Enterprise Mobility & the Connected Worker Blog

As Recession Looms, Enterprise Leaders Face Difficult Decisions

by Emily Gove | 5/10/2023

Amid speculation that the US will default on its debt by as early as June 1st, leaders across industries are taking extra measures to protect operations. Congressional response could entail a further raise of the debt ceiling, prioritization of lenders and bond holders in a technical default, or prioritization of domestic spending in a classic default.1 Any of the three outcomes may result in a recession, which could trigger the following trends:

Declining government budgets will halt some spending, although unfulfilled demand may continue to drive device sales. Given the growing US/China tension and the ripple effects of the war in Ukraine, military budgets may be preserved while infrastructure funding is withheld.

The reputation hit resulting from a debt default will ripple across industries and regions. The dollar’s decline in value will force US importers to reevaluate sourcing and may strengthen foreign manufacturers. Prices will likely rise across manufactured goods, leading to re-strategizing around manufacturing hubs and components.

The retail industry will navigate inflated prices but also perhaps a more limited supply of goods. In an extreme event, companies no longer supported by government funding could abandon goods at ports or renege on purchase contracts with foreign providers. Retailers will navigate both inconsistent supply and a changing competitor landscape. Omnichannel retailers will retake some share of the ecommerce pie as high quick commerce fees become less appealing.

The outlook for healthcare will be less stable than in past recessions, a result of changing investment models for healthcare businesses. Post pandemic, workers are accustomed to handling high demands with few resources, but funding constraints will lead to difficult supply and personnel decisions. Amid the uncertain future of government-backed health funds, patients may make difficult decisions and avoid medical treatment, lowering hospital traffic.

IT budgets will face pressure to improve operational efficiency. Enterprises may regress from 1:1 deployment models, holding devices for longer and sharing among staff where possible. Automation and workflow improvements will still hold the promise of efficiency for businesses willing invest.

Moving Forward
A recession could catalyze semi-automation and technology investment as the mobile worker landscape shifts. Employers that improve workflow ergonomics and minimize physical requirements will better attract workers and optimize operations. Contrastingly, growing unemployment and investment losses might propel some white-collar workers and recent retirees into technology-enabled mobile roles. The integration of this class of workers will be a boon for environments like ports and logistics hubs, which have faced shrinking employment numbers and resistance to new technology.

It is highly possible that a default will be avoided and that the above trends represent worst-case scenarios. However, IT leaders across industries have not forgotten the tumult of the COVID era, and will have contingency plans in mind as they monitor macroeconomic trends. OEMs able to anticipate end user needs and offer financially digestible propositions, used devices, and subscription models will gain an advantage.

2023 will be a pivotal year for rugged device sales. To learn more, stay tuned for VDC’s Rugged Notebook and Tablet Reports (publication: June 2023).