Is it a good time to invest in IT amid the economic downturn?

Overview

Should you keep investing in IT during a recession? Why invest in technology sector? In recent years, the business environment has been shocked by big things. The pandemic and supply chain crisis, geopolitical tension and inflation. In 2025, new forces direct investment calls. For example, technology stocks market turbulence or the race in AI. Global economy spending on tech will increase by 5.6% in 2025 to reach $4.9 trillion, says Forrester.

Our software development company began its business process over 15 years ago. We see how market conditions affect businesses’ investments in new technologies. We see how organizations and enterprises usually react to various circumstances. 

And in this article, we are going to share our vision of the ongoing situation. We will explain why many businesses decide to continue investing during a recession.

Digital transformation and business stability. Why tech companies keep investing during recessions

The coronavirus pandemic may be over, but its lessons linger on. It taught technology companies that resilience was a matter of how fast they could adapt to disruption. In 2025, the question will no longer be if they invest in IT but how they can do a smarter and better job of it. Сompanies continue to allocate significant budgets to technology. And top performers treat IT as a driver of long-term stability rather than a cost center. 

Those who rebound more quickly come out stronger. In times of decline, technology becomes the basis for sustainability and competitiveness. Cloud infrastructure and automation software help business operations. They scale up or down on demand and pivot business models when circumstances change. Rather than freezing projects, business organizations redouble efforts on digital reinvention.

Key benefits of investing in IT during a recession include:

• Efficiency and automation reduce expenses and free workers up for more value-added activities.
• Faster recovery – tech companies that modernize can scale back up quickly once markets stabilize.
• Customer retention and NPS lift – digital channels and personalization help maintain customer trust.

These advantages show why global IT spending continues to rise year after year. Smart investment objectives don’t mean pouring money down the drain for every hot new trend. It means investing in digital solutions that make your business more agile and customer-centric. Technology companies want not to survive but to thrive. A smart digital transformation is a key strategy in tough economic times.

Optimize run costs while funding growth bets

In 2025, CIOs and CFOs are under pressure to balance cost discipline with innovation. A practical way forward is to use a two-track investment model. This separates spending into two categories: “Run” and “Change/Grow.”

• Run spend optimization. This includes the everyday costs of keeping systems secure and compliant. The focus is on reducing unit costs through cloud cost management and automation. Every dollar saved on “Run” frees up resources for higher-impact initiatives.
• Change/Grow bets. These bets focus on targeted investments in new capabilities. The results are expected in 2 to 4 quarters. Examples include AI-driven analytics for better decisions. Also, modernization projects open new markets.

To decide if a project fits in the “Grow” portfolio, many tech companies use a basic Go/No-Go rule:

• Can the initiative achieve payback in ≤ 12 months?
• Is it compliance-critical or tied to risk reduction?
• Does it give better unit economics in a transparent manner?

If one or more of these hold, then the project will typically pass the investment threshold.

This approach helps organizations keep costs under control and continue investing in technology. It reflects the budgeting discipline that top-performing enterprises follow. They protect the core, but continue to plant seeds for growth.

Cloud computing and artificial intelligence. Core pillars of a modern investment strategy

In our practice, executives ask for universal approaches to transform their businesses. Unfortunately, it is impossible to offer a single formula that suits all situations. We often have a request to develop a digital transformation strategy. We study the needs and goals of your business, considering the state of your industry.

These two fields currently prevail in executive agendas: artificial intelligence and cloud computing. Whereas AI attracts media headlines, the roots often belong in the cloud. They offer scalability, fault tolerance, as well as pay transparency. Healthy investment objectives incorporate both, where cloud preparedness supports viable AI uptake.

Where to invest money in 2025-2026:

• Data & platform readiness. In order for AI to provide value, business requires accessible and reliable data. Data governance investment forms the ground. On top of it, AI can generate believable outcomes instead of “garbage in, garbage out.”
• Automation. Intelligent automation lowers error rates and frees people for more value-creating tasks. Orchestration tools ease the standardization of cross-region processes as the business expands.
• Integration & APIs. Most businesses still have disconnected finance, operations, and customer systems. Spending on integration software and API strategies brings these systems together. It underpins revenue operations and improvements in customer service.
• Customer-facing UX improvements. Digital channels are often the most visible proof of transformation. Enhancements in mobile apps and personalized AI-driven experiences influence conversion, retention, and NPS. 

These directions show why enterprises regard cloud and AI as centerpieces for competitiveness. AI pilots without proper data readiness tend to stall. Cloud migrations without clear business outcomes fail to justify their costs. Together, though, they provide a stack that is productive now as well as adaptable for the future.

