Elena Marinova, President of Musala Soft, predicts a transformative 2024 in the IT sector, emphasizing the power of efficiency and the pivotal role of Artificial Intelligence. In an exclusive interview for Forbes Bulgaria she delves into the dynamics of IT sector and global trends shaping the industry landscape.
Artificial intelligence has its own kingdom. The Bulgarian IT sector has a chance for growth before reaching the bottom of the economic cycle.
The major trends of 2024 apply to the IT sector as well. On a macro level, the USA seems to have avoided recession. Europe remains on the edge, and we can expect various macro surprises, with contradictory mini-cycles on a micro level. Overall, mid-term forecasts are positive but with elements of conservatism.
The global economy has gone through over a decade of cheap money and abundant investments, a series of crises around COVID, and inflation. Now, led by the USA, we are moving away from rapid unicorn growth and entering the ‘boredom’ of single-digit growth, efficiency, and stability. Uncertainty lingers – whether real or chronically embedded. It will take time for investments to become more aggressive, especially in startups. The M&A market also needs to balance the expectations of sellers and buyers. ‘Big business,’ driven by long-term interests, will more confidently increase investments, and in 2024, it and its ecosystem will be the carriers of healthy growth. Colossal investments in infrastructure such as electric and optical networks, battery factories, alternative energy sources, especially in Europe, and related businesses, innovations, and technologies, are already visible.
This entire boring picture could suddenly change though due to global trade wars, asynchronous mini-cycles, inflation falling below a healthy 3%, active bank intervention with a significant impact on business, or geopolitics. For example, the end of the wars in Ukraine and Gaza would be a positive economic stimulus but exert downward pressure on prices in the IT sector.
Every rule has exceptions, and everything written so far does not apply to artificial intelligence in 2024. When it comes to AI, lessons learned from Lehman Brothers onward are forgotten; no one remembers the burst of blockchain and crypto bubbles. The new Savior is Artificial Intelligence. Just a year ago, there was no catalyst for economic growth comparable to the magnitude of the Industrial Revolution, China, or the Internet on the horizon. ChatGPT provided humanity with the first mass interface to AI and marked the beginning of a new era. Whether we are in love with the coming bright future or afraid that AI will destroy us, we must admit at least two things: first, no one still knows exactly what AI is, and second, AI exists, and whatever its impact, it will undoubtedly be significant, so we cannot ignore it. This is also demonstrated by the figures: AI is a top priority for 83% of businesses (Gartner), but only 35% of people worldwide believe in how they implement AI (Accenture). 98% of global business leaders believe that AI models will play an important role in their organizations over the next 5 years (Accenture). They will spend nearly $16 billion on generative AI solutions by 2023 and $143 billion by 2027 (International Data Corp.), with the CAGR of spending on Generative AI being 13 times higher than other IT expenditures for 2023-2027 (IDC).
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Here are some of the main trends in AI:
What is artificial intelligence (AI): AI instructs machines to think and learn using data in various forms such as text, images, numbers, etc. Similar to human learning through experience, AI analyzes data and establishes connections, enabling it to make decisions or predictions.
Responsible AI aims to prevent intentional or unintentional harm to society, focusing on ethics and transparency in AI usage. Clear responsibilities are defined for programmers, companies, and all stakeholders, ensuring that AI is developed and used with good intentions. Examples include the Microsoft Responsible AI Standard, Google AI DeepMind Health, and organizations like the AI Alliance, led by IBM and Meta (with Bulgarian participation from INSAIT), which is becoming a balancer between the positions of OpenAI and Microsoft.
Multimodal learning trains AI to understand and process information from various data sources—text, images, videos, sound, etc. Publicly accessible models include OpenAI GPT-3.5 and GPT-4, Leonardo, CLIP, DALL-E, etc. Amazon’s virtual assistant Alexa can answer questions, play music, control smart devices, and even sing a song in your voice—all through voice or text commands. Google’s AI assistant can reproduce the original melody after you hum that tune.
AI Augmented apps combine AI and Augmented Reality (AR). AR enables digital experiences in the real world, while AI trains machines to learn and perform tasks requiring human intelligence. An accessible example is Google Lens, which can scan barcodes or simply “see” an object in the real world, recognize it, and show similar items, compare prices, or provide sources. IKEA places its virtual furniture in your home together with the real ones. Microsoft Mesh is on its way to making a breakthrough in hybrid work, providing shared virtual space with “full-body” avatars. This raises the topic of the workplace in the metaverse, where naturally Meta shows keen interest too.
Enhanced AI Regulations address the use of data, including personal information, in AI. The balance between convenience and security is challenging. Different countries are introducing various legislations. In Europe, the “Artificial Intelligence Act” (AIA) considers potential risks; in India, the framework is sector-based; Washington’s Automated Decision Systems (ADS) Law requires businesses using automated decision-making systems to explain how they work to users; Australia similarly demands transparency in using personal information for automated decision-making.
