How safe is your tech job? Many IT workers are now asking themselves this question with increasing frequency and for good reason. In the past month ZDNet has reported on the loss of several thousand technology jobs in the UK -- and this trend looks set to continue as the tech recession bites deeper into the hardcore tech industry, having already devoured the fluffier dot-com sector for its first course.
How much worse will it get, and when will it start to get it better? To answer that fully we need to explore the causes -- but let me give you my personal take up front: I don't think we'll hit the bottom until the autumn, we'll probably bump along the bottom throughout the winter, and providing we get some definition, clarity, and leadership on the post-crash role of the Internet and 3G things should start to lift in the spring.
So how did we get here? Let's be clear about one thing -- the recession that now threatens America and may also spread to Europe and the rest of the world was precipitated by the tech sector itself. Stock market lunacy fed off the unquestioning belief that the Internet had to be at the centre of all tech activity without a clear view of how this would add value for customers, and how this Internet-centric view of the world could be sustained.
The reason that the Internet and tech sector now faces such a deep crisis is not just because the bottom has fallen out of Nasdaq. The smarter investors had been expecting that for two years, and the shrewder ones had already cashed in some of their chips. No, the reason there is a crisis is because nobody believes the Internet is that special anymore -- and if the Internet is not the driving force, then what is driving the tech sector?
This uncertainty hits the order books directly -- since if firms are no longer sure that "Web enabling" their business is a "must-do" priority, then they are going to hold off ordering those servers, ASP deals, and online customer relationship management tools.
Some important lessons about the tech sector's relationship with Wall Street have been learned in the crash, and these will help the tech sector when things start to improve. The Financial Times summed up the most important of these lessons in an editorial last week which carried the headline "Shoot the Analysts". Whilst confusion reigned and the tech sector had clearly lost the plot, Wall Street carried on as if everyone still believed that a clear vision for the Internet still existed, with many analysts continuing to issue "buy" recommendations on stock that had been in freefall for six months, often with real values dropping by up to 90 percent.
In the same article the Financial Times owned up to itself being a little too willing to listen to analysts. ZDNet has been similarly guilty, and we resolve from here on to place more of a priority on seeking opinions from the people who are expected to buy and use technology products, as opposed to those who buy and sell shares in the companies that make them.
But although the stock market has an important bearing on this story, the seeds of recovery won't be found in the square mile. The tech sector must address some fundamental questions itself first -- and top of the list is this one: what is the role of the Internet in business and the home now and into the foreseeable future?
If we are entering a world where multi-platform online experiences and portable data are the drivers -- then how does that connect with the roadmaps for software, hardware and chip development. None of this is clear yet. Microsoft has tried to take a lead and provide a vision with their .Net strategy -- but this is an Internet-centric view of the world and, as has been observed, whether anybody believes the Internet-centric view of anything anymore is open to question.
The recession in the tech sector, like any wider recession, exists as much in the mind as in the reality of lengthening dole queues and falling order books. The way out of it will be found when the sector rediscovers its confidence and vision of how its products can improve the lives of business and ordinary people. There are plenty of reasons to be optimistic and, as German chancellor Schroder told CeBIT last week, "no reason for pessimism". The evidence is strong and all around us that the tech sector remains the most important industry on the face of the planet at the beginning of the 21st century. Not convinced? Then ask yourself, or better still, ask friends who don't work in the tech industry the following questions:
- Do you find it useful to work in a networked office, where an IT department maintains your PC for you, and provides you with secure communications tools so that you can work effecitvely both at your desk and on the road? Or do you think that it might be more prudent as we head into a recession, to live without these work tools?
- Now that Boo.com and e-Toys have gone to the wall, there are slightly fewer shopping opportunities on the Web. As a result of this do you think you will give up your Internet connection at home?
- Do you find it useful to own a mobile phone, to be able to speak to and send text messages to your family and colleagues when you are out and about -- or, with a recession looming, do you think you'll get rid of your mobile soon to save money?
- When you travel on the train, do you think the number of people that you see carrying portable computers, PDAs, and mobile phones is decreasing?
Most sensible people would give a firm "No" in answer to all these questions. The Internet is not going away, the networked office is here to stay, mobile communications are here to stay and, looking to the future -- interactive TV will achieve a user base several times larger than the Internet, 3G will make the Internet appear like a minor innovation in office technology, and the personal robot will, in all probability, be far bigger than the personal computer.
As the economic cycle picks up again there will be enormous demand for the right tech products. Nobody has yet cracked the perfect mobile computing device for business. When we can take our notebooks abroad, turn them on, and be immediately connected to the corporate network without a dangerous increase in our blood pressure, then we will have designed and built something that people and businesses will pay good money for. Home networking is in its infancy, but the multi-computer family is now so common that a robust, wireless home networking solution would have enormous appeal -- especially if it can be plugged into a broadband connection, which is something else that we know people will pay for.
So far the recession is a US phenomenon, with economists divided on whether or not the contagion will spread to Europe, and even if it does how severe it will be here. Many ordinary Americans lost their shirts on the dot-com crash, with consumer confidence taking a blow as paper fortunes disappeared over night. The latest evidence suggests that US consumer confidence may be recovering -- but it seems unlikely that Americans will rediscover their former enthusasm for tech stocks any time soon.
It is important to distinguish between the tech recession, and the full blown recession that it has ushered in. Because of US dominance of the tech scene as a whole and the importance of certain global players within the IT industry -- the potential does exist for the tech recession to spread to Europe, even if the wider recession is contained.
Most US global tech players tend to base their economic outlook on what is happening at home, rather than a comprehensive world view. If you think this is unfair, then remember that Silicon Valley has been telling Europe for years that we don't "get the Internet". Frankly, most Europeans that didn't "get it" are probably glad that they didn't, and many that did "get it" US-style are now wishing they hadn't.
But this is only half the problem, just as worrying are the issues that the US tech sector doesn't "get" itself (basically anything not invented in America). For example, it doesn't "get" mobile, interactive TV, or 3G, and it doesn't "get" that Europe has a different view on how the Internet should be regulated and policed, particulary in relation to crime and the protection of children.
So how safe is your tech job? The good news is that if you live in Europe and you have marketable IT skills, there is no reason why you should find yourself out of work in the next twelve months. The shortage of skilled IT workers is so acute that even if you face the loss of one job will you will very easily find another.
So far we have seen very little softening of the IT recruitment market -- although it seems likely that there will be some consolidation in the Internet-based part of it. But the best way to protect your tech job is to take more responsibility for the solutions you provide -- and don't leave the finding of the answers to the questions raised in this article to Bill Gates and Steve Jobs. They have been wrong before.
ZDNet readers are at the coal face, you are the people that have to make technology work on the ground, so be very, very clear in your own mind exactly how the technology solutions you offer can provide enough value for customers so that they are happy to pay good money for them, and to go on paying you to maintain and upgrade them.
Eugene Lacey is editor-in-chief of ZDNet UK.
Talk of recession should not mean that IT budgets must be cut -- forward-thinking firms will more likely see it as a time to invest. If we accept that the bean counters will be craving savings, Martin Veitch asks -- what are the options for IT managers? Go to AnchorDesk UK for the news comment.
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