In a recent article, Jass Sarai, PwC Leader of Industry for TMT, looked at the UK tech industry’s resilient response to a turbulent year, and paid tribute to the innovation, leadership and breadth showcased by the UK tech awards. I now look forward to the prospects for UK tech businesses in 2021 and beyond.
As tech companies gear up for the coming year, they’re facing a marketplace that’s radically changed from 12 months ago, with lockdowns having triggered accelerated adoption in the way people use technology. The effect has been to bring the digital future forward with a shift in business and consumer demands and behaviours. This has resulted in a greater adoption of cloud enabled technology, video calls, online shopping, the demand for tech enabled education and healthcare, and home entertainment - with tech businesses at the heart of these shifts.
I believe many of these new habits will continue and become even more prevalent after the coronavirus (COVID-19) pandemic: PwC’s Global Entertainment & Media Outlook 2020-2024 finds that global spending on over-the-top (OTT) video - such as Netlix and Disney+ - surged by 26% in 2020, and will reach US$86.8bn in 2024, double its size in 2019. Mobile usage is also set to keep rising. In 2019, for the first time, more data was consumed on smartphones than through fixed broadband; by 2024 the amount of mobile data consumed will be 50% greater than broadband data. Gaming has also experienced a surge in growth and the increase in Amazon revenues (and profits) is a stark indicator of the acceleration in e-commerce.
These shifts in individuals’ habits are clearly driven by the widespread move towards home-working and virtual workforces - including across borders. Our Global Mobility Pulse Survey of people leaders in June 2020 found that 31% of TMT companies were already set up for international remote working, and a further 33% were evaluating it. In fact, many businesses have found their workforces are far more able to work remotely than they previously thought. The survey also revealed that 84% of employees feel able to perform their role just as effectively when working remotely as in the office.
Against this background of profound change, the UK tech industry has much to consider as it looks forward. Despite its proven resilience to economic shocks, the sector may encounter some short and long-term impacts from COVID-19. These include changing customer demands, supply chain disruption, financial pressure as cash-poor companies face liquidity challenges, and increased price sensitivity among customers. In light of these potential risks, tech firms should target specific customer segments and verticals, and rapidly review their business and market strategies across areas like pricing, customer engagement, supply chain, workforce, tax and trade, and financial reporting. It’s vital that firms understand the risks in these areas and also recognise the opportunities arising.
Overall, the message for 2021 is clear. While society may be becoming more dependent on technology, tech businesses need to focus more than ever on building genuine, human connections with their customers, employees and society. Trust is quickly becoming a prerequisite for all companies, and for tech companies in particular – and will become ever more important in sustaining growth and winning the war for talent.
Consumer demand for ‘ethical’ companies, who deliver on their promise to be socially and environmentally minded, will see an increased benefit and Tech companies are no different.
Watch out for more information on these issues and trends in our series of deep-dive insight articles. We know from experience that growth in the tech sector is tied to transformation, innovation and remaining relevant – and that to maximise growth, businesses need to be agile with their strategy to explore and identify the right opportunities. At PwC, we work with companies across the UK tech community to help them tackle complex challenges and bring innovative ideas to fruition. We look forward to continuing to do this in 2021 and beyond.
If you’d like to know more about how we can support your business’s growth, please contact me.