How Real is the Economic Recovery?

When it comes to the economy, I feel like I’m suffering from a split personality. During my recent travels to the Cisco Partner Summit and other major conferences, industry executives crowed about the economic recovery — “It’s real, it’s real.” But when I return home and speak to my neighbors (the folks representing Main Street, U.S.A.) it seems like plenty of people are still feeling the economic pinch. So what exactly does that mean for managed services providers?

It depends on whom you ask. Back in mid-2009, HTG Peer Group Founder Arlin Sorensen told me the recession hit the U.S. East and West Coasts first, before spreading into the Heartland of America. I tend to listen to Sorensen closely, because HTG membership represents VARs and MSPs from across North America. (Groups are also starting in Europe and Australia).

I checked in with Sorensen last week for some updated thoughts. Here’s his response:

“Things did come later to the Heartland. Q4 [2009] was very slow and the first 6 weeks of 2010 as well.  But things have began to rebound for many.  At the HTG Summit last week we heard many companies that experienced record Q1 performance, including our company HTS. Pent up demand started to flow in Feb and has been flowing ever since for us.  I am not convinced we are over the hump yet, but the short term looks good as April was another strong month for us.”

Also of note: During recent conferences, many MSPs have told me their biggest challenge is maintaining focus — and zeroing in on the right revenue opportunities. And companies such as Cisco Systems are hiring again and looking to make acquisitions. And distribution giants like Ingram Micro are on record saying the economic recovery is real. We’ve even seen some new activity on MSPmentor’s job board. Fact is, the economy really doesn’t come up in most of my conversations.

Still, there are problem areas. Closer to home, I’m aware of friends and relatives who remain out of work. Others remain under-employed. It seems as if many Fortune 500 companies are sitting on profits and cash instead of making hires. And many small businesses, burned by the recent recession, are wary of making hires. Cash remains king — and managing cash remains a top priority — notes a recent SMB IT Pros blog entry.

Now, here’s the interesting twist. It comes from someone in the distribution market, who says it’s time for channel companies to dramatically shake up their employee ranks: Fire your worst performers, and bring in top talent at reasonable salary levels. After all, there is great talent on the street right now. And much of that talent can be acquired at reasonable compensation levels.

Grab the talent while you can. Because the economic recovery seems to be real.

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