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The credit crunch deja vu

by Pascal Opitz on November 5 2008, 10:25

Of course everyone follows the news about the financial sector crisis right now, and from a personal point of view I feel reminded about the time around 9/11. Back then many many agencies in Germany, where I am born and was doing my apprenticeship at the time, got hit hard and had to lay off people.

I remember group meetings, strong worries, and as the company that I worked for was directly dependent on the financial markets (doing websites for fund management organizations and other financial sector companies), they pretty much got hit immediately and did lay off about 20 people all together. I was worried whether my apprenticeship was worthwhile, or if I even was able to finish with it.

I then switched to another company based in Berlin. They sounded a bit more optimistic in the interviews, so I joined them just to find that after three months of working there the same cost-cutting process was happening all over again.

German economy in general went through tough times until about 2006, way past the date that I decided it's time to move somewhere else, and has just recently come out of the pessimism and fear that was so dominant through this whole time. The style that a lot of agencies, many of them new and inexperienced with tough situations, handled the layoffs was often borderline cruel, and where I worked relationships between management and staff became bitter and fearful. Websites like dotcomtod (now boocompany [german]) sarcastically documented companies swiveling towards going bust and cheered every time it happened.

Maybe having seen times like this is one reason for the German IT magazine "Heise" to sound so more pessimistic than everything else I read before [german] about the credit crunch, and one director of a german agency that I did work for verbally expressing something like "the fat years are over now, that's for sure".

Chris Heilmann of Yahoo seems to have a similar feeling of deja vu, and I can imagine that the fact that Yahoo was one of the first IT companies that came up in the news with reports of staff reduction does make his outlook more pessimistic than others, but not necessarily inaccurate.

This stands in big contrast to many other people that think (or maybe they're just wishing) that the IT industry is somehow the exception of economy, and will do well despite the downturn. But already I hear contractors asking about how the market does now, and I'm worried to find out for myself in December, when I need to get contracting work sorted once more.

Of course, we Germans are pessimists, and the outlook that Computer Weekly has on the topic is talking of "chances" and "positive impact of the credit crunch", but at the same time it points out that there will be drastic changes in IT investment strategies and what investors ask for as return value for these investments.


  • Interesting article, thanks. As a freelancer, I'm very interested to see how it will affect the freelance market. My theory (and like all good theories, it's based on no solid evidence :P) is that as companies make staff cuts to reduce overheads they are more likely to be outsourcing work to freelancers to get the job done quickly and cheaply. So, even though some clients may be pulling out of projects, there is still lots of work that needs to be done, and not enough employees to do it. The freelancer shall have his day! My economic theory is probably completely up the spout, but I'd love to hear what other people think? Perhaps people who have actually seen how the freelance market is first hand (I'm in a long term contract at the moment, so I'm a little out of touch).

    by Simon Plenderleith on November 5 2008, 15:17 - #

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