The Tech Sector Trumpets Signs of a Real Rebound - NYTimes.com

The Tech Sector Trumpets Signs of a Real Rebound - NYTimes.com

Is technology going to lead the recovery? To answer that question we need to understand what is guiding the investment in technology, particularly IT in the corporate world these days. And the key factor of that spending is cost savings.

What companies are doing these days is invest in IT primarily to reduce costs, not only IT costs, but total operational costs. The impact of these measures is that the business improvements achieved via IT are sticky. That is, they will not go back to normal when the crisis is over. In other words, jobs cut and improved business processes will stay.

IT is going through the extended part of its development cycle: after the first 20 years of development, we had a big bubble burst. Now we are in the phase in which IT is penetrating all sectors of activity, all industries and although there may not be radical innovations, the cumulative improvements that it brings produce massive economic results.

The other fundamental trend that is happening in modern capitalism is that IT is becoming central to corporate strategy. It has evolved from being a tool to becoming a crucial component of the way business is done. From the operations of telecom operators, to banks, to new healthcare, including all e-government initiatives, technology is now at the heart of how products and services are delivered today. That's the other reason why IT is showing signs of strength.