Augmented Workforce is the hybrid workforce of the future—human and AI collaboratively creating higher productivity, security, efficiency, and effectiveness. It is no surprise, that AI carries the characteristics of any other massive change—fear of the new, disturbances in the status quo, job losses, and the creation of fundamentally different ones. The faster organizations and people build new skills together with AI, the more successful they will be. The result will be a higher standard of living, less mundane work, and more fun. Concerns that AI would be blocked by lawyers due to risks were shattered. A parallel can be drawn with COVID-19 vaccines—never before has a vaccine been introduced so quickly, massively, and effectively until a powerful motivator appeared. The same is happening with AI.
The dynamics in AI are such that while I write these lines, trends may be reshuffling. The main message is: that we are witnesses and participants in a massive change. AI will not replace humans but will work alongside them, and according to analysts, it will create 133 million new jobs by 2030. Whether we have already reached the inflection point where automation has transitioned from being a “bad word” to a “savior” is still a question with varying answers depending on the perspective.
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Certainly, AI is not the only technological trend that will shape the world in 2024 and beyond, but it is prominently featured by all analysts, including in Gartner’s top 10 trends. Here’s a brief overview of what they are focusing on:
Democratized Generative AI: GenAI will be democratized through pre-trained models, cloud computing, and open-source, providing mass access. Gartner predicts that by 2026, over 80% of companies will use GenAI, compared to under 5% in early 2023.
AI Trust, Risk, and Security Management: A model created to proactively guard against the negative effects of AI democratization and associated risks, preserving the maximum positive impact.
AI-Augmented Development: An example of the augmented workforce, is where programmers use tools like Copilot to generate code collaboratively, allowing them to focus on more strategic tasks. The question remains whether they are ready or require additional training. An analysis can also be done with the help of AI.
Intelligent Applications: A trend that may make entire businesses obsolete but will provide an individualized experience dynamically adapting to user needs. Imagine applications created specifically for you, doing exactly what you want with minimal instructions at a cost lower than a standard product.
Augmented-Connected Workforce: According to Gartner, it’s a top priority based on the opinions of 26% of global executives who consider talent shortages a risk to their companies.
Continuous Threat Exposure Management (CTEM): A systemic approach for the continuous assessment of digital and physical assets of organizations to ensure protection. Gartner estimates that organizations applying this approach will achieve over 65% reduction in breaches by 2026.
Machine Customers or ‘Custobots’: Non-human economic entities that can autonomously negotiate and purchase goods and services against payment. Gartner predicts that by 2028, there will be 15 billion connected products with the potential to act as consumers, marking the beginning of a new paradigm and economy.
Sustainable Technology or Environmental, Social, and Governance (ESG): Aiming to ensure long-term ecological balance and human rights, ESG is already sustainably integrated into the strategies of almost all organizations.
Platform Engineering: A discipline for creating and managing self-service layers in internal development platforms, aiming to optimize productivity, and user experience, and accelerate the delivery of business value.
Industry Cloud Platforms (ICP): An evolution of cloud platforms towards industry-specific solutions, capable of further customization for specific organizations. Gartner predicts that by 2027, over 70% of companies will use ICP, compared to under 15% in 2023.
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What about Bulgaria
Due to the export-oriented nature of the IT sector (around 90%), trends are typically felt relatively quickly, albeit with some delay. Traditionally, the wave originates from the USA, moves towards major economies in Europe, and only then reaches Bulgaria. For instance, employment in the USA and India was affected at the end of 2022 and the beginning of 2023, and in Western Europe in 2023. In Bulgaria, despite significantly reduced demand compared to previous years and the creation of only a few new companies, over 4000 new jobs were created in 2023. The growth remained in the double digits, albeit at low values, and the increase in salaries (around 8%) continued. Only in the second half of 2023, especially in the last quarter, did a real sobering begin.
What will happen in 2024? Some Bulgaria-specific factors include an increase in the maximum social security threshold during times of uncertainty, potentially leading to more conservative behavior. We might also see a more widespread sharing of the burden with employees, which was more of an exception in the IT sector. Changes in the policies of major employers – significant staff reductions or expansions, policy changes such as mandatory return to the office, etc., have the potential to reformat the ecosystem and create a new balance.
Not unique to Bulgaria, startups and businesses serving them, as well as Europe as geography, are likely to face risks and lower profits in general. The 20% growth rate that we were used to could come from the “trio” – “big business”, the USA, and AI – in 2024. If this happens, the Bulgarian IT business could reach around 5 billion euros in revenue, surpassing 5% of the GDP and entering a growth phase before reaching the bottom of the economic cycle.
For the Bulgarian long-term positive positioning contribute significant initiatives like INSAIT, created in 2022 (https://insait.ai/), and the upcoming 1st IOAI – International AI Olympiad in 2024 (https://ioai-official.org/).
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Sources: Accenture, AI Alliance, Blockchain Council, Gartner, IDC (International Data Corp.), JobTiger, KKCG Group, Meta, Musala Soft, BASCOM, and CBN – Panoff, Stoytcheff & Co (for all Bulgaria-related data).
Read the article in Forbes Bulgaria HERE.