For almost 30 years, we lived in the VUCA world. But things have changed, and the old model no longer fully describes what is happening. Now our reality is BANI world.
Various factors have been identified as potential threats to organizational resilience, such as climate change, the rise of COVID-19, and record inflation. All of them will have an impact on the way organizations operate, leading to stress, disorientation, and disruption of work processes. Some organizations are closing down, others are restructuring, while the rest is trying to raise efficiency — optimization has become a key phenomenon in recent periods.
Businesses are trying to find explanations and solutions in an attempt to hold onto their positions.
What is the peculiarity of the BANI world, and why does it cause wariness?
- there are no guarantees about anything in investments;
- there may not be the "right" choice of assets; performance is not guaranteed;
- systemic influences may render all actions useless;
- there may be no obvious link between cause and effect;
- the result may take a very long time, and there may not be any result at all;
- the amount of information is more than an investor can digest, and finding the essence is harder than it seems.
Trends that will shape the future of IT
|IT Outsourcing||AI and ML Technologies||Cybersecurity||Cloud computing||Blockchain|
|Revenue in the IT outsourcing segment is projected to reach $156.20 billion in 2023. ||The AI market was valued at around $134.55 billion in 2022. It is expected to grow at a compound annual growth rate (CAGR) of over 38% from 2023 to 2030. ||By 2023, about 65% of the world's population will have their personal data covered by privacy regulations, which is up from 10% in 2020.||The global public cloud spending will reach a total of $591.8 billion in 2023 from $490.3 billion in 2022.||The global blockchain market should reach $39.7 billion by 2025.|
Market trends in 2023
IT budgets are expected to grow 13% year over year in 2023, with an average increase of 5% at the company level.
Worldwide IT spending is expected to reach over $4.5 trillion in 2023. The demand for technology will continue to rise due to the increasing number of digital initiatives and the need for more effective business processes.
The USA as a dominant player
The USA will continue to lead the IT industry in 2023 due to its strong technology infrastructure, a large pool of tech talent, and an innovation ecosystem. Major tech companies, such as Google, Apple, and Microsoft, are headquartered in the USA and drive a significant portion of innovation in the industry. By being located in the States, IT companies will have access to the latest technologies and talent to be well-positioned to compete in the global market.
Southeast Asia's growth
Southeast Asia will see continued growth in the IT industry in 2023 due to its large, young population and increasing digitization. This region is home to a growing number of tech startups and has a rapidly expanding pool of tech talent. By leveraging this pool of talent and the region's growing economy, IT companies will be able to tap into new markets and drive growth.
The winds of change: Outsourcing is sweeping away the old ways
Revenue in the IT outsourcing segment is projected to reach $156.20 billion in 2023. The annual revenue growth rate (CAGR 2023-2027) is expected to be 7.49%, bringing the market to $208.50 billion by 2027.
A recent Grand View Research report estimated the global outsourcing market at $245.9 billion in 2021 and projected a compound annual growth rate (CAGR) of 9.1% from 2022 to 2030.
Business leaders believe remote teams help improve productivity and accelerate time to market because of their diverse expertise and well-designed management processes. Next year will be a fruitful year for prospective partnerships, and the IT outsourcing market will remain a suitable field for investment.
Outsourcing software development to startups is expected to grow by 70% between 2022 and 2023. At the same time, midsize companies and enterprises need software development support to improve ROI and customer service in a tight timeframe. Due to the popularity of outsourcing, its market is constantly growing and will continue to grow in the future.
Outsourcing software development can be a two-way street for both the organizations and professionals it serves. According to chief technology officers, the most beneficial factors of outsourcing are the scalability of the team, efficient utilization of time, and higher productivity:
A Deloitte study found that the most common reasons for outsourcing programmers include the following:
- cost savings;
- paying more attention to the core business;
- solving productivity problems;
- quality improvement;
- access to a talent pool;
- other business needs.
- IT outsourcing service providers are implementing detailed data protection policies and acting in compliance with the CCPA, GDPR and other international and local regulations. Thus, they are now allies for businesses seeking to create highly secure ecosystems.
- Customers want to move forward with flexible collaboration strategies that save investment and avoid downtime. They are more likely to pay for their work using a time and material payment method instead of a fixed price.
