What Should Businesses Expect in 2023?
2023 is going to be complicated. Probably, that doesn’t come as a surprise. Many are still dealing with the aftermath of COVID-19 while already facing a number of new challenges. The inflation rates are breaking records, investors find the business environment highly unfavorable, and crypto winter will last for at least 3-4 years.
Generally, analysts tend to believe that the crisis and the recession following it will not reach the 2008 level. Nevertheless, the economy has already contracted in the year’s first half, and the inflation is expected to last through 2023. So how should tech businesses navigate in this new climate? Let’s take a look at this situation in more detail.
Layoffs in Tech Firms Are Reshaping the Job Market Again
Crises like this always result in layoffs, and this process has already started. While Twitter firing two-thirds of the company and thousands of outside contractors can be referred to the new management, many other tech companies proceed with downsizing:
- Meta laid off 13% of its staff, which is over 11,000 people. It also extended the hiring freeze until March and reduced budgets and some employee perks.
- Amazon plans to lay off 10,000 employees in corporate and technology jobs, comprising around 3% of its workforce.
- Salesforce plans to lay off 2,500 across the company, earlier announcing the hiring freeze through January 2023.
- Google also prepares to lay off 10,000 people (6% of the company’s workforce), explaining this decision by performance issues.
These are some of the few top-of-mind examples. Companies often explain such policies by overhiring and not being ready for the realities they’ve found themselves in. As downsizing continues, more candidates will become open to new opportunities. In other words, there won’t be enough job offers for all, and we’ll see changes in average salary rates.
Many skilled experts will become available and offered lower salaries than a couple of months earlier. It, in turn, will complicate things for beginners and entry-level specialists, who aren’t the first choice for companies in hiring freezes and with budget cuts.
Raising Startups Funding Is Getting Complicated
North American startup funding dropped by 25%, and European – by 38% compared to the year-ago Q2, Crunchbase reports. Global funding fell 23% compared to Q1, marking the most significant drop in a decade. The funding downturn will result in the startup scene shrinking further. We’re going to see a reduction in new project launches – at least for a while.
Digital Service Providers Are Facing a Crisis
“We’re witnessing an overabundance of digital services,” our CEO admits. “There are some apps and platforms with plenty of active users, and it’s easy for them to drive income. Meanwhile, they make the competition harder, if possible at all. Well, there’s no need to create another Uber alternative –it’s unlikely that such a product can bite off a large user share.”
Just think: how many new apps did you discover during 2022? How many digital services did you start using this year? Most likely, it would be a short list (and for some, it would be empty). So, what innovative solution can startup teams come up with? But more importantly: do they need to reinvent the wheel?
The basic people’s needs are already covered. And that means companies should start looking into opportunities in other industries that require more complex solutions.
The Dynamics of In-Demand Tech Is Changing
A slowdown in tech is likely, but it doesn’t mean software development will stop. A changing political, social, and business climate triggers a shift in the number of projects to be funded and industries that will be of the highest interest.
The world that has an app for everything – from tuning a guitar to receiving an e-recipe from your doctor – calls for more complex, mainly niche-specific solutions that are to address global challenges on different levels. We’re talking about defense & aerospace, healthcare, agriculture, and energy industries.
Defense and aerospace
The Russian invasion of Ukraine reminded the world that many things the western world considers a rule – inviolable borders, electricity and heating in homes, no nuclear threats from the leaders of foreign countries – are not something people can take for granted. A large-scale war can start on any territory, and technology plays a critical role, reshaping the understanding of warfare tactics and strategies.
Some game-changing technologies the Ukrainian army is actively using include, among others, UAVs, UUVs, and satellite services.
Unpiloted aerial vehicles
Both military and off-the-shelf commercial drones have been actively used since the first days of the invasion. For instance, drone operators on quad bikes stalled the 40-mile-long (64km) Russian convoy, playing a crucial role in protecting Kyiv from seizure. UAVs save many lives by keeping scouts behind enemy lines and aiding in destroying the enemy’s military infrastructure in the rear.
