Technology and Economy: Q & A with Sean Ferrel

Founded in 2002, Managed Solution was barely 6 years old when the 2008 financial crisis hit. Yet, even as a young company we managed (pun intended) to pull through and grow to become the organization you now know today. That is why, today, we're talking about technology and economy.

With that in mind, we sat down to interview our CEO, Sean Ferrel, to discuss the recent economic events and how they pertain to Information Technology and the Tech industry in general. Read on to explore a top-down examination of a post-covid financial climate and gather insight and advice for your business.


A Top-Down Look at the Economy

A lot has been a lot going on with the U.S. economy since the pandemic. Recently though, we’ve seen some real negative indicators with bank collapses on a level reminiscent of the 2008 financial crisis. As a business leader, could you share some insight with us about today’s current economic environment?

Sean: In the last 3+ years there’s been a lot thrown at businesses. From COVID-19 to hybrid workforces; all the way up to how the housing markets have been affected. When people started to work from home it changed the places where people wanted to live. This drove a lot of inflation in certain areas that didn’t previously have these high-salary workers in the market before.

However, the housing market is one aspect. At the core of it, we could argue that there’s been a supply problem across the board. We see it an automobile makers and shipping components. For example, we rely on other countries for things as simple as [computer] chips. Manufacturers couldn’t get the chips to put into cars so a lot of cars couldn’t be built, which then created low supply, and the big companies with low supply were able to charge more for the commodities and goods we needed.

Even with our food and beverage companies. There was a problem there as well due to the lack of potential employees. So, whether it was auto-parts or workers in factories: businesses couldn’t produce as fast as they [normally] would. The demand for goods was still high, the supply was low, and ultimately people charged, and are still charging, more for their product.

Now, the more supply that these companies create and market - the less demand they might get for the product if it becomes more saturated. Meaning they’d have to bring down their inflated costs.

They also have to pay more in taxes if they produce more of something. So, a lot of companies have kind of sat for a minute and said, “well, we're getting a lot of money for our product than we used to get, so why should we produce anymore just to get taxed more for it?”. Which is why many have continued to drive the same amount of supply out of their organization and the inflation has remained. Of course, there’s more nuance to it, but essentially that’s where we’re at.

I think the reason why we’ll run into the “recession”, however, is simply because the dollar goes less far. Things are more expensive and the only way to combat that is businesses paying their employees more. This is challenging and leads to businesses charging their customers more and it becomes a very vicious cycle. One that, unfortunately, will eventually come to a head when businesses can longer afford to pay their employees more and will likely automate their processes instead, or they’ll have to downsize. So, I do think there will be more layoffs coming.

What’s interesting though, we all read about the layoffs at Google, Amazon, and Microsoft. It wasn’t because the companies were doing poorly -- they have more cash in the bank than ever. It’s merely due to the fact that their demand is going to go down because of people’s dollar’s not going as far.


2008 v. 2023

How do you feel our current economic situation compares to that of 2008?

Sean: Compared to 2008, it’s a very different market. Back then it was the way banks were lending with negative amortization loans. Essentially, saying “we're going to loan you for this half a million-dollar house -- which you probably couldn't afford with your salary this much money -- and in three years we're going to increase your interest rate adjusted from an initial 5% or 4% interest rate up to 12%.

That increased the cost of the mortgage and people just got wiped out really fast. They couldn't afford it and hence we had a huge market where things were foreclosing, people didn't have the money and they borrowed against the home and their credit was tapped.

In today’s world though, people have been making a lot of money. It’s been a good economy for a long time, and I don’t think people are tapped credit-wise at this point, so we’re not going to see a big downturn where people are liquidating everything they have. But we definitely need to see some changes happen.


The Tech Industry

From your perspective, what are the main shifts the economy has had on the tech industry?

Sean: In the whole tech-sector; you have four things that happened in the workplace:

  1. Hybrid Workforce
  2. Heightened concern for cybersecurity
  3. Workplace culture shift
  4. Increased interest in the cloud

What I see there is a problem in general with “can technology solve it?” one, but two, “does the workforce for technologists -- like the people that we employ -- have the skill set”?

Technology has sprawled a ton, so it’s almost impossible to find enough talent out there to keep up. There's a huge lack of it from security talent to cloud talent, etc.

So, companies are struggling to find the right IT people who aren’t over-charging for the cost of their labor because, again, the employee-cost has inflated. That’s why now there’s this notion of Do More With Less. Technology and economy, obviously being closely interwoven in this concept. 


Doing More with Less (Technology and Economy)

Could you tell us what “doing more with less” looks like?

