This article is a continuation from a previous post in which I presented my point of view on the changes I have recently noticed in the IT sector.
- The SoDA bench
- How can we interpret the data?
- The SoDA mood barometer
- Google Trends
- Dedicated websites
- Industry platforms
- Consulting companies’ reports and the situation on the M&A market
- Spontaneous recruitment applications
- Collaboration proposal from similar companies
- Increased interest in marketing and sales services
- Summary
- What we can see today
I discussed some of the factors Future Processing considers when assessing the state of the market in the first section of the essay.
I included a few resources that we use to look for data particular to our sector as well as more general macroeconomic statistics. I continue to offer advice on what to watch for in this section, as well as a summary and market forecasts.
The bench for SoDA
Access to the SoDA bench is one of the advantages of joining SoDA. Members of SoDA can exchange information here about:
“OWN” – their own bench, or idle staff members who might assist other businesses with their initiatives;
The talents that a business “NEEDS” to acquire in order to finish a project for a customer.
As a consequence, businesses assist one another, and everyone gains from the alliance. Another advantage of the SoDA bench that may not be as clear at first glance is that it aids in keeping up with market trends, which may then assist us in making decisions.
The SoDA bench’s performance during the past several months is depicted in the example graph below (the real data are only available to SoDA members).
How should the data be interpreted?
A market resurgence started in September 2021 when SoDA member businesses had more projects than workers to complete them. The peak occurred in March, and the pattern changed after that. This might portend the start of a protracted decrease in demand. for a service. Changes in respect to a certain technology can also be seen. In the future, more factors (such as industry, geography, etc.) may be included.
The SoDA’s mood indicator
SoDA conducts surveys of member firms’ attitudes. The studies that have been done so far are listed below. This is yet another resource that may be used to learn about the past and how businesses see the future. The following research is scheduled for September 2022.
Trends on Google
We all regularly use search engines, and the majority of us use Google. It turns out that we can learn a lot about market shifts from this instrument. If you know what you’re looking for, this becomes really helpful.
Google Trends allows you to track changes in search volume for terms like “software development services” in the US:
Additionally, you may track the cost-per-click for words using Google AdWords and other technologies. These expenses typically increase when the economy is changing because businesses scramble to find new sales avenues when their current channels stop functioning. The cost of the service rises as a result, as does demand.
specific websites
Websites that provide up-to-date information regarding layoffs in certain industries are another free source of useful data. Layoffs is the name of the most well-known and often used website of this kind, notably in the US.
It was developed to track the effects of the pandemic, but as you can see, it also displays recent developments, such as a noticeable market shift in the second quarter of 2022.There are undoubtedly more sources of this type; you simply need to choose the ones that will provide you the most beneficial stats.
market platforms
Additionally, job-related websites may be a great resource for market data. The most apparent example is LinkedIn, but there are other, regional websites as well, including Polish JustJoinIT.
If you make use of these products’ premium editions, you have access to a human who will provide you information on general trends. I believe it is worthwhile since you will discover which industries are hiring and which have slowed down. Additionally, you may discover from which countries the organizations looking to hire new employees come, as well as whether anything is happening in this area (for example, whether clients are withdrawing or suspending their job offers or increasing their own, etc.).
Additionally, these kinds of websites frequently release insightful studies based on sizable datasets (LinkedIn) and provide access to priceless data as part of their usual subscription charge.
Another illustration is the well-known IT tool clutch. You may track trends in both the volume and caliber of sales leads obtained through Clutch as well as broader market trends. However, keep in mind that Clutch‘s methodology is subject to change, which may have an impact on the outcomes.
Reports from consulting firms and the state of the M&A market
Paid and free data offered by the most well-known consulting firms and their reports (Gartner, Deloitte, PWC, etc.) are included in a distinct category of market data. Here is an example study that compares the state of the IT industry now to where it was a few years ago
This is just another illustration of the M&A market environment. In this instance, there are more transactions at higher prices the more robust the market recovery is.
spontaneous applications for employment
The quantity of direct recruiting applications submitted through our website is one of the easiest indications we track. Although it might be closely associated with the marketing initiatives carried out by our organization, it is not entirely objective.
However, if you are aware of when things are happening and how to filter information, spontaneous job applications are a development worth monitoring. There will be fewer spontaneous applications when there is a high demand for workers, whereas there will be more applications than usual when there is a higher supply.
Collaboration proposal from firms that are comparable
I well recall how eagerly businesses searched for new projects in Q2 2020. On LinkedIn, I also read a lot of remarks on that. Such inquiries can also offer helpful data suggesting potential changes in the industry.
whether we see that firms in our industry are asking for collaboration more frequently than usual—that is, asking whether we have too many projects and need more workers—it likely suggests that these businesses are having issues with sales, their benches are expanding, and they are looking for new distribution channels.
rising need for marketing and sales services
Businesses sometimes show a greater interest in sales and/or marketing services as the market condition worsens. This is due to the fact that their current sales channels become ineffective, and to thoughtfully address this, they start looking for ways to strengthen their sales departments in order to bring in new customers. This may be seen in industry gatherings, information sharing forums, and specialized portals.
Summary
According to some, it’s advisable to start worrying before others discover what is happening. It has several advantages, especially from a commercial one. You may improve your company’s actions and ultimately boost earnings and stability if you properly and in advance predict potential market changes. As a result, it’s critical to monitor the market environment and spot changes as they occur.
As you just read, in order to accomplish this, you must collect and analyze data from a variety of sources, including both hard statistical data and soft data derived from interviews with individuals. Look forward while simultaneously thinking back. Consider the industry as well as the broader market climate and financial status. Analyze financial information and potential legislative amendments.
