in China is slowing down. Things aren’t looking good in Europe, and no significant growth is expected in the USA or the Middle East.
Impact of Generative AI
AI has been making waves since 2022, and experts believe it’ll shake up the world even more by the end of 2024. They say it’s getting easier to use and can do all sorts of cool stuff. This could help rich countries cope with labor shortages and help poorer countries make more money. Read our blog to learn more about the evolution of AI in business.
What Does a Recession Mean for Businesses?
No company is safe from the tech recession that is currently afflicting us. Tech start-ups, in particular, have had a hard time since April 2022. They have had to lay off hundreds of thousands of employees because they’re running out of money, and things are expected to worsen.
The recession, made worse by events such as the Russia-Ukraine conflict, has hit companies hard. Here’s what they’re up against:
- Increased prices;
- Higher interest rates;
- Higher oil and gas prices;
- Job losses; and
- Companies cutting spending.
Given the Great Teck Layoffs and the collapse of Silicon Valley Bank (SVB), many companies are feeling some uncertainty. Start-ups, in particular, are finding it difficult to raise money. Banks and investors are pickier about lending money, and start-ups have fewer opportunities to obtain funding. They may not get as much money, their companies may not be worth as much, and there are fewer deals to go around. And with everyone tightening their belts, customers may not want to spend money on improving certain processes. In our article, you can learn more about the business models of successful marketplace startups and how they manage their finances.
But what will happen next? When will everything get better?
We can’t see into the future and don’t know exactly how the next recession will develop. But one thing is certain: all companies must be prepared for hard times. Being hopeful is great, but it’s not enough. It’s important to stay positive, but it’s even more important to have a plan for when things don’t go your way.
How Can Technology Help You Survive a Recession?
The prospect of preparing your business for a financial crisis in 2024 can be daunting. The volatile economic climate can leave you and your team feeling exhausted and uncertain. However, tech can assist in surviving the economic collapse. In fact, it’s one of the best investments you can make to prepare for tough times.
So, how do you survive an economic depression by investing in technology?
Using the right technology in your business can give you a significant boost, even if it initially seems a little strange. Times of crisis often bring new opportunities, so it’s important to be prepared. Let’s look at how technology can help businesses survive a recession.
Boosted Efficiency and Productivity
Technology can streamline tasks and free up time for more important tasks. For example, you can use automation tools to process approvals and emails much faster than doing everything by hand.
Improved Collaboration
Tech tools for video conferencing (e.g., Slack or Zoom), project management software (e.g., Asana, Trello, Jira), and cloud storage (e.g., Google Drive, Dropbox) can help your team work better together, whether they’re in the same office or scattered around the world. Mastering these tools’ functionalities can significantly improve efficiency. For instance, learning Jira keyboard shortcuts can help your team navigate tasks, update statuses, and collaborate on projects much faster.
Better Decisions
With data analytics and AI, you can gain insights and make smarter decisions for your business. Predictive modeling and business intelligence tools can help you identify trends and plan ahead.
Staying Competitive
By investing in tech, you can automate processes, cut costs, and offer your customers a better experience. This can help you stand out from the competition and thrive even in tough times.
Enhanced Customer Experience
One of the best crisis response — software. With the help of technology, you can better understand your customers and offer them products and services tailored to their needs. This way, you can ensure that your customers are satisfied and keep coming back.
Increased Flexibility
With tech tools for remote work, automation, and flexible scheduling, you can adapt to changing market conditions and give your team more freedom to work how and when they want.
Saved Money
Technology can help you cut costs in many ways, from automating tasks to reducing travel costs. Moving your operations to the cloud and setting up an e-commerce platform can also save you money in the long run.
By embracing technology, you can make your business stronger and more resilient so that you are ready for any challenges that come your way. Adopting technology into your business is a great way to survive a recession, but there are many other essential ways. In the next section, we’ll take a closer look at how major companies in different industries dealt with the great economic crisis of 2008.
How Companies Survived the Recession in 2008
It’s difficult to predict precisely how a recession will turn out in 2024. There are a variety of factors that can shake up the economy, so it’s hard to know what will come. The good news, however, is that IT companies are generally better at dealing with recessions than other businesses. They weren’t hit as hard in the 2008–2009 global recession, and some even experienced growth.