The key is to balance ambition with discipline. Set outcomes in 2-4 quarters and measure influence. And after that, continuously refine your investment roadmap. With this approach, IT becomes a growth driver, even in times of economic uncertainty. 

Maximizing ROI in the technology sector

It is not a rare case when executives try to reach the desired results and minimize IT investments. Unfortunately, it doesn’t work this way. Invested money isn’t the only thing to consider when checking an investment strategy’s feasibility. Tech companies should focus on the value that they will bring. 

Below you can find practical tips that show what can increase the value of your IT investment.

• Niche expertise. Don’t hire generalists who cover many areas. Invest in specialists who dive deep into your domain. They deliver features faster and with fewer errors. This directly impacts business outcomes. For example, reduced time-to-delivery means faster product cycles. And lower defect density spells less expensive rework. In practice, this improves cost per active user and reduces the budget on fixing mistakes.
• Scalability and flexibility. Your IT systems and processes must adapt quickly. Investing in automated testing and infrastructure as code increases resilience. Tracking p95 latency ensures performance under load. Tracking the % of automated tests as code helps keep maintenance costs down. The ROI is visible in metrics like $/request (how much it costs to serve a transaction) and cost per active user. Both of which should decrease as systems scale efficiently.
• Software development partner. Working with an outsourcing partner accelerates delivery and reduces fixed hiring costs. Here, time-to-value (days from project start to first release) becomes critical. A good partner also lowers the cost per feature and reduces the defect escape rate. You’ll save money per build and waste less. This is because you skip costly trial-and-error hiring and learning curves.
• Concentration on core business activities. Your teams should focus on features that drive revenue or strategic differentiation. External experts should handle supportive systems. Measuring the % of engineering time spent on revenue-generating features helps ensure focus. Supporting KPIs include deployment frequency and NPS (customer satisfaction). On the ROI side, keep track of $/request and cost per active user to confirm efficiency gains.

Focus area	Core KPIs	ROI metrics
Niche expertise	Time-to-delivery ↓, defect density ↓, cost per active user ↓	$/build, waste %
Scalability & flexibility	p95 latency, % automated tests, % infra as code	$/request, cost per active user
Partnering	Time-to-value (days), cost per feature, defect escape rate ↓	$/build, waste %
Core focus	% engineering time on revenue features, deployment frequency ↑, NPS ↑	$/request, cost per active user

FinOps you can bank today. Interest rates and growth potential

Even in growth-focused companies, wasted cloud spend eats into margins. A FinOps mindset helps teams treat cloud like any other business expense. Cloud cost overruns hurt margins just as much as external factors like stock market volatility.

Here are six levers you can apply immediately:

1. Rightsizing – match VM and container sizes to actual usage.
2. Autoscaling policies – scale out only when demand spikes, scale in quickly afterward.
3. Spot/Reserved Instance mix – combine flexibility with predictable savings.
4. Storage lifecycle – enforce tiering and deletion rules for cold or unused data.
5. Egress hygiene – monitor and reduce unnecessary data transfers across regions.
6. Per-team budgets – allocate ownership so engineering squads see the cost impact of their choices.

Metrics to track:

• $/request (transaction efficiency).
• $/build (CI/CD pipeline cost).
• Cost per active customer (unit economics).
• Idle % (unused capacity).

Applied together, these levers create savings and build financial discipline into IT operations.

From mutual funds to tech stocks: Finding the right balance in your IT investment strategy

If we needed to provide only a short answer, it would be “yes.” But a lot of factors should be considered before investing in IT during a recession.

We are living in the era of digitalization. And there are no signs that show that something here will change soon. Today, digital transformation and smart IT investments can become your competitive advantage. Another concern is if your team has the skills and knowledge to develop the tech strategy.

If you feel that external help is required, you need to find a reliable IT partner. At Softacom, we are always open to new ideas and projects. We never apply any “one-size-fits-all” solutions. And we always do our best to find the most feasible approach to each business situation. Before providing any solutions, we will closely study your case. We will consider different scenarios and offer the one with the highest value.  

If you have a question, “Should I invest in IT during a recession?”, you can contact us. We will help you evaluate the feasibility of your project.

Investment checklist for downturns:

When evaluating IT initiatives in a recession, apply these six yes/no checks:

• Is there a clear owner and KPI?
• Will it deliver ≤12-month payback?
• Does it provide a security uplift?
• Does it improve unit costs (e.g., $/request, $/build)?
• Will it have a visible customer impact?
• Is it consistent with your 2025 roadmap?

Projects that meet two or three of these conditions often deserve investment.