Amid the chaos of the upcoming year, the tech industry emerges as a beacon of growth. Despite uncertainty, the technology and software sector are poised to aid others during a possible global recession. Explore their growth patterns and significance in this insightful piece
The talks of a global recession have been spurring up since mid of 2022 and more recently after a revised version of the global outlook report by the IMF was published. The report stated that while global inflation rates are forecasted to decline, so is the global growth rate. A slowdown in the global growth rate combined with high inflation, rise in unemployment and other worrying factors gives leeway to the likelihood of global recession occurring mid early or mid-2023.
So, how is the tech sector expected to deal with these global obstacles and issues? Same as everyone else, hang tight and hope for the best. Still, tech and software companies seem to have a positive outlook when compared to other industries in the upcoming year.
Tech Industry Stats
The global software products market grew from $1,141.43 billion in 2021 to $1,304.74 billion in 2022 with a compound annual growth rate (CAGR) of 14.3%. Furthermore, the software products market is expected to grow to $2,040.37 billion in 2026 with a CAGR of 11.8%. As for 2023, the growth rate for the IT services market is said to be 7.9%, with a value of around $1.3 trillion.
Nonetheless, this does not mean that there will be no backlash for tech companies during the global crisis of 2023. Some of the biggest tech giants of the world have announced hiring freezes and layoffs as the global economy enters uncertain times. This year over 121,000 employees from around 800 tech companies have been laid off.
The primary reasons for these large-scale layoffs center around high inflation, possibility of recession and excess number of employees hired during the Covid-19 pandemic. It’s quite simple, they bit off more than they could chew. Exploring and investing in other technologies like AI and the metaverse are also contributing factors to some layoffs. Companies are trying to be lean while also investing in technologies they think will prove to be more lucrative during economic turmoil.
Effects of Technology
The impact of technology and technological advancement is beneficial for almost all industries. Modern technology aids in manufacturing, supply chain, transportation, communication platforms and much more. Industry 4.0 is quickly becoming a reality for many nations. Industry 4.0 is signified by digitization, combining physical environments with virtual ones to increase industrial competitiveness and encourage economic growth. Streamlining and optimizing production processes with automation and digitization also help decrease costs significantly all while maintaining a steady flow of output.
Impacts of Technology in Globalization
The points mentioned above are all contributing factors when it comes to the effects and impacts of technology in globalization. As, at the end of the day, progressions and advancements in the right direction leads to a more connected and interlinked world. Globalization allows for shared technology, shared knowledge, increased flow of trade, more opportunities for growth, and the chance to spread your risks across a larger surface.
It allows for companies to look for more affordable alternatives for production, such as outsourcing. Software outsourcing is among one of the many services that is expected to see a rise in demand in the upcoming year. With services like outsourcing, companies can experience numerous benefits. You can explore a wide range of talents, compare and choose the most affordable rates, avoid recruitment and allocation costs and also cut back on training costs and time.
Wrapping Up
Technology will help businesses in the long run. It helps save time for a company which is a main asset in any business arena or industry. Automation, AI, machine learning, digitization, and etc can help simplify and optimize production and service-based processes which ultimately make businesses more compatible to this dynamic world.
“Investing in the right digital initiatives at the right cost can blunt the negative effects of economic pressures in the short term and build long-term competitive advantage,” said Gartner.
Thus, among all the chaos of the global economy, technology and software seems to be the one among some sectors that will have demand. While this will be variable depending on how situations progress, there is no doubt that the tech sector will grow in the upcoming year. The nature of this field allows it to sustain through hard times and as the world shifts further into globalization and digitization, technology and its implementation may be one of the best ways to stay afloat.
Add a Comment