Let’s look at companies founded during the 2008 recession and companies that successfully overcame the crisis and became even stronger.
Successful Companies Founded in 2008-2009
Here is a list of companies founded during the 2008 recession. They all have great stories about how they came up with their business ideas and succeeded even in difficult times.
Airbnb is an online platform where travelers can find accommodations for short periods. It was founded in 2008 by Brian Chesky, Joe Gebbia, and Nathan Blecharczyk.
When Airbnb launched, the economy was struggling, and people were looking for cheaper ways to travel. Airbnb recognized this opportunity and offered a way for people to rent out their extra space to travelers, making vacations more affordable.
Airbnb used the internet to bring travelers together with hosts, making finding and booking places to stay easy. It also focused on security and good customer service.
How Aibnb survived the recession: Although Airbnb was founded during a recession, it has performed very well. In fact, the company received $1 billion in funding in 2020. This shows how understanding customers and using technology can lead to success.
Pinterest is another big company that emerged during the recession. It’s a popular social media website where people can find and share pictures and videos. It was founded in 2009 by Ben Silbermann, Paul Sciarra, and Evan Sharp.
When Pinterest launched, the economy was in a difficult situation, but Pinterest still managed to hold its own. It offered people a fun way to escape the stress of time by discovering new things and sharing ideas with others.
How Pinterest survived the recession: Pinterest’s success can be attributed to a few things. First, the company focused on getting users involved and excited about sharing their stuff. Secondly, it found clever ways to make money without annoying its users. And finally, the company made sure to protect users’ privacy and data, which helped users continue to trust the site.
Uber was founded directly after the stock market crash in 2008. Travis Kalanick and Garrett Camp came up with the idea and launched the ride-hailing service in 2009.
When the economy was in a difficult phase, many people were looking for cheaper ways to get around. Uber offered a solution by connecting riders with drivers via an app, which was easier and cheaper than traditional cabs.
By using a mobile app, Uber made it easy for drivers to request and pay for rides and for drivers to pick up passengers and get paid. But it’s about more than just being convenient and affordable. Uber has also made safety a top priority. Uber checks drivers’ backgrounds, offers help in emergencies via the app, and provides 24/7 customer service.
How Uber survived the recession: Uber’s success comes from focusing on what people needed most in difficult times: a way to get around that’s easy on the wallet.
Slack is another cool start-up that emerged during the recession and changed how we work and communicate. Slack saw an opportunity in 2009 when the economy was shaky. With more and more companies working remotely, the company realized there was a better way for teams to communicate from any place. So, they developed a tool that made remote collaboration easy and seamless.
How Slack survived the recession: Slack’s success can be attributed to a few things. First, they made their app easy to use and nice to look at, which keeps users coming back for more. Secondly, they made sure that it works well with other popular tools like Google Drive and Trello, making it a must-have for businesses.
Finally, the app is constantly being updated and improved to stay one step ahead, and its dedicated team ensures customers are happy and getting the most out of Slack.
WhatsApp, the messaging app we all know and love, was developed by Brian Acton and Jan Koum in 2009. At first, it was just a way for people to let their friends know what they were up to. But it didn’t catch on right away, and the founders almost gave up on it.
Instead, they listened to their users’ wishes and constantly improved the app. They added features like push notifications and instant messages, and before they knew it, they had almost 250,000 users.
Even though things were looking up, getting money to keep the business going during the recession was difficult. As a result, Acton asked some friends for help. They invested $250,000, and from then on, WhatsApp never looked back.
During the recession, when people were cutting back on spending, WhatsApp succeeded by capitalizing on the trend of using smartphones for communication. They knew that people wanted to stay in touch with their loved ones despite tight budgets.
And in 2014, Facebook bought WhatsApp for $19 billion. This allowed WhatsApp to grow even more and reach even more people.
How Whatsapp survived the recession: The company understood what people needed, provided a simple and reliable service, and was open with its customers’ data. And a big company like Facebook offered Watsapp’s founders a pretty good deal, too.
