Four trends focusing on sustainability are expected to take hold next year within the IT services industry that are predicted to spell success for those that adapt quickly, new research claims.
The trends, according to analyst firm Technology Business Research (TBR), will see a refinement of talent management approaches, decarbonisation and the widespread adoption of blockchain technology and 5G solutions next year.
The firm’s senior analyst, Elitsa Bakalova, claimed that the trends focus on the theme of sustainability — in hiring practices, climate change and emerging technologies.
“Even with a rush of emerging technologies and responses to the pandemic at the forefront of IT services [providers’] strategies and client success stories, the fundamentals of IT services remain rooted in people — in recruiting, training and deploying the right talent to solve IT-related business problems and staff enterprise IT needs,” she said.
“The changes TBR expects in 2022, including new competitors in the war for talent, new opportunities around decarbonisation and accelerated adoption of emerging technologies, will not substantially alter IT services [providers'] business models.
“Differentiation among the [providers], in offerings, capabilities and financial performances, will come more through execution than strategy, at least in the near term. [Providers] more adept at pivoting to new revenue streams and more patient with pressured margins will see greater success beyond 2022, provided they are able to adequately navigate talent challenges in the near term,” she added.
The first trend, essentially boiling down to human resources (HR) initiatives, will see IT services providers refining their approach to talent, including attraction, retention and promotion programs in the year ahead.
Bakalova said this comes out of a necessity of a post-pandemic world, following the need to retain employees experiencing emotional distress and burnout from 2021 lockdowns.
These approaches may include, but are not limited to, universities and apprenticeship programs, as well as expanding its employee acquisition reach outside of its regular geographic location.
There will also be a need to combat competitors and large cloud hyperscalers, like Amazon Web Services (AWS), Google and Microsoft, with more attractive employment packages.
Regardless, the importance of talent programs among IT services providers is expected to drop off by 2023, with margin improvement pushed into the spotlight instead.
Decarbonisation strategies are also expected to pick up steam past empty promises, with 2022 expected to bring clarity to sustainability policies and in fact offers “massive opportunity” for IT services providers.
“IT services [providers] will assist clients in assessing, measuring and reporting decarbonisation efforts, transparently and over time, setting track records useful to clients’ investors, partners and employees,” Bakalova said.
“In TBR’s view, sustainability, specifically decarbonisation, will be a substantial new revenue stream for those IT services [providers] with clearly defined offerings in this space, specific measures that track progress and well-branded and promoted decarbonisation commitments of their own that they can leverage as a use case with customers.”
Next year is also predicted to prop up emerging technology, with the adoption of blockchain and 5G anticipated to lead towards targeting financial services and manufacturing industries, respectively.
“In the IT services space, TBR sees the late 2021 accelerations around DeFi [decentralised finance] and government-backed digital currencies as providing a substantial lift to IT services [providers'] blockchain initiatives,” Bakalova said.
“In addition, the slow rollout of 5G, which is becoming more powerful and less expensive, sets up IT services [providers] with opportunities in manufacturing broadly and IoT [internet of things]-enhanced environments specifically.
“Even with myriad complications and roadblocks — such as regulations in DeFi and interconnectedness across IoT and 5G — TBR sees these two emerging technologies as on the cusp of wider adoption, fuelled by use cases that resonate with banks, retailers and manufacturers, already key clients for the largest IT services [providers].
“Partnerships between IT services [providers] and technology providers will be a key lever for increasing value of solutions and expansion of portfolio and client reach,” she added.
Largely, IT budgets are forecast to grow at their fastest rate in 10 years with worldwide IT spending projected to total US$4.5 trillion in 2025, fellow research firm Gartner claimed.
Indeed, the firm predicted all IT spending segments -- from data centre systems to communications services -- are forecast to grow next year, with enterprise software anticipated to have the highest growth at 11.5 per cent.
Meanwhile, in the mid-term, more than half of of all ICT investments by organisations, at 55 per cent, are anticipated to be used for digital transformation projects by 2024, according to analyst firm IDC.
It claimed direct ICT investments by organisations around the world are expected to increase at a compound annual growth rate (CAGR) of 16.5 per cent from 2022 to 2024 — up from 2021-2023’s 15.4 per cent.