What happens if the market tanks?

They used to say about the Canadian economy that if the United States sneezes, Canada gets a cold.

With the U.S. economy heading into recession and the government incurring a debt of more than US$9 trillion, Canadian solution providers should start to worry.

But they are not. The solution providers I have spoken to are not worried. That has to be their public stance. They do not want to panic their customers, employees or suppliers. What makes me worry is how many of them are not planning for a down turn in the economy.

I have only spoken to one solution provider who told me he was looking into outsourcing as a possible new market opportunity when his main business dries up.

Since most solution providers are reactive and they do not have the manpower to dedicate to a new business venture they are stuck servicing the customers they have right now.

As more economic gloom and doom news hits the wires the chances customers will hold back IT budgets or slash them greatly increases.

There are markets that have been hit already such as manufacturing. Those VARs servicing that sector have a challenge on their hands.

The U.S. is Canada’s largest trading partner and vice versa. This is significant and should not be taken lightly. Canada’s close proximity to the world’s largest and most affluent market has empowered Canada to be a G8 nation. Canada’s gross domestic product is equal to that of the state of Texas, according to the CIA World Factbook. That is how powerful the U.S. economy is, and that is where Canada stands in comparison.

This incredible US$9 trillion debt load is sinking the U.S. greenback at the moment, while at the same time increase price of imports.

Those costs may be passed on to solution providers who deal with U.S.-based suppliers or products.

That cost inevitably will be passed onto the customer. To give you a sense of what one customer is thinking on the current economy crisis in the U.S. just read Boulton Fernando’ comments at the recently concluded CSO Perspectives Conference in Atlanta.

Fernando is a chief security officer for IndyMac Bank and he said: “My agenda for 2008 is survival, we have to look at how to make it through difficult and challenging times and focus on how to keep the lights on in ‘08 and still make it through and be stronger in ‘09,”

Canadian solution providers should take this to heart and start to make provisionary plans to handle a downturn in the Canadian economy. Let’s all hope the country does not fall into recession like our friends down south. But maintaining a business-as-usual attitude in light of all this economic bad news is a recipe for disaster.

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Jim Love, Chief Content Officer, IT World Canada

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Paolo Del Nibletto
Paolo Del Nibletto
Editor of Computer Dealer News, covering Canada's IT channel community.

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