Elena Marinova, President and Co-Founder of Musala Soft, for Forbes Bulgaria.
COVID-19 positive
In 2020 the IT industry started with an inertial growth followed by shock during Q2, a mobilisation in Q3 and ended the year with pre-holiday positive expectations for 2021.
Overall, the pandemic proved positive for the industry. Analysts differ in their predictions, but they share a common view that the speed of technological development is increasing. The COVID-19 pandemic resulted in an acceleration in digitalisation, the peak of which we are yet to see.
A universal bottleneck continues to be human capital: 50% of global organisations state that they find it extremely difficult to source the IT talent they need. An unprecedented increase in the demand for IT services has been accompanied by significant social pressure for accountability towards the consumer, society and the environment. In order to adequately address all of these demands in the long term, we have to allocate enough of our scarce post-pandemic resources towards education. It has seen some of the most fundamental transformations, the effects of which we will see over the next 10+ years.
IT Sector in Bulgaria – Numbers and Achievements
All of the above is valid globally. As export-oriented as the sector is in Bulgaria, global trends have a near-immediate impact.
The most interesting long-term potential to stimulate whole regions will be the crises’ effect on rural communities and small towns. These places have seen an influx of relocating IT specialists. I would bet on a modest, but sustainable trend based on the combination of the millennials mindset and the shift towards remote work which will remain long term for the majority of the IT industry.
According to research conducted by BASSCOM, the Bulgarian software association, the software industry grew by 10% during 2020 – this contrasts to a 5.5% drop in GDP in the country. Even during a time of crisis, net employment grew by 3 500 people. Average income continues to grow (4% in 2020) and is now three times larger than the national average. Similarly, each employee contributes three times more on average – 22 400 BGN annually – in taxes and insurance payments. In total this is 1.5bn BGN of expected income for the national budget in 2024 due to the projected additional 23 000 new high-paid jobs during the coming four years.
Global Trends 2021
The world is slowing its tempo, bringing back many of the physical boundaries we have happily forgotten. In contrast, the virtual world is growing at such a pace that some analysts are discussing a technological ‘reset of everything’ which will bring new levels of innovation and efficiency for corporations and will lead to a technological transformation for society.
Temporary things are forever
Despite the overall positive effect of the pandemic on the IT business, which engulfed the industry in one quarter, we cannot overlook the negatives which destroyed many companies and placed everyone in a new, unfamiliar situation in a matter of hours. Tech trends regrouped placing a focus, more than ever, on people centricity, giving them the necessary level of process digitalisation, allowing for normal operations. There is a new large technological focus on a maximum degree of location independence: for work, services and even production. This trend comes out of a revolutionary change in the physical work spaces and ecosystems around them.
The virus as a catalyst
The soft factor that hit hard corporate operations was the temporary mass implementation of working from home. Is has been quickly shifting to a permanent concept of work from everywhere.
The idea of remote work was largely foreign for the Bulgarian mentality and was subsequently absent from most all local companies. At the end of 2020 no more than 10-20% of IT staff in Bulgaria work from a physical office. A far larger percentage, however, show a desire to return to the office once the emergency situation has normalised.
Even in March for the most forward looking was clear that the IT industry would never see the same pre-pandemic return to the office. This is only the beginning. According to IDC, by 2023, 75% of companies will implement a hybrid approach to work by design and not by circumstances. The IT sector is simply the first to go hybrid, helping others to make the change.
Factors influencing a move towards hybrid work
The factors cover a number of fronts: an operational capability of the company to work under the new conditions; the choice and implementation of a new suite of instruments – from online audio and video conferencing to ‘bossware’ (software which tracks everything which employees do on the job). Also necessary are a change in infrastructure for mobile working is, legal framework including amendments to national and international legislations. It also includes individual and business communication changes especially when these have had a large personal dimension. Last but not least, all HR functions have to be revisited. After all this is ready to go, it has to be synchronised with the organisational, operational, infrastructure and legal readiness of clients to work completely remotely and distributed with their providers.
Regardless of where the equilibrium between virtual and physical falls, companies will have to be ready to operate in an ‘anywhere’ mode: physical spaces will have to be digitally enhanced and flexible networks of professionals will play and ever-larger role. Gartner estimate that, by 2025, 75% of services required by customers will be fulfilled by freelancers.
