How fun for the people of the world to survive a pandemic and then add inflation to the mix? Whose idea was this anyway? We are sure everyone is filled with the same question these days, why? Or why me? It isn’t just you, it’s almost the whole world and it has its effect on all of us differently, including major industries. You may be wondering all the ways that inflation can affect certain industries or markets. Today PCS VoIP will inform you on how inflation has been affecting the technology industry. Whether that be intensely or not as intense as it may have hit other industries.
You would think that inflation wouldn’t have any effect on technology or it would just be a positive effect, but that is not the case. Due to us all being in a “post” pandemic setting, yes, technology has been very convenient to many and it’s great for small tech companies; however it is more like making a sacrifice so that the average consumer can continue buying with us.
There are a few main causes that we have found for what the future holds for the technology industry. Due to inflation of capex or capital expenditures, there are higher operating costs, and increasing interest rates on these expenses. In order for a business to operate smoothly, capital expenditures keep it together. Capital expenditures are “…funds used by a company to acquire, upgrade, and maintain physical assets such as property, plants, buildings, technology, or equipment.” In simpler terms, these are the expenses to maintain the business with tax money. You may be thinking that maybe the companies in the tech industry need to rethink their budgets for equipment and things of that sort; however the less we spend on our product the less value yet the same or even higher costly the product will be due to the inflation rates. Then it wouldn’t be a win for the consumer or the company because we need consumers to do the purchasing to maintain quality.
What are tech companies doing to reset the equilibrium?
During the pandemic, as mentioned before, you would think tech companies wouldn’t have any issues with everyone working remotely. They didn’t have any issues with the consumer or the employee for their company back then but now it’s become something no one really expected. The profits made from the year 2020 enabled tech companies to raise pay and hire as many people as they wanted. For example, if you only need 2 people for the job, you could hire 4 and they’d be evenly paid. Now with inflation affecting the industry as a whole, it has been very difficult for companies to keep all of the extra employees and maintain the pay. As predicted by Professor Nicholas Bloom at Stanford University, “…tech firms will tighten belts by cutting back on office space and moving to hire cheaper workers…” The actions that have been taken to reset the equilibrium have been through layoffs, making the hiring process more extensive, and lowering the pay. We can currently think of two examples that we have personally experienced in the last couple of years. It’s like companies didn’t know what to do at first making this whole situation even more unfortunate for the employee.
All we can say now is that we as consumers, employees, and owners should prepare ourselves for what could be a tough season/quarter for the tech industry. And who knows, these steps to reset the equilibrium may do well even though it hurts. Let’s try to stay positive during these tough times. We hope everyone learned something new from us today and wish everyone a great new year and we can all get back up on our feet!