- Outsourced teams are here to bring tech and non-tech values: the ability to provide a single vendor for all of the company's needs. It means that future IT outsourcing service models may involve transforming the operations of these providers to become consultants, analysts, developers, and marketers in one box for their clients.
- Next year will be fruitful for promising partnerships, and the IT outsourcing market will remain a suitable area for investors.
Humans stay behind, AI takes a step forward
IT companies will increasingly integrate AI and ML technologies into their systems and processes to improve decision-making, automate repetitive tasks, and drive innovation. This will involve using natural language processing (NLP), computer vision, and predictive analytics. By leveraging these technologies, IT companies will be able to gain a competitive advantage and better meet the needs of their customers.
As the number of applications that are capable of using AI increases, people will start to realize the capabilities of this technology in their daily lives. Some of these include applications that allow people to create complex reports and visualize data with just a click of the mouse.
The availability of low-code and no-code platforms has made it easier for people to develop and test artificial intelligence-powered software. This makes it possible for anyone to create and implement applications that are simple to use.
Top niches where Low Code will be in demand in 2023:
- Cloud technology.
- Remote work. Recent data suggests that by the end of 2023, the percentage of employees working from home should increase to 48%.
- Web 3.0 development.
- Artificial Intelligence
The democratization of AI will help organizations overcome the skills gap that has hindered the development of AI. This issue is caused by the lack of qualified individuals capable of handling the various tasks involved in using AI.
Salesforce mentioned that sales automation increases productivity by 14.5% and helps reduce marketing costs by 12.2%.needs of their customers.
Companies in Europe will also invest in upskilling their existing workforce to ensure that they are well-equipped to work with these new technologies.
As companies start to make their models more interpretable, the trust levels in the ecosystem will increase.
About 8 billion voice assistants will be in use in 2023, according to a study from Juniper Research.
The global machine learning (ML) market should grow to $209.91 billion by 2029 at a compound annual growth rate of 38.8% over the forecast period 2022-2029.
Engineers are constantly trying to improve their understanding of machines by teaching them to collect knowledge instead of just looking for patterns. Foundation models are very useful in various tasks, such as translating and coding, customer support, and content generation. Examples of well-known foundation models include GPT-3 and MidJourney.
The increasing number of trust levels in ML models being made by companies will help pave the way for an era of augmented reasoning and decision-making.
All the above will allow machines and humans to work seamlessly together.
Cybersecurity: where to look
The increasing importance of ransomware attacks and data privacy laws has driven the focus of risk and security leaders. They are also increasingly looking into board-level audits and cyber-physical systems.
According to the Global Outlook report, business and cyber leaders believe global geopolitical instability is moderately or very likely to lead to a catastrophic cyber event in the next two years. And there are already tremendous changes taking place to respond to today's risks.
What risks is everyone talking about? Here is the list of the main ones:
- Increase in AI-powered cyberattacks
Cybercriminals will use AI to automate tasks such as scanning for vulnerabilities and launching phishing attacks, making their attacks more efficient and effective. They will also use AI to evade detection by security systems, making it harder for organizations to protect themselves.
- The emergence of new ransomware variants
Ransomware attackers will use new techniques to infiltrate systems, such as exploiting zero-day vulnerabilities and using sophisticated social engineering tactics. They will also use new encryption methods that are more difficult to break, making it harder for organizations to recover their data.
- Cloud security concerns
As more companies store sensitive data in the cloud, there will be a greater risk of breaches and unauthorized access to that data. To address these concerns, organizations will need to implement strong security controls and closely monitor their cloud environment for potential threats.
- The Internet of Things (IoT) security challenges
With the growing number of IoT devices in use, there will be an increased risk of attacks on these devices, such as hijacking them for use in a botnet or using them to steal sensitive data. To address these risks, organizations will need to ensure that their IoT devices are properly secured, with secure software updates, strong passwords, and other security measures in place.
- The growing importance of 5G security
As 5G networks become more widespread, they will become a new attack vector for cybercriminals. Attackers may exploit vulnerabilities in 5G infrastructure to gain unauthorized access to sensitive data or to launch large-scale attacks such as DDoS attacks. To mitigate these risks, companies must ensure that their 5G networks are properly secured and that they have the necessary security controls in place to protect against potential threats.
Cybersecurity will continue to be a critical issue for organizations as cybercriminals use increasingly advanced tactics to infiltrate systems and steal sensitive data.