You may use this to develop your own evaluation procedure that is tailored to your company. You will discover certain reoccurring trends as a result of this approach, which will enable you to respond appropriately.
what is now seen
You can attempt to predict the future and draw conclusions about the current situation based on the evidence that has been gathered and debated. You still lack a crystal ball, so keep in mind that your predictions could turn out to be inaccurate. This is all about probability.
How do we assess the state of the market and our industry?
After 2008, the so-called “era of cheap money” began, which created an environment in which businesses had simple access to capital and investment.
Companies tried to invest money rapidly as a result since they knew their rivals would. As a result, a few start-ups appeared and several ideas were implemented despite the lack of a sound business case.
People then held onto their money during the pandemic and refrained from spending it. On the other hand, as a result of specific political choices, they were given “free” money. As a result, when the pandemic started to subside, that money began to directly support the economy.
A supply shock also occurred because people wanted to spend the money they had saved but were unable to do so due to supply shortages brought on by supply chain disruptions brought on by the epidemic. That came along with by the crisis in semiconductors.
These are the main causes of inflation worldwide, to summarize. Additionally, the base effect—zero or very zero inflation prior to the pandemic—led to a sharp increase in the Consumer Price Index in a number of nations.
Additionally, there were price fluctuations for energy resources brought on by both political developments and weather (poor winds in Europe during the winter reduced energy output from wind power plants).
Then, once Ukraine was attacked by Russia, energy prices continued to rise, which undoubtedly fueled inflation even higher. Keep in mind that the globe is currently experiencing other significant changes. Once more, two blocs are dividing the planet. The United States and the US currency lead the first bloc, but the BRICS bloc, which also includes China and other nations, seeks to break free from the USD.
As a result, there is currently a great deal of uncertainty on all markets. Though there isn’t technically a recession yet, more and more people believe that it’s only a matter of time. This is simply a self-fulfilling prophecy. It’s a good time to remind ourselves that recession happens by definition. when the real GDP falls for two consecutive quarters. The possibility that the GDP is not growing but is unable to keep up with inflation is another viewpoint.
What is the current state of the market, then?
Well, no one can be certain. Although the concrete figures concerning the present situation, in my opinion, do not indicate the beginning of a recession, we must take into account the evolving conditions: cut off access to cheap energy and money (I’m specifically thinking about Germany, a nation that built much of its competitive edge on cheap energy coming from Russia).
As a result, businesses would find it difficult to pass on costs to clients or they might start losing business to rivals, which might trigger a downturn or recession in the economy. These findings, however, are not based on current numerical measures, but rather on projections for these indicators in the future. To put it another way, we are watching random, one-time occurrences that have enough impact to potentially bring about change that is not predicted by the measures that are regularly employed.
This raises another question: Does the conflict in Ukraine have an impact on clients’ choices for commercial locations? Though I believe there is some influence, it is not substantial. The impact of the rise in labor expenses in Poland and the area is what matters most to our clients. Therefore, they look for less expensive solutions in India and other Asian nations. It appears that the West, in its broadest sense, wants the war to conclude in a peace treaty with regard to the conflict itself and what it could bring.
I’m concerned about the worth of our money when it comes to Poland. It appears that the administration is prepared to sacrifice it “for the time being” in order to sustain GDP growth and employment rates. This is not terrible news from the standpoint of exporters like Future Processing. The possibility exists that the value of the Polish zloty will spiral out of control and that we will fall prey to a speculative onslaught. This might harm Poland’s reputation as a potential market. As a result, customers could decide they don’t want to take a chance by doing business with Polish companies.
This forecast may be off; it’s possible that Poland won’t get these monies this year. I believe the government is engaging in dangerous behavior, thus I am concerned about the PLN exchange rate and how it may affect us.
Let me conclude with a crucial point: increasing interest rates is not intended to combat Poland’s inflation but rather to strengthen the zloty (to prevent our debt from growing higher). This is due to the fact that the Polish government is concurrently implementing its pro-inflationary policies (the increased pension benefits, the reduced taxes). In these circumstances, increasing interest rates won’t affect inflation but may help keep the value of the national currency stable.
Inflation, on the other hand, benefits the government since it reduces the amount of existing debt. As a result, we may anticipate the euro/dollar parity this year and a value of somewhat less than PLN 5. Long term, the US dollar shouldn’t be as strong relative to the euro, but given the current state of Europe and the ECB’s monetary policies, I anticipate that the dollar will likely be even more costly than the euro this year.
The zloty won’t have any chance of recovering its losses in this environment unless the National Recovery Plan funds actually materialize; they may strengthen the zloty’s standing against the euro and the dollar. Furthermore, the conflict has a significant influence on the value of the currency; just look at other nations, particularly those that have adopted the euro and are unable to choose their own monetary policies. For instance, Estonia’s inflation rate is over 20% due to the war’s effects, dynamic growth, deletion of the second pillar of the pension system, and lack of effect on the country’s monetary policy.
All in all, I believe the following possibilities might occur this autumn and winter:
70%: Market stabilization and the ensuing recovery, which I interpret as a reduction in inflation, a decline in material costs, and an increase in stock market valuations.
25%: The start of the recession, which means that many nations’ GDPs will really decrease and the existing issues will get worse.
5%: A more serious problem will develop as the recession gets worse.
This, in my opinion, suggests that the slowdown that is presently evident will continue through the fall and then see a recovery in the fourth quarter of 2022 and the first quarter of 2023.