Sean: I think one question is; are companies ultimately building tools that are easier to manage by bolting them together? For example, Microsoft owns Microsoft Azure (the cloud).

They also own the operating system within the cloud, which is windows. Then they own the productivity software we all use, which is Office 365 -- and in that you have your communication tools like Microsoft Teams, collaboration hubs like Microsoft Viva -- all the way down to the computer with Windows operating system.

With that, they can control the market from a cost perspective and drive down costs for these suites of products. Not to mention, more Microsoft people in general are probably out there in the world studying and learning.

Making it a little bit easier to find people who do work in that area. And at the ultimate goal; it's easier to manage the process and the technology by consolidating into one or two platforms as opposed to having many, many vendors.

It’s similar to security too. Everybody's coming to market with amazing security tools that do detection at the endpoint or do secure app management to secure applications in the world. But now there's a lot of them and there's not enough resources out there to ultimately manage many different types inside of one business.

So, that's where the big picture of the project-based work consolidation is happening. You have more talent to manage better and more control & cost optimization by consolidating these infrastructures. Today's technology and economy are extremely closely related so business leaders need to emphasize having the right technology for their companies.


The Role of Managed Services

Could you speak about how this all ties into managed services and IT outsourcing? What benefit, if any, could customers gain from these types of services and solutions during this time?

Sean: As I mentioned before, you have the whole thing around hybrid and remote workforces. There are two things that happened:

  1.  Shifted working hours
  2. Changing workforce (great resignation)

Where previously companies had one IT person in the office. That’s not the same anymore. If people are working from home, they're working 24 hours a day. There's not really a regular 9 – 5 anymore.

That means the calls are coming in more than ever. The person who worked internal IT doesn't want to be the person hanging on the phone taking those calls all day every day and it’s not like they can run into anyone’s house to get everything set. That’s why we see technical call-based Help Desks becoming more and more popular. So, outsourcing will continue to grow in a bad economy. Outsourcing and centralizing the tools that are being managed by companies.

The second reason why outsourcing is becoming bigger, is due in part to the great resignation. With the inflation of salaries and expense of increased employee turnover, people are looking at companies, like Managed Solution, instead.

 Beyond that, when it comes to enhancing security, making their users more productive, or having collaboration tools move into the cloud -- many companies are finding that the traditional IT teams are not always tooled up for this. That's why we're seeing more companies outsourcing a lot of that strategy as well; to help them build a long-term footprint that looks at the total cost of ownership. They’re asking organizations like us, “How do we optimize costs and better productivity for my new hybrid workforce of users and make sure we’re secure?”.

For us, it's a nice place to play in the industry right now, being sort of the managed service provider who outsources all this stuff and the consulting arm to be able to go out and help build the future architecture.


Advice to Fellow Tech Companies

We’ve established that the economy today is different than it was in 2008, but one thing they have in common is their negative impact on people and businesses financially. As a business leader who came out of that, do you have any advice or words of comfort for fellow tech companies like Managed Solution?

Sean: For tech companies like ours, it’s always been a good thing to have multiple vendors on your website such as Microsoft, Amazon, Google, Dell, etc. A lot of the traditional sense has been that those are kind of like VARs, or ‘value added resellers’, who could resell all these products and services.

But my advice, is that you’ve got to pick a horse. Make sure you understand what suppliers (Microsoft, Amazon, Salesforce, VMware, Cisco), are building that understand the economic climate. If cost is a big factor and businesses are having to do more with less technology, who's building the technology in one stack of products to ultimately give you all the tools that you need to be successful?

Consolidation is really where I think all businesses should try to head and are trying to head right now. So, ultimately, as it pertains to technology -- I think picking that horse that you think is going to be best in the race is key. Technology and economy is a huge conversation right now. Technology and economy are both make or break aspects for businesses today.


If you’re interested in speaking to one of our team members for more tech-guidance? Contact us and we’ll be happy to help.

Want more resources or interested in more tech content? Head over to our blog page! Technology and economy is a huge conversation right now. Be sure to keep up with us to stay in the know!

Africa Gold Rush - Managed Solution

Africa's Tech Gold Rush

By Nik Milanovic as written on
Africa is on the verge of something big. This seems to be a quiet, cautious consensus in some investment communities. The past year has been peppered with stories of tech startup hubs emerging across the continent, from Lagos to Kigali to Agadir. The model of American tech entrepreneurship looks to be slowly sparking a renaissance in the Silicon Sahara.
As the gaze of America’s VCs begins to settle on African entrepreneurs, many open questions are left unanswered. Will Africa play host to the tech world’s next gold rush? Can these markets stay stable enough to grow the next billion-dollar Internet companies? Does Africa have what it takes to emulate Silicon Valley? The answer is a resounding “Yes.” Big things are ahead for African tech.
But to understand the rising star for Africa, you first must understand why the road to Africa goes through China.