Companies That Survived 2008: How They Did It
There is hope for many companies, and not every business has to strive; some only have to survive and then bloom later, during a more convenient time. Outsourcing your development is a great way to reduce costs (learn how to find the right partner). To illustrate how this could be helpful, here are some examples of big companies that also turned to their vendors for help:
In 2008, Google made most of its money from ads placed in online searches. But when the recession hit, people spent less money. Still, advertisers stayed with Google because they had few other options.
Sure, Google’s revenues declined somewhat during the recession, but the company was smart about it. They cut back on expenses, such as hiring fewer contractors, and shed business units that weren’t making money.
How Google survived the recession: Google’s way of making money was different. Instead of relying on people to buy things, they made money from advertisers who wanted to spread their message. Even in tough times, advertisers need to reach customers, and Google was the best place to do it.
Back in 2008, when the global recession hit, IBM was facing tough times. Instead of collapsing under pressure, IBM showed resilience and cleverness and emerged even stronger than before.
How IBM survived the recession: An important reason for IBM’s success was its broad range of products and services. While some areas of the economy were struggling, IBM had its hands in many different things, such as hardware, software, consulting, and outsourcing. This diversity helped keep the company stable.
Another factor that helped IBM was the fact that they cared a lot about their customers. They made sure that their customers were happy by providing them with great solutions and ensuring their satisfaction.
And let’s not forget how IBM managed its costs. They spent their money wisely and found ways to save without cutting corners. This allowed the company to maintain its competitive edge even during the recession.
In 2008, when the whole world was struggling with the recession, Apple stood out. The company not only survived, it thrived.
How Apple survived the recession: The reason for Apple’s success was its talent for innovation. Even when times were tough, they kept developing cool new products. The iPhone 3G and the MacBook Air were launched during the recession. These gadgets kept people interested in Apple and brought in more customers and money.
Apple also had a loyal fan base. People loved their products, and that didn’t change when money got tight. Apple continued to make world-class products and provide great experiences for their customers, so they kept coming back.
Amazon’s rise to become a major player in the business world has not been easy. In the days of the dot-com bubble, when the internet was booming, Amazon took a big hit. Between 1999 and 2001, while other online stores such as Pets.com and Webvan went bust, Amazon lost 90% of its share value.
How Amazon survived the recession: It was a smart move by the company to raise a pile of cash just before the market collapsed. This cash injection helped them stay afloat. The company borrowed almost $700 million from European investors in 2000, which saved it from bankruptcy.
Another thing that helped Amazon was its unique way of handling money. The company found a way to get paid by customers before it had to pay its suppliers. This clever cash flow strategy and investor money helped the company continue to grow even when it wasn’t making a profit.
The great recession of 2008 hit General Motors hard and drove the already struggling company into bankruptcy. Due to high pension costs, unprofitable cars, and expensive production facilities, the company had been losing billions for years. When sales collapsed during the recession, this was the final blow.
How General Motors survived the recession: The US government stepped in with a massive bailout, investing nearly $50 billion in exchange for a 60% stake. After taking control, the government helped GM restructure. It laid off several executives, dealers, and employees and even got rid of brands such as Pontiac and Saturn.
The changes paid off. By the end of 2013, GM had posted 15 profitable quarters in a row, and the government sold its shares. Sales also picked up as the economy recovered, especially for SUVs and trucks.
GM’s recovery wasn’t just about surviving the recession; it was about decades of hard work to build a company essential to the U.S. economy. Thanks to smart cutbacks and forward-thinking, GM is now in a good position to meet whatever challenges come its way.
Takeaways
We’ve looked at some of the notable cases of how companies managed to survive the recession in the past. Businesses can learn a lot from these examples.
Let’s sum up what helped these companies deal with the financial crisis in 2008:
- investing in technology;
- listening to customers’ needs;
- looking for investments;
- raising cash before the financial crisis;
- offering a diverse range of products.
If you’re a start-up starting a business during a recession in 2024, you should understand the risks and opportunities we mentioned above.
If you plan to implement cutting-edge technologies in your business or want to build unique software, the LITSLINK team would be happy to help. Contact us!