Why Companies Are Still Investing in Tech During an Economic Slowdown

With rising oil prices, higher interest rates, and an economic downturn plaguing Europe and China throughout 2023, recession is looming in the United States. However, according to a recent Forrester report, American businesses are still increasing their spending on technology despite the threat of an economic downturn. In fact, the study showed that 67% of participants reported an expansion of technology budgets over 2023, specifically increasing spending on security and privacy tools along with digital experience software and backend optimization. With cyber-attacks becoming more sophisticated and complex, especially with the emergence of AI, it has never been more important for companies to invest in cybersecurity to protect employees, customers and the business.

Companies are taking advantage of the downturn period to get their ship in order. This involves concentrating on customer value and making sure they aren’t wasting money by optimizing current tech investments. Additionally, keeping up to date with the latest tech allows businesses to retain valuable customers while remaining one step ahead of their competitors, putting them at the forefront of the market when the economy comes out of recession.

As budgets begin to shrink, companies need to find innovative ways to continue investing in the best possible security tools to keep up with modernizing cybercriminals. Carefully choosing top-rate security tools and reviewing existing underutilized software contracts may help businesses cut down budgets while securing themselves from cyber threats.

Why investing in your company’s security is crucial during a recession

While making budget cuts may seem like the natural reaction to an economic slowdown, tech leaders actually plan to increase spending in IT and security departments to promote resilience through the recession.

Data breaches don’t stop during a recession and in fact, cybercriminals are more likely to attack during periods of economic uncertainty. Not only does this leave a company at risk of an attack, but may also impact their client’s data if top-rate security is swapped out with an underfunded department. To ensure client retention, tech leaders are prioritizing their customer service by increasing their funding in high-quality security tools.

What is worth the investment, and what isn’t worth the hype?

Companies need to prioritize their investments in customers, resilience, and revenue when planning their recession budget. Despite economic turbulence, 70% of respondents in the Forrester study reported planned budget increases in customer experience in 2023. To retain valuable customers during a period of instability, businesses will have to continue putting them first and exceeding their expectations. Baseline expectations of consumers continue to rise, and without proper investment there is a risk of driving customers away.

With client data more and more at risk, client-facing security solutions are a sustainable investment for businesses. By prioritizing customer’s data as well as their digital experience, companies can simultaneously protect their reputation and their clients. Maintaining focus on data security even when times are tough will also lead to better understanding throughout the company of the latest cyber threats.

This will also help prevent accidental internal data breaches, which can sometimes be more costly for companies than attacks from cybercriminals. Companies should invest in resilient security tools to optimize their budgets. Though initially more costly, high-quality solutions will be more sustainable than lower-cost solutions, which could potentially be more liable to security breaches, leading to expensive crisis management. Forrester suggests businesses should invest in support for modernizing the cloud, a complete transition to Zero Trust, or in the event that a security breach does occur, training on crisis management and purple team exercises.

How do you test out the latest security while also making sure that your solutions are resilient? Approach new tech with caution, Forrester research recommends. For example, while AI is clearly an extremely powerful tool that can help optimize business, it also comes with multiple risks. Privacy preserving technologies (PPT) could be an AI alternative, as it promises to act like most models while maintaining privacy, ethics, and regulatory requirements.

Optimizing your security tech.

There are multiple ways to optimize existing security tools to perform at their best, which can help relieve tight budgets. Existing software contracts should be reviewed to make sure that they still work for the company. This may be done by validating any new terms and conditions, renegotiating pricing, and ensuring that only those employees who need it have a license. It may also be time to have a look at your prior investments and make sure they are still relevant to the company. Cut out legacy contracts or underutilized tech that no longer aligns with your business, and consolidate to fewer tools if possible, as some may have integrated a solution that previously required a separate tool.

With economic recession looming over the US economy once again, the majority of companies still recognize how important it is that customers, employees, and stakeholders feel like their needs are being met. That’s why it is so important to invest in technology that protects businesses from cyber threats as a company necessity, not a luxury.

Originally published in Cyber Defense Magazine