Looking back at 2023, various factors and events come to mind that encapsulate the year: challenges such as economic slowdowns, soft recessions and flat GDP, rising interest rates, and inflation, which, in the tech industry would reflect focusing on controlling costs in areas such as cloud. Geopolitical tensions also surged, sparking new conflicts across global regions, while the relentless impacts of climate change continued to fuel natural disasters.
However, amidst these difficulties, there were also positive strides. COP28’s landmark agreement marked a pivotal shift away from fossil fuels, signaling a collective commitment to combatting climate change. Additionally, the WHO declaration of the end of the COVID-19 global emergency unblocked key trade and economic areas. Scientific and technological advancements were abundant, with the standout being the explosive rise of Generative AI, profoundly influencing investment plans, not just in the tech industry, but permeating other sectors, governments, and institutions. We are entering the AI-everywhere chapter in the Digital Business era.
IDC is not in the business of looking at the past, but rather analyzing how past and ongoing events shape the future digital landscapes. Keeping in mind the main highlights of last year, let’s take a look at the key macro events that are going to shape digital agendas in 2024:
- From AI Ambitions to Actions: If 2023 has signaled the beginning of the AI everywhere chapter, 2024 is expected to be its consecration, or is it? The transition from AI aspirations to practical implementation is hindered by many factors: critical infrastructure and skills shortages, rising implementation costs, and rapidly changing infrastructure and data strategies; yet businesses are eager to progress.
- The IT Industry AI Pivot: Tech providers are shifting R&D, staffing, and CAPEX investments to AI/automation. This creates a fascinating challenge for IT companies, where possessing the solution allows them to dictate prices, creating a competitive race between cloud, SaaS, major consulting firms, and key infrastructure players in determining the direction of the industry. It will be interesting to see how the 2023 investments will come to fruition in 2024, also in terms of new use cases, applications, and innovations; and, how Technology providers will react to the initial adoption challenges and show the potential of business value to end-users.
- The Elections’ Year: EU elections, general elections in the UK and the US, and more than 60 other general elections worldwide are poised to shape the future guidance of global equilibria. These will have repercussions on the digital landscape: a shift in political powers in key regions might cause the readjustment or the halt of ongoing national plans and new priorities in countries’ digital agenda – green initiatives, international relations, investments, and regulations.
- Inflation Evolution: the normalization of inflation rates towards the 2% target is likely to have to wait some more time. Despite some positive signs of deflation in the second half of 2023, prices rose again towards the end of the year. As a result, it seems we reached the peak of the interest rate raise, but it’s still uncertain whether we’ll see some cuts in H1 2024 or later on in the year. Ongoing disruptions in supply chains pose an increasing threat to the oil and energy sectors, and in many regions, IT product and service supply chain issues will also continue to affect costs and access to innovations.
- Digital Regulations: In 2024, significant developments in IT regulations are anticipated, particularly on AI, with Europe taking the lead through the EU AI Act. This legislation will impact global players, although its effects may not be fully evident until later. The year will be crucial for gauging the timeline, initial consequences, and the enforcement approach of Member States. Other global players are engaged in the race to regulate AI, including the US with its executive order on AI and various legislative proposals in Congress, China and its draft rules on Gen AI, and Brazil’s somewhat EU-inspired rules. Other digital regulations are also going to be key this year, including the EU’s Digital Operational Resilience Act and the CSRD, data privacy regulations in various US states from California to Texas, and more.
- Sustainability for Real: after the historic COP28’s agreement on fossil fuels, 2024 marks a pivotal year for sustainability reforms, also in the face of the increasingly frequent natural disasters – directly linked to climate change – that have been affecting the whole world in the last 12 months. Europe is poised to step up, as stringent regulations will be enforced in the region; in the US, the incentive-based approach with the Inflation Reduction Act (IRA) is finally expected to have a greater impact in 2024 and the SEC rules on climate disclosure; China’s strategic emphasis on its green industry to gain competitive advantage in global markets; some APAC countries have stringent climate and ESG regulations, like Australia and South Korea. Digital transformation and technologies will have a key role there, leveraging IT solutions to carry out green initiatives, but also by making the IT industry itself more sustainable and greener. VC funding for climate tech and sustainability innovations slowed down in 2023, but the newly established fund by COP28 will set precedence for further acceleration in this space. 2024 will also be the year when countries and organizations start linking AI investment decisions to the positive and negative implications of meeting sustainability goals.
- Ecosystem Evolution Scenario: China’s supply and economic recovery plays a pivotal role in shaping global dynamics. The continued growth and resilience of China’s supply chains have far-reaching implications for the global economy, as the country remains a key player in various industries. As China attempts to recover from economic challenges and adapts its ecosystem, the implications can reshape global trade and IT market dynamics. The rise of digital sovereignty and protectionism, in general, is already redefining global trade and technology markets. Countries are focused on securing their technology supply chains, resulting in heightened competition for critical materials and a push for technological self-reliance. This trend, driven by concerns over national security and economic interests, could fragment the global tech supply chain and reshape the balance of power in emerging industries.
- Continued Geopolitical Tensions: The ongoing conflicts in strategic global regions – the invasion of Ukraine and in the Middle East – continue to affect the markets in terms of investments, supply chain disruptions, and volatile oil prices. As we have been increasingly learning in the past couple of years, the IT market is not immune to these shocks: critical data centers are affected, talent is displaced or relocated, and key components procurement flows are disrupted. The supply chain deserves a spotlight, specifically related to disruptions in key worldwide shipping channels that are affected by ongoing conflicts. As things stand, most of the most critical conflicts happening worldwide are unlikely to be resolved in the short term, and their continuation can amplify their unsettling outcomes.
It’s essential to monitor ongoing macroeconomic events and be ready to assess and adjust strategic plans in the face of unexpected shocks. We follow all of this and more in our MacroTech Trends and Strategies research. Get in touch to discover how IDC can support you in this continuously changing environment.