The Army of Drones project is one of the many initiatives backing up this sector. While state agencies and big volunteering foundations contract with reconnaissance and strike UAV manufacturers (Turkish Bayraktars, Ukrainian PD-2, Valkyrja, etc.), volunteers sustain the supply of DJI and similar devices.
Unmanned underwater vehicles
Ukrainian forces used underwater drones to push Russian ships away from Odesa, one of the main southern ports: they launched an attack on the key port city of Sevastopol in Crimea (annexed in 2014). It is an excellent example of how technology makes a difference. Even with evident dominance on the sea, there is a limit to what the Russian forces can do.
Satellite services
The connection between many units, reconnaissance and lethal drone operations is possible thanks to the Starlink connection. In addition, Ukrainians raised 600 mln UAH (around $16.4 mln) to purchase an ICEYE satellite with access to the database of the SAR-satellite constellation, which is now at the disposal of Ukrainian intelligence forces.
Heavy weapons
Along with the abovementioned, anti-tank missiles, artillery, air defense, radio-electronic warfare, and counter-UAV weapons will remain in high demand on the battlefield. A handful of advanced military technologies are being tested in intensive combat right now. Weapon manufacturers will experiment and modernize their creations and produce weaponry more actively in the upcoming months (or, probably, years).
Global trends
The Wall Street Journal reports that the biggest arms makers are already scaling up the production of rocket launchers, tanks, and ammunition to meet the sustained demand. Meanwhile, the US Army is in the middle of the modernization campaign. A list of countries worldwide started reviewing their strategies and resources to strengthen their security capacities. New defense partnerships and clusters are announced.
The unprovoked aggression of Russia set the stage for militarization that will clearly last for years. The tensions between the USA and China, Japan and North Korea are not making things easier. One thing we can be sure about is that military technologies and innovations will be in high demand and in the spotlight during the coming years.
Besides military
Let’s not forget about space exploration and air travel, though they don’t get much attention in this article. The primer seems to have limitless potential for studying and discoveries. The latter calls for more sustainable solutions and more reliable supply chains. So yes, there’s room for innovation and demand for new technologies that can address and solve existing problems.
Healthcare
Medical institutions worldwide started adopting patient records, telehealth, and online training platforms for personnel a while ago. So there is a chance that creating a new product for one of these areas has a high probability of meeting fierce competition. So what are the other perspectives?
The global endemic revealed weak spots and showed what needs improvement. Modernization of healthcare systems is a long-lasting process that will continue for some time. Also, the demand for analytical tools may remain high, as governments and healthcare providers want to know the probability of other seemingly unlikely scenarios and have algorithms to counter them.
Healthcare tech is also critical for the defense sector. Front-line medical care is of paramount importance. Lightweight and portable devices for controlling blood loss, clearing airways, and administering transfusions, wearables for health monitoring, transport and equipment for facilitating fast evacuation can save many lives, even with small advancements in these areas.
Another interesting aspect is prosthetic solutions. For example, researchers from the Massachusetts Institute of Technology and Brown University have devised a sophisticated way to monitor muscle movements. The researchers are planning to seek approval to test this new approach called magnetomicrometry on people with prosthetic limbs.
Finally, taking care of the professionals’ physical and mental health after they leave the service is essential. Data science has the potential to turn immense amounts of data about veterans into actionable intelligence to improve decision-making on many levels.
Agriculture
Everything related to food and agriculture – production, transportation, etc. – requires innovative solutions. Bayer names grain export blockades, fertilizer shortages, rising energy costs, extreme weather, and COVID aftermath as the main factors that problematize food security.
What solutions may become game-changing? Firstly, it is real-time monitoring and predictive analysis for a range of systems. Turning insights into early-warning systems will help farmers protect their harvests. Secondly, tracking and analyzing the food journey can help minimize food waste and reorganize the supply chain. There are enough calories to feed the entire population, but a significant share of food gets lost on its way from farm to fridge.
