90% of companies that participated in the latest Talent Alpha’s Tech Business Survey predicted that AI will have a positive impact on the growth of the IT sector and planned to utilize it in various fields of business. 83% of them believed that AI would help their own business grow, and more than half of recipients planned to utilize artificial intelligence to boost their productivity in the next 12 months. The survey was conducted with a group of about 100 managers from technology companies in different parts of the world – mainly CEE, but also Mexico and the United States.  

2023 brought many revelations and changes for businesses around the world and proved to be a particularly difficult year for the IT services sector. 2024 brings new hopes and concerns connected with one of the hottest technology topics – artificial intelligence. Some see it as a way to overcome the slowdown and understaffing. For others, AI is seen as a threat to their business and are afraid that many job roles can disappear from the market. But how does the growth of AI solutions affect IT companies now and in the future?    

Impact of artificial intelligence on IT business

Regardless of the differing opinions of the public about AI, it is already having an impact on the biggest players as well as the labor market. Currently, around 50% of the IT industry’s entire workforce is potentially exposed to generative AI, according to data presented by the Everest Group in Talent Alpha’s and Intelligent Leadership Hub’s Future of Work Report 2024. Everest Group also estimated that over 90% of leading service providers are leveraging AI in some form (model, third-party tool, software, etc.) across the talent value chain. According to Resume Builder’s report, 37% of business leaders said workers were laid off in 2023 because they were no longer needed due to their companies’ use of AI. And it may get worse in 2024 – as the report states, 44% said that there would be layoffs in 2024 resulting from AI efficiency.  But the turmoil over AI is not limited to layoffs, as it also involves the rethinking of various strategies, including hiring. For example, according to information shared by Business Insider, Klarna decided to pause new hires except for engineering roles, and gave AI an opportunity to do the job instead.   

To address these questions and outline the ways AI is utilized, we conducted an anonymous study among IT service companies from all over the world. The study’s findings may help IT companies to become aware of current trends and the ways of navigating the change ahead.   

State of play – AI in IT service business

Global situation of businesses in the last six months

Despite concern regarding negative ramifications, AI has the predisposition to become a support for many businesses that are facing a range of challenges. IT services businesses are facing more challenging trading conditions, even when compared to last year that was marked by war in Europe, an economic slowdown and rising inflation. Their impact is still significant with business growth levelling out and fewer companies experiencing development and new business opportunities.  

As many as 50% of respondents in Talent Alpha’s study indicated that they had not experienced growth in the previous six months, but remained stable, while 15% of all respondents experienced a setback in their respective businesses. However, compared to the beginning of 2023, the situation worsened with 32% of companies seeing no growth. At the same time, as many as 35% in the new survey experienced growth in business, down from 53% of surveyed companies at the beginning of 2023.  

When asked about the most significant factors affecting the decline in business performance, Talent Alpha survey respondents most often (43%) cited the fact that new opportunities were on a lower scale or were shorter in duration, which did not provide stability and led to uncertainty. While new projects did appear, a substantial number of them (37%) had excessively long processes.   

What was also significant was that 33% of respondents saw their projects either not extended or even closed down (16%), with up to 27% seeing projects downgraded. The troubling truth is that 29% of the businesses that saw a flattening or reduction in growth, are currently seeing no new business opportunities.   

Use of AI in IT service companies

AI is already influencing companies worldwide, according to data presented in the Future of Work Report 2024. Data provided by Randstad suggested that one third of employees already work with artificial intelligence solutions. Furthermore, data from Everest Group in the same report indicated that over 90% of leading service providers were leveraging AI. 

The majority of the companies that took part in Talent Alpha’s study, used AI to support marketing (54%) and sales (47%) areas in their companies, by utilizing AI in the creative sphere of business with, for example, written content (68%) or image generation (22%). For 37% of all respondents, AI was a way to boost creativity, using it to generate new ideas.  

Among those who use artificial intelligence to improve the efficiency of IT services performance, 35% used AI tools to generate code, with 31% testing their code with AI support. Among the interesting solutions, are Talent Analysis (22%) and the use of AI in customer contact (33%).  

The Future of Work AI-ed

Expectations for AI’s impact on the IT sector

Expectations regarding AI are high and positive with regard to the sector’s development. AI can appear as a solution to some of the issues concerning repetitive processes, replacing certain roles as well as streamlining tasks performed by employees to make them error-free and more efficient. A majority of respondents (51%), believed that AI would accelerate the growth of the entire IT sector. Although another 39% thought that the impact of artificial intelligence was going to be positive, it would only apply to some parts of the industry. Only 6% of respondents did not believe in the widely anticipated impact of AI on the IT sector. Finally, 4% were pessimistic about the consequences of AI’s implementation, predicting it may have a detrimental impact.  

Predictions for the impact which AI will have on the recipient’s company break down slightly differently – while still positive, they are no longer as optimistic. This time a majority (51%) was betting that AI would assist the company’s growth only in certain areas. 33% believed that AI’s impact would help them grow in the coming year. Only 4% of companies believed that AI would have a negative impact on their company. However, the number of companies which said AI would have no impact on their business doubled to 12%.  

AI in Business in 2024

During the next 12 months, companies will observe AI with more firms planning to utilize it in several business areas. Among the most frequently mentioned tasks to be supported by artificial intelligence, companies participating in the survey indicated that with the help of AI, they wanted to boost their efficiency – both internally (67%) and externally, focusing on improving their performance for their customers (59%). Companies also wanted to use AI in the product area – to improve current products (13%) and to create new products (16%).  

Regarding the tasks and areas of activity for which companies intended to use AI tools, these did not differ significantly from the current state of affairs. They are, however, expanding. As of now, they strongly focus on the creative side of the business – 36% (compared to 33% previously) intended to continue generating written content using AI tools, while there was an increasing desire to involve AI in the graphic area (33%). This shows that the trending direction of growth for the use of AI in 2024 will be marketing and sales (55% in both cases).   

Challenges for AI-ed business

The use of AI in business not only brings hope for increased productivity and improved quality of service but also generates real obstacles and concerns.    

The challenges pointed out by companies participating in the Talent Alpha survey come from many areas of the sector. The most common answers relate to crew, as a significant number of companies pointed out that a lack of qualified staff may be one of their biggest problems related to implementing AI (35%).   

Notably, given that AI remains a controversial topic, some feared resistance from both sides – employees and customers in particular (16% in both cases). A lack of budget to implement AI (31%) was another worry for many companies. 

With the boom of AI raging, not everyone feels ready for the revolution. 31% were concerned about the lack of proper processes associated with it but were also worried  about problems related to the security (27%). A dearth of suitable data (25%), hard decision-making process (18%), and legal issues (10%) were seen as other challenges facing companies in 2024.  

Despite the incredible potential of artificial intelligence, which can in fact streamline operations and take the performance of many businesses to the next level, a widespread positive sentiment toward this sentiment is yet to emerge. So why not get ahead of the curve and give it a try?  

If you’re wondering whether it’s worth implementing AI-based solutions in your business, explore the voices of experts. You can read more in the Future of Work Report 2024 – The World of Work AI-ed.

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Sources:

Business Today

Resume Builder

IBM  

Business Insider