Techno-Decade’s Challenges & Opportunities – Part I
It’s a new age, where shipping lines operate truck and rail infrastructure, a software company empowers creativity across industries, and global giants relocate their entire manufacturing to avoid geopolitical roadblocks
This is a brave new era — the Techno-Decade — where change is both a challenge and an opportunity. As we look at how technology has radicalised the work we do and the way we do it, it would be prudent to remember that it has always done so. It’s a new age, with new challenges where the old tools and strategies no longer work. Could you ever imagine a shipping line operating a truck and rail infrastructure to stay in business, a software company committed to empowering creativity across industries, transform its business to help its customers from being rendered obsolete; and global giants relocating their entire manufacturing to avoid geopolitical roadblocks?
A Once-in-a-Century Disruption
Sometimes we can put a precise date on when the world changed. March 11, 2020, the World Health Organization declared Covid19 to be a global pandemic, triggering some form of lockdown or the other across the world. In the last 100 years, an event of this magnitude, impacting almost every country has never been witnessed. As we hit the pause button, almost instantaneously we also hit restart. It took us about a fortnight for companies to begin an accelerated journey to transform their business – digital transformation was on steroids.
An Unprecedented Response
We figured out exciting ways to deliver services, even physical goods, to customers; we learnt how to work remotely; we held meetings; monitored projects; and kept the wheels of business and commerce functioning in an entirely new way. As governments across the planet pumped in trillions of dollars in stimulus funds, the cost of money became near zero. The United States Congress unleashed roughly $5 trillion into the economy, aiding households, small businesses, restaurants, airlines, hospitals, and other institutions affected by the pandemic. The Government of India announced a mega economic stimulus package totalling Rs 20 lakh crore, which is equivalent to $275 billion. This package was one of the largest in Asia after Japan.
The IMF supported 86 countries with over $110 billion in emergency financing since the beginning of the pandemic, with lending to Sub-Saharan Africa being 13 times more than the annual average over the previous decade. From April 2020 to March 2021, the World Bank Group committed over $200 billion in financial support to public and private sector clients to combat the impacts of the pandemic.
Digital Transformation on Steroids
Money became inexpensive; organizations saved on infrastructure costs as remote work meant less spending on utility, office space, travel, and other operational expenses. Overall, businesses prospered after they withstood the initial impact of the pandemic. It accelerated economic trends, such as the shift towards e-commerce and online retailing, with substantial increases observed in sectors like non-store retail and personal services.
The Reserve Bank of India reported a significant increase in contactless transactions during the pandemic, with such payments growing by over 300% in 2020 compared to the previous year. A survey by McKinsey revealed that 85% of Indian executives accelerated the digitization of their customer and supply chain interactions during the pandemic. RedSeer Consulting reported that, India’s e-commerce sector witnessed significant growth during the pandemic, with a 45% increase in gross merchandise value (GMV) in 2020 compared to the previous year. Amidst the wail of ambulance sirens, the cash registers rang with the music of new commerce.
The Mood Music Changes
Little did we reckon that the mood music will change in just 24 months. Governments began to yank back their pandemic assistance as Covid19 abated. The US Federal Reserve has raised interest rates 11 times in the last year and a half (since March 2022) (Bankrate). This represents a significant increase to combat inflation. As of, March 9, 2024, the federal funds rate is in the target range of 5.25% to 5.5%, which is the highest level since early 2001 (Bankrate). Money became expensive.
Once the lockdowns were lifted, people rushed back to the shopping malls, and unleashed their pent-up yearning for physical contact. Remote education that had boomed during the pandemic, suddenly found itself facing bankruptcy. Once prized unicorns, that flourished during the remote-everything days, saw their valuation fall off the cliff by several hundred percentages. In one case from $22 billion to less than $2billion today. An analysis of India’s unicorns (startups valued over $1 billion) in FY22 (ending March 2022), by Inc42’s Unicorn tracker, revealed a cumulative loss of $5.9 billion for 55 loss-making companies.
The wildfire of post-covid impacts were raging across the world. In 2023 nearly 260,000 technology employees lost their jobs, including India. In the first three months of 2024, almost 50,000 jobs have been lost. Countless roles have been erased as organizations no longer need those. India’s youth unemployment in ages between 20 and 24 is at 44.49% per CMIE.
—
In the forthcoming episode, we discuss how de-globalization and tech-nationalism are affecting world trade, and how innovating is seen as a means to overcome regulations as manufacturers are shifting closer to customers to better address the exponential velocity of change.
[To be continued]