The US is presently experiencing a bear market, which you are probably already aware of unless you’ve been dwelling on an uninhabited island. Investment prices have, regrettably, dropped to their lowest point since the start of the epidemic from where they were at the beginning of the year. Simply said, we are at the precipice of a financial cliff where a recession might occur at any moment. Both investors and company owners should be dismayed by this. In an economic slump, small firms seldom prosper, as they did during the Great Recession of 2008. When everyone else in your industry is struggling, outsourcing may be a strong strategy to keep your firm viable. In the future, you should absolutely think about outsourcing your IT services. We’ll examine some of the causes in this blog.
But first, let’s study a little bit about bear markets before moving on.
Definition of Bear Market
When stock prices fall over an extended period of time, a bear market arises. Wall Street defines Bear Market as a period when an index, like the S&P 500, declines by 20% or more from its highest levels.
You might be curious in how the phrase “bear market” initially started in the world of stock exchanges. Bears do indeed hibernate, thus bears signify a declining market, as has been the case since the beginning of June. A gradually rising stock market, on the other hand, is referred to be a bull market since bulls are always ready to charge.
In the past, recessions have always come before bear markets. In fact, an economic slump came into effect after 8 of the 11 bear markets were experienced since 1948.
Although there are a few other potential reasons for bear markets, cynicism or doubt among investors is frequently one of them. The bear market in 2022 was due to the economy’s fragile status. Pandemics, armed conflicts, changes in the price of oil, economic policies that were too contradictory, and more have also been significant causes.
What is A Bear Market Rally?
Stock prices rising during a protracted bear market is known as a bear market rally. Making it seem as though recuperation is about to happen. A dead cat bounce, bull trap, or sucker’s rally are other names for this kind of market movement.
Rallies in bear markets happen frequently. Since 1929, there have been 26 bear markets; 17 of them have seen upswings with gains of 10% or more. In contrast, a bull market rally happens when stock prices are increasing and there is widespread confidence that the trend will continue in the days to come. It is regarded as the standard form of market rally.
Why Should You Outsource IT Services During Recession?
Bear markets, as we previously discussed, are frequently an indication of an upcoming economic recession. You can’t totally protect your company from the consequences of an economic slump. But at least you can be prepared for it. In actuality, outsourcing your IT services to the best IT outsourcing company the best place to start. Even while the market still declines generally, there are often one or more bear market rallies during a recession. As a result, a rally shouldn’t be regarded as a surefire sign of an upturn in the economy.
Here are some advantages of outsourcing IT during a recession for your company:
- It is a more economical choice
You have no choice but to maximise every dollar you have available when a recession hits and uncertainties rule supreme. If not, you run the danger of experiencing cash flow issues when clients ultimately leave.
You have the freedom to reduce your expenditure on jobs that don’t require full-time assistance by outsourcing IT support. You only spend money on things you truly need at any specific time.
You may contract out services like system optimisation, network support, Office 365 support, business continuity management, and other things if you run a small medical practice. You may discover that you are paying substantially lower variable prices for these tasks, depending on your supplier. This is in contrast to the cost of hiring a fully functional in-house IT team. The extra money may then be used for initiatives that are more crucial to achieving your goals, including marketing and advertising. Before long, you’ll have successfully kept your practice out of the recession’s grip and perhaps even earned a profit.
- It Enables the Highest Level of Operational Efficiency
Although regrettable, employee layoffs are virtually always necessary during a recession. When the economy is in a tailspin, no business owner wants to foot the bill for a team that isn’t being used to its full potential. Your expenses must be adaptable.
The majority of restructuring victims are undoubtedly low-level employees. Since your company, like many others, is unable to dismiss talented and established team members, you will ultimately be forced to let go of individuals who aren’t contributing, including those in the IT division.
However, as a result of this unavoidable trade-off, low-value IT activities begin to accumulate, which ultimately reduces your team’s productivity. Your most valued employees will end up doing the minor but crucial jobs while ignoring the ones that actually make a difference for your company. Even before the recession hits, outsourcing IT services to a reputable, well-equipped supplier is one of the simplest methods to avoid this scenario.
- Workers Receive the Benefits they are Due
In a downturn, employees’ top concern is typically the loss of specific benefits. Even if a firm isn’t exactly benefiting from this circumstance, an employee’s input and motivation are far more negatively impacted. Being denied assistance in the midst of a recession is the very last thing anyone wants.
You may save money by outsourcing your IT support requirements to the proper business and use that money to pay the other employees instead of running that department. Employees will do every effort to keep the company viable if they understand that their benefits will be unaffected by the recession. Keep in mind that contented employees are productive employees.
- Quick Access to a Varied Pool of Specialists
A bear market and recession in general are times to exercise utmost caution while dealing with others. There is no space for complacency, and even a small error might cause your company to become potentially unprofitable and stagnant. In light of this, working with a qualified and successful IT consultant pays off. In other words, hire an MSP as soon as possible.
When you work with a managed service provider, you’re enlisting the services of a group of professionals with a wide range of combined experiences, qualifications, and understanding of current and forthcoming technology. Top-tier consultants that you have hired just won’t stand by and let your company fail.
An experienced MSP will leverage their knowledge to create a solution that is especially suited to assist your company withstand the storm in the form of an economic downturn. Furthermore, because MSPs are held responsible by Service Level Agreements (SLA), you can be confident that they’ll implement market-leading methods to create tried-and-true workflows and procedures rather than substandard ones. This results in more uptime for your company since you’ll always be knowledgeable, wise, and prepared to handle any unforeseen circumstances that may arise.
What is a True-up?
Given that we’ve gone into great detail about the benefits that outsourcing IT can bring to your company during a downturn, it only makes sense to move on to true-ups, which is an important part of the process of consolidating money and maintaining your company’s viability. A “true-up” is essentially a means to match costs with the present state of the business when considering IT support. It mostly entails reconciling licensing numbers, hardware, and current headcount to comply with the real quantity of resources used that you should be paying for at any given moment. True-ups are often performed on a regular basis, most frequently every quarter or year.
Why would you think about a true-up in a downturn? Since MSPs sometimes set their prices on the number of employees, you can adjust your technology spending as necessary if your company expands or contracts quickly. Undoubtedly, this is a fantastic approach to save expenses while maintaining security in uncertain times.
Last Thoughts
In light of the fact that the US is currently battling a bear market and may be approaching a recession, outsourcing IT is now more than just important—it’s a must. There’s no need to worry, though, since there is still time to make the necessary adjustments and due diligence to be performed. In addition to bringing unmatched experience to your IT environment, a reputable IT services provider will assist you with a variety of IT operations at a reasonable cost depending on the number of employees you currently have. Yesterday was the ideal day to take action. Today is the second-best time. Overall, you can do this.
Searching for an IT consulting and services company that values you and your needs? It simply takes one phone call to reach us. The finest thing is that we also function as a dependable MSP with a 95% client satisfaction record. When you can take the greatest action for your company right away, why wait until the recession blinds you suddenly? To find out more about our services, contact us now!
