The most recent economic downturn the world experienced was the recession of 2007-2009. If you’re a company executive with less than 15 years of experience, you likely have little to no hands-on exposure to such severe economic events. Now, discussions about a new financial crisis in 2025 are arising, and many businesses may be vulnerable in the face of extreme, abrupt change.
While software companies were less affected by the 2007-2009 recession, things might look very different this time. Globalization has enabled software companies to target customers worldwide, making the overall landscape significantly more complex and competitive. Executives might not benefit from safety nets that kept them protected in the past, and organizations may struggle to attract investment.
This is why building solid economic downturn strategies is more important than ever. Companies must develop resilience, take action to stay ahead of challenges, manage cash flow effectively, and reinforce their positioning to secure employees and clients. By leveraging the power of data and making data-driven decisions, organizations of all sizes can turn downturns into opportunities rather than threats.
With Waydev, CTOs, VPs of Engineering, and other executive engineering leaders can assess their costs and allocate resources effectively to deliver projects aligned with business needs and requirements. Our solutions provide visibility into how work progresses, the volume of unplanned work, and roadblocks in projects.
So, what strategies can a development company use in an economic downturn? In this article, we’ll walk you through some strategies meant to increase the chances of making it through the forecasted economic downturn.
As mentioned in an article by TechCrunch, Y Combinator, the Silicon Valley business accelerator, advises portfolio founders to prepare for the inevitable – a worldwide economic downturn starting in 2022.
The investment firm that backed up big names like Airbnb, Dropbox, Reddit, and Waydev advises entrepreneurs and CEOs to prepare for the worst, reduce their organizations’ expenses and extend a runway. This means aiming for Default Alive, which is an extreme measure to secure the company and reach profitability before the organization runs out of money.
The Y Combinator open letter raises questions on the economic downturn 2022 might bring and makes executives and organizations ask themselves whether there are other tactics except reducing expenses to the minimum.
The answer is, of course, yes. Organizations must consider and implement several financial, client, and internal management strategies to survive and even strive in this challenging landscape.
Companies can make it through a potential recession by identifying the right mix and using their resources wisely.
The investment landscape is already shifting. If an economic downturn strikes, venture capital funds will face challenges attracting money, and limited partners will demand greater value and discipline. Startups, especially those yet to market their products, won’t be able to rely on new funding rounds as easily as before.
Investors want tangible results. While some funds remain available, investors will deploy capital more cautiously—backing only companies they trust to deliver ROI.
At this point, companies of all sizes should ensure they can survive for the next two years without raising additional investments. For this to happen, software organizations must understand where engineering costs are going and optimize operations.
Waydev’s Project Costs Report provides insights into the progress and costs of critical initiatives to help teams deliver on schedule.
Moreover, our Executive Reports offer complete, real-time visibility into key metrics like software innovation spending and unplanned work.
Moreover, our Executive Reports enable you to benefit from complete, real-time visibility over key metrics like software innovation spent and unplanned work.
In times of economic downturn, stakeholders want more value for their money, so optimizing each project for top performance and ensuring transparency on your engineering progress is crucial.
There are several strategies you need to apply to obtain stakeholder satisfaction:
Software development projects require a high level of certainty and clarity. When the project starts, executives and stakeholders need to know all its details and have a clear view of the progress.
To understand bottlenecks and delays, engineering managers have to be aware of their team’s interpersonal dynamics and work patterns. This straightforward approach eliminates future complications and reduces unplanned work.
Our reports offer you a clear view of your team’s progress and performance, focusing on key metrics you may assess over time. This way, you can see how your team dynamics change for different projects or sprints and how focus and volume modify over time.
Once you get a clear view of what’s working and what’s not, the next step is to assess risk and prioritize. This is quite a challenge, and even the most experienced professionals might face difficulties.
There are two types of requirements that need to be considered and prioritized during an economic downturn. These are:
Stakeholders are not happy when a product or service doesn’t deliver. Moreover, in times of crisis, they want even more value for their money, so you and your team need to make sure that you prioritize the right set of requirements. In times of economic distress, any error will make them look for alternatives.
Nonfunctional requirements bring value to the final result by focusing on security, accessibility, performance, or storage aspects. Any security breach, for example, can lead to legal and financial repercussions for the company, which might turn out to be unbearable.
In times of economic downturn, investors’ budgets might be tight, so it is crucial to identify the essential requirements they are facing, set your targets correctly, and ensure your team sticks to the plan. Waydev’s Targets feature enables engineering managers to visualize and track team progress by setting up KPIs.
In times of economic downturn, situations might change frequently, and opportunities might arise, so reacting fast is crucial. One of the survival strategies that tech leaders employ is making decisions quickly while focusing on the team’s priorities.
To do so, they need correct, accurate data that is available instantly. Engineering leaders need to understand where the primary resources are allocated and clearly view their projects to optimize efficiently. For this reason, many data-driven engineering leaders use platforms that help them generate extensive reports like our Resource Planning Report.
An essential economic downturn strategy is focusing on your team and ensuring that your most skilled and dedicated professionals stay with you and use their ideas and talent to drive value for the company. You need to make them feel appreciated and secure and continue focusing on their growth, no matter the difficulties your organization faces.
When organizations are going through an economic downturn, employees are worried about their jobs, their projects, and the overall state of their department. Professionals that aren’t kept in the loop share assumptions, ask questions, and create an environment of uncertainty that affects performance and the quality of deliverables.
Good leaders talk to their teams constantly, assess and acknowledge their results, and make them feel part of the bigger picture. They base their directions and decisions on facts and figures that they share with their peers. This way, they make their colleagues feel safer in an ecosystem that assesses results objectively.
Waydev offers you complete visibility of your team’s performance and progresses through its Daily stand-ups dashboard, enabling you to have an accurate status over commit, pull request, and ticket activity. Our solution measures team velocity sprint over sprint so that you always know the focus of yesterday’s work and the day’s priorities. This way, tech leaders have access to all necessary information to communicate efficiently and transparently with their teams.
To ensure that your biggest talent stays with you during a potential recession, you must always focus on each team member’s career path and take advantage of coaching and overall improvement opportunities.
In times of economic downturn, many professionals need leaders to whom they can look up. They also need to know that these managers pay attention to their performance and provide helpful feedback that enables them to enhance their skills.
By fostering a culture centered around people like the PPT framework, you will create a more productive working environment and benefit from initiatives and ideas that might help you enhance your economic downturn strategies.
Taking this into account, successful tech leaders pay much attention to their team’s dynamics and ensure members work together productively.
Preparing for an economic downturn is a challenge that generates much discussion. While there is no one-size-fits-all approach that companies can deploy, reducing costs, optimizing your resources, driving value for your clients, and fostering a culture that acknowledges and supports team members may be an excellent start.
For this, you need data regarding your resource allocation, project costs, your team’s performance, and the level of team collaboration. Through its dedicated reports and dashboards, Waydev provides key metrics that enable you to assess your team’s work, setting a sound base for decision-making and getting your organization buckled up for the economic downturns ahead.
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