- IT companies will need to stay ahead of the curve by developing and implementing new security technologies and techniques to counter these threats.
- AI and machine learning will play a major role in the threat landscape and cybersecurity defenses, as cybercriminals use AI to automate their attacks and organizations use AI to detect and respond to threats in real-time.
- The cloud, IoT, and 5G will all be major areas of focus for IT companies, as they represent new attack vectors for cybercriminals and new security challenges for organizations.
- IT companies will need to work closely with their clients to educate them on the latest threats and to help them implement effective security measures to protect against those threats.
Experts agree that there are certain points worth paying attention to in 2023:
In conclusion, IT companies will need to be proactive and agile in their approach to cybersecurity, staying up-to-date on the latest threats and technologies and working closely with their clients to ensure their systems and data are secure.
Cloud computing: no time for blue-sky thinking
The increasing number of people and organizations using public cloud services is driving the demand for these services.
Over the past few years, the growth of the public cloud services market has been impressive. Amazon Web Services, Google Cloud Platform, and Microsoft Azure have all seen tremendous increases in their usage and adoption.
According to a survey conducted by Statista, the public cloud services market grew from $214 billion in 2019 to $415 billion last year. The total market will grow by 26.7% in 2023 and reach a volume of $525.6 billion.
As organizations move their data and workloads to the cloud, they are also transitioning to software-as-a-service (SaaS) offerings, such as Salesforce and Office 365. According to a study conducted by IDC, the SaaS platform will be the largest segment of the public cloud computing market during the next five years.
The second-largest segment of the public cloud computing market is the infrastructure-as-a-service (IaaS), while the platform-as-a-service (PaaS) is also expected to grow quickly.
Top trends of cloud computing in 2023
Many organizations are using a combination of public and private cloud solutions to meet their unique needs and optimize their workloads.
- Keep an eye on serverless computing as a way to build and run applications and services. Consider choosing it over traditional infrastructure management to save time and reduce costs.
- Look for multi-cloud strategies. Many organizations are using multiple cloud service providers to avoid vendor lock-in and improve resilience.
- Adopt a hybrid cloud approach. IT companies should embrace a hybrid cloud strategy that leverages both public and private cloud solutions to meet the unique needs of their customers.
- Focus on security. With more sensitive data moving to the cloud, IT companies should prioritize security and ensure that their cloud solutions meet industry-standard security certifications and regulations.
- Embrace AI and ML. IT companies should invest in artificial intelligence and machine learning to automate repetitive tasks, analyze large data sets, and provide customers with valuable insights.
- IT companies should consider using serverless computing to build and run applications and services, as it can save time and reduce costs compared to traditional infrastructure management.
- Partner with multiple cloud service providers. IT companies should develop partnerships with multiple cloud service providers to provide customers with greater choice and avoid vendor lock-in.
Based on these trends, we can outline the direction for future strategies in the next few years:
Blockchain: The stakes go up
The blockchain market is expected to grow rapidly in the coming years, driven by increased demand for decentralized solutions, security, and transparency in various industries such as finance, supply chain management, and healthcare.
The global blockchain technology services market will grow from around $3.28 billion to almost $20 billion by 2027, with a CAGR of 45.5%.
The increasing number of private and public entities investing in blockchain technology is a major factor driving the growth of the global cryptocurrency services market. These organizations are expected to use it to develop new business models. Some of these include cross-border payments, internet banking, and trade finance.
The Asia-Pacific region was the largest contributor to the blockchain services industry in 2022. It was followed by North America in the global market in 2022. The other regions included in this study are Western Europe, South Africa, and Eastern Europe.
Besides that, it's important to mention the elephant in the room. Regulation is set to play a major role in shaping the future of blockchain technology in 2023 and beyond. The increasing popularity and widespread use of blockchain have led to a growing need for government oversight and regulations to ensure the technology is used in a secure and responsible manner.
Some of the key issues that government regulators are looking to address include consumer protection, data privacy, and financial stability. For example, regulators may require blockchain-based financial services to comply with anti-money laundering (AML) and know-your-customer (KYC) regulations to prevent illegal activities.
In addition, regulators seek to promote innovation and encourage the growth of blockchain technology. For instance, some governments are offering tax incentives or setting up blockchain-friendly regulatory frameworks to attract blockchain companies and entrepreneurs to their jurisdiction.
