A global recession in the coming year is looking more likely than ever, with warnings from international bodies such as the World Bank amid rising interest rates and the soaring cost of living across the world.
Countries in Southeast Asia will not escape the impact of a recession either, with Malaysia’s exports to China, the US and the eurozone being relatively high versus the rest of Asia.
With news of such an event on the horizon, the time for businesses to shore up their defences is now. The good news is, according to GoTo’s recent survey on How Global Businesses Prepare for an Economic Downturn, 65% of business owners believe it is important to prepare their business for recession and have taken steps to do so. Bolstering digital defences is one way and many businesses believe that implementing technological solutions can contribute to economic resilience.
However, many are still not confident about long-term stability should a recession occur. We look at how some businesses in Malaysia are preparing for the economic downturn and provide further recommendations on what to do.
Learning from the past
Having been through recessions previously, Malaysian businesses know what to expect and how to prepare themselves.
GoTo’s survey found that 57% of business owners and executives had learnt what to do to prepare for any potential disruptions to their business as they had gone through a similar experience in the past. Their attitudes also reflect a belief in creating a recession-proof business. To do so would involve creating a business continuity plan, equipping employees with the technology they need and creating a company-wide emergency fund.
The top three actions they have taken to recession-proof their businesses are:
Diversifying the business’ cash flow (53%)
Ensuring three months’ worth of “cash in bank” (52%)
Doing internal risk assessments (48%)
Further recommendations for economic resilience
While most businesses are on the right track in shoring up their defences, there is more that can be done on the technology front, from upgrading hardware to better managing the operational side of things, as the survey findings have shown:
1. Keep work and office equipment up to date
Just over half (53%) of business owners believe in maintaining work equipment (employee computers, office equipment) on a regular basis as a measure of creating a recession-proof business.
It is important to maintain equipment, be it technology or the physical office environment, and keep it up to date as this can prevent costly repairs when there is downtime, not to mention missed connections with customers for support and revenue-generation opportunities. Downtime costs money — small businesses can lose US$137 to US$427 for every minute of downtime.
Employee productivity will also be affected, with more than one-third (37%) of business owners facing disruption while doing important work, due to technology issues. The trade-off is between paying now to maintain your equipment or paying more later with a costly impact on both the business and the customers they serve.
2. Consolidate tech stacks to reduce the number of providers
Benefits of tech stack consolidation include simplifying and improving processes between various departments in an organisation. At the same time, it reduces the management and costs businesses pay to different providers.
Unfortunately, less than half of business owners are prioritising tech stack consolidation. To consolidate your tech stacks, look at any duplication of current functions — for example, are various teams using different software to communicate and collaborate within the workforce and with your customers? Look at the software used for managing your workforce, customers, inventory, and finance to see which can be consolidated.
The employee experience is also crucial to ensuring a seamless remote working experience. Understanding the challenges that employees may have in learning new software, or their experience from using disparate apps, will provide leaders with a view of how the software can be consolidated.
3. Outsource helpdesk or IT support functions
The survey also found that only one in three (36%) businesses believe that outsourcing a helpdesk or other IT support functions to a managed service provider (MSP) can help in an economic downturn.
Reducing costs is no longer the key driver for using managed services. The priority for organisations has shifted towards improving and connecting customer, employee and partner experiences.
Depending on the MSP you choose, you benefit from your MSP’s prior expertise with clients in the same industry and their expertise in various IT support functions, including providing network, applications and infrastructure support. At the same time, these MSPs have dedicated support teams so that you avoid dealing with technical problems and can channel your efforts to more urgent business needs. Any outage that may occur on the servers is also handled by the MSPs.
It is reassuring that many businesses in Malaysia have the foresight and awareness of what they need to do to protect themselves against a recession. Most are on the right track to doing so with the steps they are taking and can afford to further strengthen their defences on the technological front with the recommended steps.
Lindsay Brown is vice-president and general manager (Asia-Pacific) at GoTo, a flexible-work provider of software-as-a-service (SaaS) and cloud-based remote work tools for collaboration and IT management