The running of the bulls: China’s economic rollercoaster

The Chinese credit crunch and the crash of the Shanghai Composite should have come as a surprise to no one… with the benefit of 20/20 hindsight. Beginning in the early 1990s, the Chinese economy grew at a consistently monstrous rate of between 8 percent and 16 percent, year over year (only dipping to 7 percent following the global financial crisis). This happened mainly because the west began to outsource and offshore its traditional manufacturing in favor of less expensive Chinese producers.
The Chinese middle class made exceptional gains as a result, and grew tremendously during this period as manufacturing generated new wealth for the emerging agrarian economy. It seemed inevitable that the party would end at some point — where the roulette wheel would stop though, was anyone’s guess.
A credit crunch, a cooling growth rate and underwater construction loans all flew in the face of a stable, harmonious China.
The first warning signs came in 2013 and 2014 as reports began to trickle out about Chinese “ghost cities.”
Developers were running deep in debt from loans originated mostly by government municipalities, which the developers had taken out to build the audacious mega cities that would house the next wave of the urbanized Chinese middle class. There was only problem: The next wave didn’t come.
As the defaults from construction started to trickle upward, it likely became clear to the People’s Bank of China that growth may be slowing for the first time in a few decades. Meanwhile, the U.S. and, to a lesser extent, Europe, were slowly but steadily recovering from their recessions.
Harmony and stability are values central to the policies of Chinese President Xi Jinping — and to the communal ethos of China as a whole — and are lauded much the same way Americans praise liberty and equality. A credit crunch, a cooling growth rate and underwater construction loans all flew in the face of a stable, harmonious China, and threatened the newly minted middle class, looking for returns on its capital. So the CCP guided retail investors to a new asset class: public equities on the Shanghai Composite.
From mid-2014 to mid-2015, the Chinese stock market was an investing barn burner, more than doubling in value in less than a year. It looked like the CCP had solved the problem of what to do with the glut of wealth held by its middle class — until the market crashed spectacularly in June 2015.
Again, the warning signs were there. Companies like Shanghai Duolun Industry rebranded themselves as “technology” companies and made outlandish claims that just their domain names alone were worth hundreds of millions. I made a brash — and admittedly uninformed — bet against the Shanghai Composite. A few bearish investors and I got lucky; many millions of Chinese did not.
Now, as the Chinese stock market enters its third bear market — marked by sustained losses of more than 20 percent — in less than half a year, Chinese retail investors are again looking for a promising asset class to park their investments.
So why does this matter for Africa? While China was reaping the windfall of massive growth and dealing with the investment challenges of a “free” market within its borders for the first time, it was quietly scaling up its investment outside the country, as well.

The tale of the Chinese patron and the African builder

War, hunger, malaria, tribalism, Ebola and crushing poverty… these are the common western images conjured up at the mention of Sub-Saharan Africa. Since the end of the last world war, those headlines have been sadly reflective of the condition of some unstable African republics. Driven by motives ranging from charity to profit to a renewed “white man’s burden,” the western world has during the past half century poured money into the African continent to combat these ills.
But over the past decade, driven by its meteoric economic growth, China has quietly but steadily increased its foreign direct investment (FDI) in Africa. In the five years from 2003 to 2008 alone, Chinese investment in Africa shot up by a CAGR of 105 percent, from $75 million in 2003 to $5.5 billion in 2008. The same went for imports and exports between the two, which grew from $10 billion in 2003 to more than $50 billion in 2008.

Why is China investing so much in Africa?

