4 Disruptors in the Software Industry & How to Overcome Them
The software and technology industry has been a massive driver of growth in recent years, but it can also suffer from negative trends in the larger economic climate. 2022 saw the appearance of multiple challenges in software industry companies, such as:
- Many employees returning to the office after working remotely during the COVID pandemic.
- Soaring inflation rates that forced many businesses to reevaluate their pricing models.
- Crises such as the war in Ukraine that impacted IT services and outsourcing operations.
These software industry challenges—and more—resulted in massive waves of tech layoffs throughout 2022. What’s more, the trend seems to be accelerating rather than slowing down. In the first quarter of 2023, there were more than 166,000 layoffs worldwide in the tech industry—slightly more than the total number of layoffs in all of 2022.
Given this unpredictability, companies need to prepare for a wide range of disruptors to software development when starting new development projects. In this article, we’ll go over four of the biggest challenges faced by software product development companies, as well as how to address each one.
4 Software Industry Disruptors & Solutions for Navigating Them
1. A possible recession
Whispers of a possible recession have been circulating since 2022—but so far, the economy has avoided a major downturn. In a February 2023 survey of business economists, however, nearly 60% predicted a recession would arrive later this year.
Software companies are often hit particularly hard by recessions because they face strong competition from business rivals that can set lower prices to survive in troubled times. On the other hand, companies that have highly unique existing products, or that have diversified into sectors such as engineering and consulting, are better prepared to weather the storm.
Solution: Survival strategies. There are various strategies for software product development companies to survive during a prolonged recession. One alternative is to expand into new markets or geographic regions, including internationally. However, this may not be a possibility for smaller businesses that lack the knowledge and resources to do so.
Another survival strategy during a recession is for small and medium-sized companies to attach themselves to larger companies. By joining forces in a business partnership, smaller software development firms can leverage resources for growth, such as higher marketing budgets and more distribution channels, that they wouldn’t otherwise have access to.
2. Talent gaps and layoffs
As discussed above, 2022 and 2023 have seen rolling waves of layoffs in the tech industry that add to the atmosphere of economic uncertainty. Facebook’s parent company, Meta, for example, announced two rounds of layoffs in November 2022 and March 2023 that saw 21,000 employees without jobs.
Despite the glut of workers suddenly on the market, many software companies still struggle to find qualified tech talent. For one, many of these layoffs have affected departments such as human resources, marketing, and finance—not software developers themselves. In addition, many technology businesses are looking for specialized, highly technical skill sets (such as machine learning or the cloud) that remain hard to find in the general job market.
Solution: Outsourcing. Rather than building their own development teams in-house, many companies would benefit from using an outsourcing partner that can help with software product development services. Outsourcing is often more cost-effective during the software development process: not only do you save time during the recruiting process, but you can also decrease overhead costs.
If your company is laying off skilled engineers and developers, or simply doesn’t have the skill sets it needs in-house, consider outsourcing to fill in the gaps. The right outsourcing partner will have the expertise you need for your next software development project—from application development and testing to specialized topics like big data and generative AI.
3. Increased competition
Perhaps more than any other sector, the software industry is focused on shaking things up and disrupting old paradigms in order to adapt to and introduce new technologies that can work more efficiently and cost-effectively. According to Bain & Company, for example, more than 75% of recent large venture capital investments have gone to so-called “industry-focused” software companies that are looking to revolutionize healthcare, education, the restaurant industry, and more.
This means that software and tech companies are often fiercely competitive, with everyone from startups to massive multinationals looking to claim a piece of the pie. From price and user experience to different features and functionality, there are many ways that these organizations look to gain advantages over their rivals.
Solution: Speeding up time-to-market. If time-to-market for new software product development is one key differentiator for your business, consider joining forces with the right development partner. A skilled, experienced software development partner can help you release your next product faster than your competitors, establishing a foothold in the market.
Companies that specialize in software development, such as KMS Technology, are ready to staff entire teams to meet your needs—from project management leads to software engineers and testers with in-depth code development knowledge. You won’t have to deal with the hassle of hiring in-house professionals, which can take weeks or even months and delay your product launch.
4. An ever-changing industry
Software and technology have the ability to transform the face of dozens of industries—but it’s not just external change. The tech industry, in general, is subject to rapid shifts regarding how companies develop software.
For example, new software development tools and programming languages are constantly arising—with some having more longevity than others. Software methodologies, too, are constantly fluctuating, each with its own take on how to navigate the development phases of a new product. Developers need to patch newly discovered security breaches and flaws that could result in a hack or exploit.
Solution: Open-mindedness and flexibility. Above all, software companies need to be ready for a digital-first approach. Times are changing faster than ever before, and new technologies are emerging left and right—from blockchain to artificial intelligence, like ChatGPT.
Failing to keep up with the latest developments in software and technology makes it easier for other companies to outperform and surpass you. Instead, adopt a growth mindset that enables your teams to take on new technologies and digital transformation projects head-on.
Overcome Software Industry Challenges with Help From KMS
Given all the challenges of the software industry, it’s no surprise that many businesses are looking for help from a development partner. Outsourcing partners such as KMS Technology can help at every stage of the software product development process, from code review to long-term support and maintenance. The best software development partners can suggest the right technology to improve your workflows and output.
The benefits of joining forces with KMS for software product development include:
- Leveraging emerging technologies, including AI, machine learning, big data, and more.
- Accelerating your time-to-market with continuous delivery cycles.
- Filling in gaps in your in-house team and enhancing your existing development capabilities.
Ready to learn how KMS can help you surmount the disruptors of the software industry? Get in touch with our team of experts today to schedule a consultation about your business needs and objectives.