IT & ITES News

After a roller coaster 2022 of strong growth & layoffs, what 2023 holds for IT industry?


The IT sector has experienced a roller coaster ride in 2022. Although the technology market started the year with strong growth, it also appears to be decelerating as the year comes to a close. This sector has been impacted by the possibility of a severe recession, and the fear of a slowdown in the economy is only acting as a catalyst. Declining margins, a sharp plunge in stock prices, mass layoffs, and capital becoming more expensive owing to interest rate hikes are some of the crises the IT sector is currently facing.

On one side, analysts are predicting a further slowdown, industry leaders are anticipating a positive outlook. Despite these crises, it is projected that there will be a very high demand for IT services in 2023 as businesses advance their digital business initiatives in response to the upheaval in the economy. According to Gartner, global IT spending is expected to reach $4.6 trillion in 2023, up 5.1% from the previous year. Considering all possibilities, the measures are being taken by the government as well as businesses with cautious optimism.

2023: The year of repair and restoration

Tech companies have finally caught up with rapid hiring, which was especially noticeable during the pandemic, when technology drove nearly all synchronous tasks. Many tech giants, including Twitter, Cisco, Microsoft, and many others, announced mass layoffs as the IT sector began to show signs of sluggishness.

“As 2022 comes to a close, the IT sector in the upcoming year will be dependent on a variety of factors, such as economic conditions, tech developments, and changes in business demand. While it is difficult to predict the future, things are likely to get better, especially pertaining to job security. In a bid to negate modern-day challenges, both employees and employers must stay flexible and be prepared to adapt to changing market scenarios,” Vipin Vindal, CEO, Quarks Technosoft.

What government should do to boost the IT sector
The government is reasonably aware of the importance of the IT sector to the 21st-century knowledge economy that is driven by technology. Given the situation, the government needs to develop a plan of action to slow the crisis’ progression. “To promote the growth of new IT-related technologies and industries, the government could make R&D investments. Additional assistance for infrastructure development can be provided in addition to the current support since it will help the sector’s expansion. Furthermore, the government could work to promote India as a desirable location for IT investment, which could aid in attracting new businesses and capital to the industry,” Vipin Vindal said.

The sector has also witnessed several layoffs by IT companies. As per some experts, the major amount of layoffs has already happened in many companies, the number of layoffs in the industry is likely to come down in 2023. The government has urged tech companies to make layoffs a “soft landing” while giving people enough time to adjust and look for other jobs.

“Although the government cannot completely prevent major layoffs, it can take steps to address workers’ concerns and protect their interests. The government can also ensure easy access to funds for capital requirements and loan return policies for small and medium-sized IT firms. These steps will assist businesses in developing long-term strategies, overcoming immediate market challenges, and making preparations for the impending recession,” (Mr. Bhaskar Ganguly, Director, Marketing and Sales, Mass Software Solutions said.

Policy Changes expected in 2023

In the past, the Government of India (GoI) has undertaken a number of initiatives to encourage the development of the IT and ITeS (information technology and information technology-enabled services) sectors in the nation. To address this ongoing crisis, however, some adjustments to previously formulated policies are urgently required. To keep India at the forefront of IT services globally, the government must actively support newer initiatives and encourage the introduction of cutting-edge research and technology.

“To support the domestic software product ecosystem and further the key goals of the National Policy on Software Products (NPSP), more initiatives must be launched. Furthermore, the new data bill, which is currently undergoing public review and consultation, is expected to ensure market parity and drastically reduce compliance costs.

The Emerging Technologies Division of MeitY is responsible for fostering and promoting the utilization of cutting-edge technologies in the country. The Emerging Technologies Division supports work for policy/strategy papers in the emerging areas like AI, AR/VR, IOT, Blockchain, Robotics, Computer Vision, Drones, etc,” Bhaskar Ganguly said.

Expectations from the Union Budget 2023:

Many significant reforms are anticipated in the Union Budget 2023 to support the expansion of the IT sector. “First and foremost, more startup employees should be able to defer paying taxes on their employee stock option plans, and IT companies should have a set deadline for completing advance price agreements. More policies and incentives for IT startups developing cutting-edge technologies are also anticipated from Finance Minister Nirmala Sitharaman, which would promote the ease of doing business in the nation. Given that the government has already backed India’s economic digitalization, giving it top priority will open the door for more flexible and resilient businesses” Ganguly said.

IT outlook in 2023:
The technology sector may experience future challenges related to a funding freeze, rising costs, and a higher attrition rate, but there is doubt that things will start to look up in 2023. The tech sector will undergo significant change in 2023 as a result of new technologies, hiring strategies, and governmental reforms, and the potential of the sector will be tested. As a result, firms may decide to focus more effort on resolving local issues while focusing on global events. In 2023, there will undoubtedly be significant issues to address; however, how these issues will affect the IT sector may not be as clear.



Source link