Another year, another survey, another chance to gain insights from those in the trenches. As we all start looking ahead toward 2023, we asked 3,678 tech leaders in our community what they think is the current state of the tech industry and where they predict we’re headed. Today we share some of the highlights.
Yes, we’ve seen the grim news headlines over the last month or two. But, don’t worry, this isn’t going to be a downer. Despite the fact that some of our questions were admittedly glass-half-empty, our network, overall, feels very glass-half-full. Read on to learn from the observations and forecasts that our respondents made.
Overall, our respondents expect some segments of the tech industry to continue to grow at the same pace while some of the “less dynamic segments may be under pressure,” as one aerospace chief business officer put it.
As purse strings tighten in the face of inflation, there doesn’t seem to be any sign of disinterest in investing in technology — it still stands as a way to save money, increase efficiency, and drive digital transformation — but several respondents mentioned how the veil is lifted. You need to be building a business on a great, proven product, not just a well-funded good idea.
“A high number of startups have been focused on a race of extreme growth looking for the next valuation / exit without building good foundations, and now we're feeling the consequences,” edtech investor Antón Adanero observed. “Due to the bonanza experienced in the tech industry in the previous years — which I think was more like a bubble than real and sustainable growth — I think startups face a tough scenario in which they'll have to adjust budgets, personnel expenses, etc. to minimize cash burn.”
It’s proof over promises in 2023. Tech startups and scale-ups need to focus on gathering proof of value through case studies and testimonials. Then, you need to translate that value for different markets and verticals. With 71% of our survey respondents increasing investment in marketing and lead gen, this needs to be reflected in and then localized across all messaging.
As one managing director put it, “With the increase in online events and solicitations it is...more difficult to stand out from the crowd above the noise to capture prospects' attention.” It’s a rush to stay relevant.
And as several respondents noted, it’s not just about attracting new customers, but “reducing churn in a time of great competition.”
We asked respondents what challenges they foresaw to their company’s growth in the next six months and, frankly, their responses surprised us. Almost no mention of inflation or recession. The referred challenges were much more grounded in the tradition of scale-ups — simply put, everyone is looking for ways to attract and retain business and talent.
By far, the number one challenge mentioned was scaling B2B business over the next two quarters. As you can see in the results above, 50% and 64% are targeting new verticals and markets, respectively. According to Antón, that can only be achieved through product-market fit in a number of key industries, internationally. Another business officer said their team retaining focus and structure around sales processes is key to sustained long-term growth.
Confirmation bias is at play, so it wasn’t surprising that half our network is planning to expand its presence in Europe next year, while 93% saw international expansion as key to scaling their B2B business. The global market will only continue to grow in 2023.
It’s not just about attracting international leads and customers, but staff too. Despite rumors that the tech talent bubble is near bursting, only about one in five respondents said they may freeze hiring in these uncertain times. In fact, the Great Resignation seems to continue with about just as many respondents said that they think hiring top talent will continue to be a struggle in 2023, especially in customer-facing roles, as well as technical specializations like cybersecurity.
As promised, the vast majority of our respondents are looking forward to success in the next year. Only about 14% predicted an economic downturn in the tech industry while another 21% was unsure about it. In fact, Ukrainian CEO Denys Khromov predicted a 15 to 20% growth in the tech industry in this quarter alone.
More than two-thirds believe the tech industry’s growth will continue at the same rapid pace. But you could call this cautious optimism as there was also speculation that the tech bubble is going to pop or at least this continued growth won’t be as aggressive across the whole industry.
One respondent remarked that it’s totally sector dependent: “The HR tech sector has done very well this year and we expect great results for Q4. When your software helps companies to be more efficient and cut costs we have seen an increase in sales and upselling of services to existing customers.”
Likewise, while assistant sales manager Mansi Sharma predicted a slight economic downturn, she said that VVDN Technologies engineering and manufacturing solutions would actually benefit from that, saying any downturn “will create more opportunities for VVDN specifically to acquire new customers.”
Not surprisingly, the sectors that respondents suggested are most set up for success overwhelmingly overlap with Gartner’s top strategic technology trends for 2022. These include areas that are still nascent in terms of technology but that have gone past the hype cycle to prove real value, like big data and deep learning, hyper automation, cybersecurity and anything that helps organizations become cloud native.
As founder Paul Solski responded to our survey, “Digital transformation, AI, IoT [Internet of Things] are still in their early stages and will continue to drive growth because of their high value/ROI to businesses. Security issues are only increasing and dealing with them will demand more spending on innovations and security services.”
Respondents also took the time to talk about partnerships at home and abroad. Particularly, several mentioned expanding relationships with ecosystem partners, which aligns with their internationalization goals. This ties into more than a third of respondents planning to increase outsourcing of services in order to support growth.
Giovanni Peracin, founder of the URBNX platform, says 2023 is all about finding the “right partners and right procedures, [to] anticipate the needs of our clients and users.”
Giovanni looks optimistically toward 2023 because, he says, while the “tech industry is moving fast, it is relevant for the other industries, so I think it is the engine for future growth in any other industries.”
Just to sum up the perspectives of the more than three thousand tech leaders we interviewed last month on where they see the tech industry headed in Q4 of 2022 and beyond!