German startup Constellr is an example of companies that works in this direction. It aims to harness space-based water monitoring data to monitor Earth’s surface temperature for crop health monitoring, water neer management, and early response to stressing factors.
The University of Sydney mentions agricultural robotics as a means to assist farmers and improve their productivity. Small autonomous vehicles can be engaged in a number of effort-consuming tasks, such as weeding, spraying, seeding, and more. In this case, we are talking about securing both food production and smallholder farmers’ incomes.
The technologies that allow for the generation of staple foods, such as precision fermentation, can also be an answer to some serious challenges.
Alternative energy
Green energy tech is not new, but it seems that not enough attention was paid to this sector’s enhancement. It surprises many that the world could have faced an energy crisis THIS serious this soon. Ironically, companies kept investing in developing an ICE engine while also aiming to shift to green energy in the next decade.
Governments are now looking for ways to replace fossil fuels and protect consumers from high prices. For example, Germany is requesting help from Brussels to revive the solar panel industry, having lost its leading position after cutting subsidies and shifting to Russian fossils (which was a questionable decision in the first place).
Regarding wind power, solutions for cheap storage of excess energy are still somewhat experimental and require further improvement. Green hydrogen has become another subject of interest lately. But as with many solutions in this sector, companies are still looking into scaling its production and making it more cost-efficient.
We won’t go further in detail. Clearly, sources of alternative power will define the future of energy security. Any initiatives in this direction will help to drive progress. Startups working on technology from this sector should be in the spotlight of both government and private investors.
Automotive industry
The Economist mentions that global car sales are expected to rise by 1% next year, which will still be 19% lower than in 2019. Meanwhile, the increase in electric vehicle purchases is around 25%, making up around 20% of the new-car market.
EU approved the new law that bans the sale of new petrol and diesel cars from 2035. You can notice the steady shift towards eclectic vehicles in many countries, strongly supported by government donations and prices. For example, one of two major car-sharing services in Lithuania offers exclusively electric weapons. And by setting low prices for the ride per minute, it seems to take the lead so far.
New centricity
For the last few years, companies have emphasized the importance of technologically exquisite solutions and user experience – convenience, in particular. With inflation and crisis in full swing, we are heading towards a situation where people are more concerned about and focused on expenses. Saving costs will become a priority for many.
It is probably one aspect of life-centricity – a concept that keeps popping up in business conversations lately. Companies seem to have been moving from product-centric to customer-centric and, now, to life-centric. Simply put, instead of prioritizing user experiences, businesses should consider various external factors that influence decision-making, such as climate change, political situations, etc. Adding more than an average user’s sketch to the equation is essential.
How to use this in a short-term perspective? Businesses should consider how inflation, rising food prices, the energy crisis, and their local contests can change consumer habits. Probably, people will look for ways to cut costs on non-essentials and optimize their expenses. This take can help build a strategy for the next year or two, but further, other changes should be embedded in the scaling logic. Businesses will work with different audiences in five years – the same people but in different circumstances.
2023 and Beyond
2023 is going to be complicated. The world recovering after the global pandemic and the changes it brought is now facing other challenges caused by the full-scale war Russia started in Ukraine. It revealed weak spots in many industries and processes and set the development vector for the next few years.
Users have plenty of software products that assist with everyday needs, business software and management systems, site/app builders and SDK platforms. It is time to take digitalization to the next level and start working on more complex, sophisticated solutions.
Investors are likely to pay more attention to projects beyond everyday use – to fields that call for innovation and where competition isn’t that fierce. The focus is expected to be on technology that is to make a difference globally.
Businesses are again at the stage of discovery – new warfare tech, new healthcare devices, new supply chains, and so on. The domains mentioned in this article are facing more or less the same problems: safety (protection of civilians and infrastructure, food distribution, energy security) and sustainability in a long-term perspective.
So yes, it may be a difficult time, but also, we may be at the beginning of a new and crucial stage of the world’s development that will come with a wave of technological advancement.