Unlike the west’s investment, China’s ravenous appetite for African labor and resources is not tied to countries with good governance. The only two criteria for Chinese investment in the continent appear to be stability and profitability. This has allowed China, which still only accounts for 3 percent of the FDI in Africa, to grab the lion’s share in some of its larger FDI recipient markets, such as Sudan, Congo DR and Nigeria, all of which score low in world democracy rankings. Zimbabwe, long a thorn in the side of the western world, recently made the yuan its official currency, effectively making it an economic vassal state of China.
Yet this new spate of FDI leaves one big question unanswered in the west: Why is China investing so much in Africa? Conventional wisdom holds that Chinese investors want to make a play for African resources — such as mining — as fuel to power China’s mighty manufacturing sector. However, the data tell a different story: China is slowly moving its industrial and services sectors to Africa. Indeed, 38 percent of African FDI has gone to manufacturing and construction, and another 20 percent to finance and business services.
So why does this matter for Africa? In all likelihood, it means that over the last two decades, as the Chinese middle class grew and became richer, and as western standards for factory labor became more strict, Chinese goods slowly became more expensive. As evidence, China has consistently devalued the yuan in recent years in order to keep its exports cheap. But at some point, prices will catch up with producers, and China will need to find cheaper factories for its companies to be competitive. Enter Africa.
Chinese FDI in Africa shows no sign of slowing, even as it goes through a credit crunch and a run on its stock market. If it continues at this rate, Africa could become the new world’s factory in the next 10-20 years, and the African middle class could find itself yanked out of agrarian poverty just as quickly as China’s over the last 20 years. And why wouldn’t Chinese investment continue? Relative to the boom and bust of the Chinese debt and equity markets, African FDI has looked remarkably stable.
As long as China, like the Medicis of Renaissance Italy, continues to be a patron of Africa’s enterprising manufacturers and builders, both will profit, and the African middle class will grow.

From blue collar to white collar to v-neck: Africa’s road ahead

Silicon Valley is boring and oversaturated with capital. At least, that seems to be the conclusion some of its largest investors came to as they looked longingly west. Over the past few years, Sequoia, Matrix, Tiger Global Management and other VC and PE firms have been embroiled in a land grab for Chinese Internet startups. They’ve been met with equally fierce competition from Chinese investors, such as Tencent and Alibaba. China is seen as the “market to conquer” for mega-startups such as Uber or WhatsApp.
All this offshore investment activity has been driven by two factors: an increasingly crowded VC and PE market for American tech and the new stability and wealth of emerging economies like China and Brazil (another big focus of American VCs). The rise of China’s middle class led to a mature, stable business environment that encouraged entrepreneurs like Alibaba’s Jack Ma to found startups and reap their fortunes.
Africa is ‘poised to become the next great investment destination.’
— The World Bank
Over the next 20 years, Africa will walk down the same path. As more and more manufacturing and services companies look to increasingly stable African economies in which to offshore their operations, the African middle class will grow. And as the middle class grows and business environments become increasingly wealthy and stable, entrepreneurs will emerge in Africa’s nascent tech startup scene.
It’s important to note here the alluring temptation to over-homogenize Africa. The western world tends to think of Africa as a cohesive unit, while countries as close to each other as Egypt and Rwanda are in reality as diverse as Luxembourg is from Turkey. Some will welcome the tech scene; many will not.
But early signs are encouraging. Literacy and education rates are skyrocketing. Studies are coming out on entrepreneurship as the best driver of growth on the continent. The Rwandan government just announced a $100 million venture fund for local tech entrepreneurs. Djibouti is modernizing rapidly with an eye toward becoming East Africa’s Singapore. Mobile phones still have yet to reach their potential. And The World Bank says that Africa is “poised to become the next great investment destination.”
It’s tempting to patronize a bit and characterize these entrepreneurs as “African solutions for African problems,” seeing them only as incubators for social enterprise. Western ears tend to hear about these startups and call up pictures of mosquito nets, clean water, cheap lighting and malaria vaccines. Yet these companies will compete for the same markets to distribute the same products as western ones, with new tactics.
Which is not to say that there isn’t a looming, powerful opportunity to amass what C.K. Prahalad calls “the fortune at the bottom of the pyramid.” Local contexts will allow entrepreneurs to create new services that wouldn’t even make sense in western contexts, such as the much derided “Yo!” app which Marc Andreessen noted smugly — and correctly — is hugely relevant in Bangladesh.
Look no further than China for evidence of fierce local competition. Didi Kuaidi boasts 7 million rides daily in China to Uber’s 1 million, in the one market that Uber has repeatedly stressed is most important. Look to Alibaba, challenging Amazon’s monolithic supremacy in online purchases while also spinning out payment subsidiaries (Alipay and ANT Financial), streaming music (Xia Mi) and news (South China Morning Post). Or to Tencent’s WeChat, whose 650 million users challenge WhatsApp’s 900 million.
As support structures grow around entrepreneurs in emerging markets, they will gain access to the resources that have buoyed Silicon Valley for 30 years now, and will compete head-on with Silicon Valley startups. In the words of Andela, a Nigerian education startup backed by the American VC firm Spark Capital, “genius is evenly distributed; opportunity is not.”
This is just the beginning.
Inspiration for this article came from conversations with Daniel Zuckerman, Mo Elbibany and Robert Toews. This editorial and the opinions expressed within it are entirely my own, and are not affiliated with, nor belong to, my employer or other associated parties.

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