The last couple of years were tough. Both the global Covid-19 pandemic and the Russian invasion of Ukraine caused many businesses to rethink their established business procedures and significantly cut costs. For many, expertise outsourcing has become a primary decision that helped them stay afloat. Data shows that IT outsourcing spending is projected to reach a staggering $519 billion in 2024, a 22% increase over 2019’s numbers. Keep reading to find out more about the 2024 software development recession and what businesses can do to survive and do well.
Understanding the 2024 Software Development Market
In 2024, it is anticipated that the software industry would generate USD 650 million. These predictions demonstrate that the software development industry will keep expanding and increasing its proportion of the global IT market in 2024. But there are still obstacles to overcome. Growth is no longer enough on its own. Changes in investment capital are impacting earnings and operating expenses. Geopolitics will also dictate its rule, such as the availability of more local hosting possibilities. And in the upcoming year, growing trends in automation, industry clouds, and sustainability will command attention.
Read more: What is the offshore development center (ODC)
Anticipating the Impact of a 2024 Recession
It is difficult to foresee the precise effects of a recession in 2024. Numerous factors can affect economic situations, making them unpredictable. But in general, IT companies are less likely to be affected by economic downturns compared to other businesses. IT businesses were less impacted than other industries during the previous global recession in 2008–2009. In some cases they even experienced growth. Still, if you want to be fully prepared and lessen the possible effects of a recession, you can implement several strategies, including:
- Staying updated on economic indicators and forecasts. By monitoring fundamental economic indicators such as GDP growth, employment rates, consumer spending, and business investment trends, you can prepare for the upcoming challenges.
- Conducting market research and analyzing customer needs. Understanding your customers is a must. Remember that their needs will inevitably change during the recession.
- Conducting financial planning and stress testing. Discover your areas of vulnerability and develop contingency plans accordingly.
- Diversifying your offerings. Some sectors may be more resilient to economic downturns than others, so diversifying your offerings can become a key factor in staying afloat.
- Focusing on cost optimizations. Reducing unnecessary expenses where it is possible. Outsourcing your software development team is often a great way to cut costs without compromising the quality.
- Adopting agile business strategies. Prepare your business to change by maintaining a flexible organizational structure.
- Establishing strong customer relationships. Prioritize customer satisfaction and retention.
Tech businesses may anticipate the effects of a recession with the use of all these tactics. However, it is crucial to remember that every recession is different, and the particular obstacles and possibilities may vary. Navigating economic downturns requires constant monitoring, change, and a proactive approach to risk management.
Strategies for Surviving a Recession in Software Development
By outsourcing some non-core activities, businesses can significantly cut costs and dedicate more resources to core competencies. If you decide to outsource, you’ll benefit from:
- Cost reduction. By finding a trustable software development outsourcing partner, you’ll manage to hire individual engineers or even entire teams at a lower cost than locally. There are plenty of cost-effective countries where developers have deep expertise in a variety of technologies and programming languages. This cost advantage can aid businesses in navigating through the challenges during the recession more successfully.
- Flexible staffing. Having the flexibility to scale your staff up or down is invaluable, especially during the recession. By partnering with an outsourcing contractor, you can easily adjust your resources. There is no need for layoffs, your partner will do everything for you.
- Access to specialized skills. If you’re looking for an engineer specializing in a unique or rare technology, outsourcing is the way to go. It’s way harder to find a great Haskell developer locally than to delegate the responsibility of finding one to your partner.
- Focus on core skills. By outsourcing non-core tasks like software development, companies can focus on their core skills. To survive a recession, they can dedicate more time and resources to key projects and core business operations. Businesses can streamline processes and increase overall efficiency by delegating software development duties to outsourcing partners.
- Faster time to market. Software development processes can become way easier and faster if you choose to outsource. Your partner will help you assemble a team that can complete tasks way faster. Why? Because such teams usually already have established procedures. When companies need to quickly introduce new features or goods in response to shifting market demands during a recession, this can be especially helpful.
- Risk mitigation. In unpredictable times like recessions, firms can reduce risks through outsourcing. Businesses can transfer some risks related to software development, such as resource limitations or technological difficulties, to a reputable outsourcing provider. Plus, it is possible to manage other parts of their operations with less risk exposure if they concentrate on doing so.
Related: Software vendor selection criteria that will help you choose a trusted partner
Software Development Market Surviving a Recession 2024: Conclusions
Since saving money is always a priority during such uncertain times, it is no wonder that more and more companies are looking to outsource development expertise to more cost-effective locations. Such a decision may be a lifesaver for those struggling to pay salaries, and rent, and dedicate months to finding suitable experts. Outsourcing a software development team is a great decision in most cases, but during the recession, it can help your business survive. Nearshore Friends is an experienced software development partner that provides a variety of services. If you’re new to outsourcing, we’ll consider your preferences and help you assemble a team of top-notch professionals today.