Technological trends 2021
BASE
Hybrid distributed hyper-cloud. Everything which is not in the cloud will go in the cloud. Simply said: the cloud is like using someone else’s computer. The hybrid cloud is like someone else’s computer working with your computer together with a third computer somewhere plus another computer somewhere, your phone, sensors with edge-computing capabilities and wireless and networking technology ensuring all of the above works smoothly. The whole configuration is an amalgamation of distributed public and private clouds. The distributed infrastructure leverages the benefits of the public cloud combined with physical proximity to ensure low-latency and geographic locality for legal compliance.
Privacy and security. By 2023, 30% of the IT organisations are expected to move from a policy of BYOD (Bring Your Own Device) to BYOE (Bring Your Own Enchantment). This will be done to accommodate augmented humans into the workplace – people not only with laptops, tablets, phones and wearables but all manner of sensors and enhancements. To the question of ‘will they chip us?’ the answer is ‘we are willingly chipping ourselves because it is more convenient’. This does however create a nightmare for those responsible for security within an organisation. It leads to the processing, analysis and encryption of sensitive data in a secure environment bound within a cybersecurity mesh formed around a person or thing rather than a physical perimeter.
Enablers
These are areas of rapid development which are at the earlier stages of their growth curve where aspects of them will fade while new dimensions will emerge.
Hyperautomation. Everything which can be automated, will be automated. On the road to automation, processes within organisations will be cleaned up and technologies and systems will be optimised. According to Gartner, by 2025, customers will be the first humans to touch more than 20% of the world’s products and produce.
IoT and Smart World. Everything which can be robotized, stuffed with sensors, ‘chipped’ and connected, will be. We will see the creation of more and more digital twins. They will speed up, reduce cost, reduce risk and increase opportunities in fields from health, industry, services and so on. Homes, cars, factories, hospitals and even government institutions will become smarter.
AI – Artificial Intelligence. First generation AI was based on rules which emulated classical logic to generate outcomes within a specific, tightly defined, environment. Current second generation AI is based on understanding built upon deep-learning networks, machine learning, big data and actionable analytics. The coming five years will see the introduction of neuromorphic computing utilising human cognitive facets such as interpretation and autonomous adaptation. This is a critical step in overcoming AI’s current ‘brittleness’ based on the training of neural networks dependent on a literal, deterministic logic which does not keep in mind context or common sense. Next generation AI will be able to address unfamiliar abstractions and situations, enabling it to automate normal human activity.
Consumer Experience
The channels powering uninterrupted, personalised client services are becoming more abundant: social and mobile networks, wearables and all sorts of other edge-devices. All of this will build to create a total experience.
Online shopping is growing so rapidly that the World Health Organisation is expected to declare it an addictive disorder by 2024. Businesses will be held responsible to warn potential clients of the associated risks. At the same time, by 2024, AI will use emotional analysis to target 50% of the ads we see. By 2025, 40% of businesses offering services in the real world will add virtual elements in a bid to stay competitive.
Organisations and governments will both create and fight against fake news. In 2023, 30% of global news and video content will be verified with blockchain technologies.
On top of the information we receive, as individuals, we will continue to share information about ourselves. This information will be used to change our behaviour – the so-called IoB (Internet of Behaviours). For example, insurers will track both our level of physical activity and our purchase behaviour to gauge whether we are eating and living healthily, thus determining our health insurance premiums.
Combinatorial Innovation
Tying all of the above together in a creative and smart way produces combinatorial innovations – using existing technology and processes to build intelligent organisations and new business opportunities.
Unsurprisingly, the path towards intelligent organisations is littered with digitalisation initiatives which, according to analysts in 2021, will end up costing twice as much time and resource as expected. A not insignificant chance exists that smaller players turn out to be faster in this transformation due to a lower burden of legacy systems, processes and a lesser degree of interdependence between them.
People at the top
The majority of trends and investments in the years ahead will be heavily influenced by the pandemic. Many of them will increase the quality of life for side-lined social groups while increasing the side of the middle class at the same time. For example, by 2023, the number of people with disabilities will be able to enter the workforce will triple thanks to a shift towards remote working and AI. More and more people will be drawn to a career in IT due to high employer demand and a high quality of life across the world. Loyalty, integrity and building a sense of belonging will be some of the greatest challenges facing organisations in the move towards ‘work from anywhere’. First for the IT industry then for everyone.
Sources: Gartner Top Strategic Predictions for 2020 and Beyond, Forester, IDC, Corum, BASSCOM Barometer 2020, Strategic and research documents from Musala Soft.
Read the article in Forbes Bulgaria HERE.