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The technology industry has seen a lot of ups and downs throughout the last three years, especially after the end of the pandemic. However, through the boom of technology created and engaged with during the pandemic, the tech industry is looking at a continuing rise of activity; but, is that truly what will happen?
A main way that people and companies grow in this industry is through digital competitiveness. Digital competitiveness is the "ability to adopt and explore digital technologies to create economic transformation within business, government, and across al societal sectors," - and it is an essential pillar to sustaining profitability within the tech industry.
One country that has struggled with maintaining digital competitiveness is Japan, who has a robust economy but scores low for their digital competitiveness. Some barriers to digitization Japan has faced include: a high context culture with a risk-averse mindset, senior leaders focused on company longevity rather than productivity, limited exposure of some industries to global competitors, a gridlock effect between the private sector and government waiting for digital endorsement and, most importantly, a deficit of more than 500,000 software-related jobs. Japan needs to dedicate itself entirely to digitization in the next decade. Current GDP growth and productivity rate trajectories indicate that economies like Germany and India will surpass Japan after 2030 without such adjustment. Given Japan’s great potential, this decline in competitiveness would weaken the country’s advantages.
On the other hand, surprisingly, Vietnam is expected to increase its growth rate within the tech industry. The country’s digital economy is set to have an annual growth rate of 8.9% between 2022 and 2026, which is an incredibly fast pace. It is estimated that Vietnam will see explosive growth in connectivity and device penetration, areas in which it leads the index, and rapid development in digital payments and entertainment. According to analysts, the country’s young population, accommodating government policies, and increasing foreign funds and investors will boost growth.
Besides the expected growth and traditional ways of moving up in the industry, this sector is also predicted to deal with issues regarding the supply chain, the workforce, and the innovation of products and services throughout 2023. The global economy has been unstable for some time now, so companies within the sector are trying to formulate a plan to trim costs and allocate their funds properly to maintain profitability. In tandem, these companies also want to innovate their products to sustain competitiveness in the tech world. The supply chain crisis has posed a problem to all industries worldwide and will hopefully improve with time. Countries and companies in the tech industry must implement innovation within their supply chain practices to get ahead of the crisis. In the next couple of years, the tech industry could look completely different than it does now. And we are seeing this change right now in different sectors of the industry.
Harvard business review predicts that 2023 will be a year of a "more sober year in tech," specifically citing the 90% drop in NFTs, and seeing the failures of recent crypto stocks and the metaverse. On top of that, we see the political uncertainty in countries around tech created and imported, such as the TikTok bans around the world. We also see the fall of employment in the tech industry, with mass layoffs happening throughout the world as the Covid-19 boom slowly fades away.
So what should we do to prepare for these changes? Tech companies must be aware of global uncertainties they may encounter if they want to be resilient in the sector. These risks include geopolitical tensions, supply chain uncertainties, ongoing semiconductor concerns, raw material shortages, and the enactment of new legislation and trade restrictions. United States IT companies specifically face a significant risk in the current market context due to the reliability and efficient supply of parts and components, as roughly 80% of digital elements are produced in Asia - this could be indicative of problems to come for other countries as well.
Finally, a change in sourcing could lead to better outcomes. Tech executives should look into other nations for product manufacturing and sourcing in light of the supply chain risks posed by China’s Covid-19 concerns and ongoing trade tensions. Although it might not be possible to move product sourcing away from China completely, the companies that control most of the technology market are likely to look into other Southeast Asian nations and perhaps nearshoring for sourcing components and assembling their goods.
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