Financial Crisis Already Having Moderate Impact on Washington Tech Businesses, Survey Says
Three weeks ago, the Washington Technology Industry Association (WTIA) launched a survey on the effects of the economic downturn on the technology community. The specific goal was to get feedback on how tech businesses are being directly affected by the nation’s financial crisis. Xconomy was the exclusive media partner on the survey; we had early access to the results, which will also be made available on the WTIA website.
The news isn’t as bad as it could be—but it’s bad. First, a bit about the respondents. They represent companies in software, Internet, consulting, and professional services in roughly equal proportions, with a few hardware companies and other categories thrown in the mix. The majority are based in Washington state and classify themselves as business-to-business.
Seventy percent of respondents said their businesses are being directly impacted by the financial crisis. Fifty-four percent said demand for their product or service was somewhat reduced or greatly reduced. Looking ahead to what was expected over the next 3-6 months, that figure held pretty steady at 56 percent, but 30 percent of respondents thought demand for their product would actually increase.
On companies’ plans to raise capital, hire new workers, or expand, the survey showed a mixed bag. Thirty-eight percent of respondents said the economy is delaying, reducing, or putting on hold fundraising efforts, while 30 percent said it has no effect, and 28 percent marked the question “not applicable.” Meanwhile, 56 percent said their hiring outlook for the coming quarter is down (the rest said it hasn’t changed or has even improved). And two-thirds percent of companies surveyed said they’ve cut back on plans for investing in growth or expansion.
So what’s to be done about it? Forty-two percent of companies said they are re-allocating resources because of the economy. Thirty-seven percent said they will devote more resources to sales, while 16 percent will put more into marketing. Interestingly, another 16 percent said they’d devote less resources to marketing. Operations budgets led the pack as the most likely to be reduced (18 percent of companies).
All in all, it seems like a useful snapshot of tech-business attitudes heading into a financial winter. We’ll be watching closely for signs of spring.