It is expected that regulation will play a major role in determining the future of blockchain technology and its widespread adoption.
Companies working in the blockchain space must be mindful of regulatory developments and comply with relevant regulations to be successful.
The year 2023 provides a huge field of work for IT companies. But to get down to it, it is important to ensure your sustainability to be ready for new dynamics in this new reality.
What organizational resilience stands for in 2023?
In the context of BANI World for IT companies, resilience means having systems, processes, and plans in place to minimize the impact of adverse events on business operations and ensure the ability to recover quickly.
Many experts agree that certain areas will help strengthen business:
- Increased focus on technology-driven solutions
Due to the increasing number of organizations globally relying on technology for their operations, they are expected to adopt technology-driven strategies to enhance their resilience and ensure business continuity in the event of disruptions. This can be done through the use of automation, cloud computing, and artificial intelligence.
- Emphasis on risk management
As organizations look to improve their operations, they are likely to place greater importance on risk management. This can be done by regularly conducting assessments, investing in early warning systems, and developing contingency plans.
- Greater emphasis on mental health and well-being
Regarding the importance of employee well-being, as well as their role in organizational resilience, organizations are expected to place a greater emphasis on promoting mental health, especially during times when uncertainty and stress are prevalent.
- Sustainability and green initiatives
To minimize their environmental impact and improve their sustainability to reduce their carbon footprint, organizations are expected to incorporate green initiatives into their planning processes. This can include adopting renewable energy sources, reducing waste, and developing more environmentally friendly business practices.
- Remote work and hybrid models
With the rise of remote work due to the COVID-19 pandemic, organizations will continue to embrace hybrid models of work, with employees working from home and the office. This will require organizations to have robust technology and communication systems in place to ensure business continuity.
An IT company with strong organizational resilience will have robust infrastructure, regularly tested disaster recovery plans, and effective communication processes to ensure that the business can continue to operate even in the face of disruptions. This can help the company maintain customer trust, protect its reputation, and continue generating revenue during difficult times.
Mad Devs forecasts
The previous years were not easy for any business due to the events that took place in the world, one after another.
Oleg Puzanov, our CSO, shared his main observations, which tools helped our company to endure.
- We moved away from the concept that we are a development-only company. We are talking about the diversification of resources. In addition to software development, we have good expertise, which clients need. By sharing our knowledge, as consultants, for example, we responded to the market's demands. In this way, we strengthened the sustainability of our company.
- Modern geopolitical conditions and the pandemic have slowly brought us to the point where the HR department has been transformed into a semblance of HR Care. People are our greatest resource. And it makes a huge difference in how you treat them within the company. It increases the loyalty and motivation of the staff. And this is an important tool for business development in any field.
- Our mission is to automate. It gives enormous power to our risk management to withstand any unexpected events. We automate everything not only for clients but the whole routine in Mad Devs processes. From planning and budgets to task execution. We use an internal product called Enji to do this. It allows us to respond quickly to problems. But beyond that, it's also a way to delegate responsibility to employees because they can track all the metrics themselves. Less bureaucracy, more freedom of information.
- Fixing all the processes is the key to stability. We have a large database of documentation, which details all the processes employees and customers may encounter. These are both managerial documents and engineering handbooks, which lead to observing basic development processes, communication, and so on. In a crisis, people tend to overreact to any deviations. And when there's a clear understanding, it gives us as a company and clients peace of mind.
What works must remain in the future. But beyond that, Mad Devs have identified several other trends that will strengthen the organizational resilience in the BANI world.
Hard skills have been replaced by soft skills. In a constantly changing world, awareness, sincerity, empathy, intuitive adaptive thinking, and tolerance of difference and uncertainty come into play. This will be the opportunity for efficiency to exist. Therefore, the main investment should be in the development of people, in particular employees. The more mature and flexible people in companies, the higher the chance for business to survive.
The planning horizon is changing. Classical goal-setting for a year no longer works. It is important to learn to set goals at the probability level, taking into account the growth of technology and the volume of information that increases every month. That's what tracking trends with AI, which can handle data in a short amount of time, are for. Here again, we come back to the importance of nurturing a workforce that is capable of implementing new trends and tools.
Stay strong. Value the people. Go with the trends. Good luck in 2023 🤟