IT services companies are facing quite a few challenges in 2023. The situation has been changing dynamically with businesses facing obstacles which had not been anticipated at the beginning of 2023. Financial uncertainty, shortfalls in the field of new business options, continuing layoffs among teams as well as other issues are still a daily reality for many. But which of these issues could be considered the most crucial for the entire IT market?
Trading conditions for many companies in the IT services sector are constantly changing and remain challenging. Factors such as the development of AI technology, the resulting shortage of skilled professionals and economic headwinds are among the most serious issues that the sector has to manage. Based on the latest data, we have selected three of the most important hurdles that IT businesses are currently facing.
Rapid entry into an AI reality
One of the hottest topics in the first half of 2023 was undoubtedly artificial intelligence (AI). The market has seen an explosion of new ML and AI-based tools, with the number reaching up to 100 new solutions per week. Using them in business is certainly an opportunity of sorts, which in the future will reduce labor input, improve efficiency and unlock new opportunities for businesses. The interest as well as a belief in the use of AI in business is immense. The buzziest solution recently, ChatGPT, seems to be perceived as a real game changer- as many as 97% of respondents in a Forbes survey believed that ChatGPT would help their businesses.
However, this comes at a cost – AI is not all about benefits. To be able to effectively implement AI into the business, experienced specialists, who can harness and use it effectively, are required. This has, to a certain degree, changed the structure of the Talent Gap as the market against a backdrop of rising demand, lacks senior or mid-level specialists experienced in working with AI. As a consequence, 40% of respondents in the Forbes survey pointed to a concern regarding such reliance on AI. Moreover, as a relatively new solution, the use of AI is affected by a number of shortcomings and therefore generates risk. There have already been issues connected with data security or the general application of policies and guidelines.
Uncertainty about the economy is a massive setback for many businesses and a brake on growth for the vast majority of companies. Cutting costs and meticulously placing expenses in the most strategic places are challenges to be faced in light of a reality created by factors including rising inflation. According to the survey conducted by Talent Alpha, for more than 70% of SMEs, an economic recession was one of the biggest fear factors. Some saw it coming – in a PwC survey conducted in November 2022, 42% of senior executives said that cost-cutting would be a priority in 2023.
For IT services companies, cutting expenses across operations can be beneficial in the long term. In wanting to save time and resources, companies are more likely to opt for automation and solutions that can enable the process. This is especially the case in the face of massive layoffs that are reducing the number of staff on hand, as well as uncertainty in the number of business opportunities as many projects are being downgraded or even canceled. In times like this, delivering a quality product is more important than ever. As the Gartner forecast shows, spending on IT services may in fact grow by up to 5.5%, a potential 2.5% increase YoY.
The rapid shift in digitalization may be problematic for IT service companies around the world. This process dramatically picked up with the onset of the COVID-19 pandemic and has not slowed down since. Those who hesitated to enter this new reality are now experiencing a serious detrimental impact on their business. Companies that were unprepared to quickly shift their operations online have faced challenges in maintaining business continuity and providing services to their customers.
Digital Transformation, however, is not yet complete as it has shifted to an ongoing process with more and more new technologies and solutions entering the market. Taking risks and reaching for new solutions is becoming a requirement for businesses in order to keep up with changes and remain competitive.
While these three issues are considered crucial, it’s essential to recognize that all the challenges awaiting IT businesses have their significance and can impact organizations to varying degrees, based on their specific circumstances and priorities. The IT industry is continuously evolving, and staying vigilant to address these challenges remains a key responsibility for businesses and professionals alike.