What the recession could mean to the Middle East IT sector

It is now clear that the world is in an economic recession. What does it mean to the IT sector in Jordan and the Middle East?

If you’re the technology head at your company, obviously management will ask you to make cuts.

You’ll have to ‘eliminate’ redundant hardware and software assets, large maintenance contracts and excess capacity of any kind.

Operation efficiency will become the focus, and you will have to achieve the business strategic objectives at a lower budget, and sometimes argue against cuts because of the mission critical nature of some IT operations.

A good way to start, unfortunately, is by ‘squeezing’ your vendors. The rates for the software services they offer must come down, and the maintenance contract will be re-negotiated, and investment in hardware might by put off for a while.

This leads us to the impact on hardware and software suppliers, who will feel the pinch but should, in turn, plan for the downturn by cuts of their own, that will enable them to relay the savings to clients, who will be demanding discounts.

If a company employs ‘project teams’, these people will have to go when projects dry up, and if top marketing and sales people have big salaries and commissions, they’ll suffer from cuts or will just be let go as sales dry up.

It’s not a pretty picture, but it’s already started across the world and, although the Middle East seems like a cash rich region, the effects are beginning to be felt.

In Jordan, we’re used to tight economic conditions, but the last few years have seen an expansion in IT and Telecom services to such a degree that makes us vulnerable too.

An IT manager I talked to summed it up nicely, saying that there are always some excesses which are the first things that must go, that’s easy, then there are slightly painful decisions that make it challenging to deliver the same levels of IT services, but can be managed with better efficiency and resource optimization, then we cancel part of the of the IT services!

Will it get to that? Depends how long this recessions last!

zanasser@gmail.com