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Apr 29 2020

Exit Strategy after the lockdown - What might be a possible strategy in the software industry?

The Corona crisis is a global challenge whose further development or even end is not foreseeable, but with the end of the lockdown a new phase towards a new 'normality' is starting. When and at what speed the economy will recover is difficult to predict for all industries. This applies all the more to companies in the technology sector, as many of them are internationally oriented. Accordingly, both medical and economic developments abroad have a direct influence on German companies or on the German branches of international companies.

After the first wave of the crisis, when the rapid spread of the virus overtook many companies, a second wave will now follow in the coming weeks. Here it is up to the management and the executives to lead companies through the crisis with pragmatism, sensitivity and creativity before the new 'normality' is established. In the interaction with customers, creative approaches are required that make it possible to implement projects in a time of great uncertainty. When dealing with employees, managers must "keep their nerve" and not pass on the pressure they feel to the teams unfiltered and unconstructively.

"Most companies plan at short intervals - usually monthly - and have several plans: worst case, most probable, best case." Explains Dr. Monika Becker, Business Unit Director for Software at Hager Unternehmensberatung and Sector Head IT & Digitalisation at Horton International.

"In the long term, most companies in the software industry expect the Corona crisis to have a strengthening effect on digitisation. Companies are now realising if they have not done their "homework" with regard to continuous digital processes and process automation and will push these issues with even higher priority".

The Corona crisis has made the importance of digital technologies very clear to everyone. This phase should be seen as a wake-up call across the board to push the issue of digitisation more strongly. 

Not only cutting costs - entrepreneurial courage is also required

Sales and margins are collapsing and cost pressure is increasing. This is precisely because emergency measures are often more cost-intensive than in normal cases. Nevertheless, if possible, companies should not sacrifice their future strategies for acute cost-saving measures and should act with foresight for the phase when the corona effect weakens. They should continue to push ahead with their business strategies. This applies in particular to recruiting in Germany.

The long notice periods make a hiring freeze in Germany particularly painful. Because it will take a long time after the end of the hiring freeze before a company has the employees it needs on board.

There are many indications that the DACH region could cope with the Corona crisis better than other regions, so that investments here appear to make particular sense. 

Conclusion:

The Corona cut came very suddenly for many companies. The next phase, the management of the crisis, should be directed forward despite all the imponderables. Those who cut back their future-oriented corporate strategy for the post-Corona phase may give up a competitive advantage or lose out to companies that are able to move forward even during the crisis. This medium-term risk must not be lost sight of under current pressure to cut costs. This is particularly true in Germany, where many things - such as bringing new employees on board - can only be implemented with a certain latency.

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