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By 2026, 40% of service providers’ revenues will come from digital business models

IDC predicts that by 2026, the need to increase resiliency will drive large enterprises to create new digital business models and digital products/services, which will account for 40% of service providers’ revenues. This is just one of IDC’s predictions unveiled in its latest report Worldwide Services 2023 Predictions – APeJ Implications.

Economic expectations from 2023 in the Asia/Pacific excluding Japan (APeJ) region remain moderately pessimistic (but more positive than the global average). Although IT spending plans remained stable throughout 2022 as enterprises continued to invest in digital readiness, going forward, IT projects will have a renewed focus. IT projects will continue contributing to organizations’ Digital Business agenda, pushing enterprises to engage with competent IT services vendors for closely tracked digital transformational projects.

“The high degree of volatility and uncertainty in the business environment over the last few years has dramatically changed enterprise expectations of their IT Service Providers. Enterprises will increasingly look to engage services firms with the agility to anticipate and overcome environmental changes and associated operational challenges, rather than purely on technical prowess,” says Pushkaraksh Shanbhag, Associate Research Director, Asia/Pacific Services, IDC Asia/Pacific.

IDC’s research also indicates that the APeJ region demonstrates a highly progressive approach to ESG and see it as key to risk mitigation and business viability. The next few years will see a strong sense of corporate purpose driving ESG investments, and enterprises will increasingly turn to IT Services vendors for ESG Business Services as they make an effort to make sustainability an integral part of their corporate/brand identity.

IDC’s top ten IT and Business Services predictions identify the most important trends and related areas of opportunity in APeJ:

#1: Acceleration of cybersecurity measures: By 2025, 75% of enterprises will seek help with cybersecurity measures to counter vulnerabilities created by investment in emerging technologies and to exploit the full digital business value chain.

#2: DX becomes digital business: By 2026, the need to increase resiliency will drive large enterprises to create new digital business models and digital products/services, which will account for 40% of service providers’ revenues.

#3: Crisis management’s rising importance: By 2024, 40% of organizations will have a business continuity crisis management strategy that includes continuous intelligence and enables an agile reaction to future economic shocks and disruptions.

#4: Attrition/skills gaps will spawn M&A: By 2025, rising demand for digital talent, coupled with high attrition rates, will force enterprises to increase outsourcing and pay their service providers a 10% premium on all contracts.

#5: Ecosystem control plane services: By 2027, 70% of organizations with advanced digital ecosystem participation have internal teams that use digital control planes to operate as value integrators to the business.

#6: Skills gaps leading to technology vendor/advisory partnerships: By 2025, 50% of large enterprises will use alliances between tech vendors and advisory firms to develop strategies and utilize technologies to reduce the skills gap for existing and future workforces.

#7: Off-/near-/right-shoring evolves given inflation: By 2024, 70% of enterprises will recalibrate their IT delivery model mix, adopting a sourcing model with a higher degree of automation and rightshoring to reduce costs and leverage experienced skills.

#8: Hybrid cloud disrupts industry: By 2026, managed hybrid cloud services spending will eclipse $10 billion driven by firms shifting their sourcing strategies increasingly to public cloud providers as their primary providers.

#9: ESG adds managed services: By 2025, 40% of ESG business services projects will include managed services to address large enterprises’ ESG data and analytics demands, given the lack of internal expertise to meet these needs.

#10: Joint creation of IP: By 2027, 30% of IT services providers will collaborate with enterprises and technology vendors to develop innovative industry-specific niche products/IP that will be jointly commercialized globally.

CT Bureau

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