Despite projections of a slowdown in economic expansion around the world, IBM CEO Arvind Krishna recently issued a statement in which he expressed optimism regarding the growth prospects of the technology industry.
As first reported by Nikkei Asia, Krishna is more optimistic than some economists on the overall outlook for the global economy. He predicts that the growth rate of the technology industry will be between 2% and 4% higher than that of GDP.
CEOs Optimistic for Tech Industry's Future
His optimism is based on the increased demand for digital transformation and the global demographic changes, which he believes will make the technology industry more resilient in the face of a slowdown in economic activity around the world.
However, Krishna also warned that there would be a "gap" in growth within the technology industry, with a correction in demand for business-to-consumer services but strong demand for business-to-business services. This "gap" in development will occur because of the following:
He brought attention to the fact that the current time is favorable for financial investments in high-tech enterprises in nations such as Indonesia, India, and some countries in the Middle East.
This sentiment is shared by Microsoft CEO Satya Nadella, who stated that during the pandemic, there was a rapid acceleration of investment in technology and that the industry will go through a period of "normalization of that demand." Nadella also expressed optimism that digital technology, such as artificial intelligence (AI), can help boost the overall economy in the current climate.
Despite the predicted decline in global economic growth, as reported by PwC's survey of 4,400 CEOs worldwide in October and November 2020, nearly three-quarters of CEOs believe global economic growth will decline over the next 12 months. Both Krishna and Nadella believe the tech industry will thrive.
Meanwhile, nearly 40% of CEOs believe that if their organizations do not transform, they will no longer be economically viable in ten years. In the fight to retain talent following the 'Great Resignation,' CEOs are also cutting costs, but 60% do not plan to reduce headcount, and 80% do not plan to reduce compensation.
The Role of Governments
Krishna also stated that he is a "firm believer" that governments with a lot of trade and participation in a much larger global economy serve the world better than any geopolitics.
IBM, for example, has been investing in China for nearly 30 years and plans to continue doing so for the next 30. This demonstrates the company's belief in the tech industry's growth potential and ability to weather economic downturns.
Despite the anticipated slowdown in the growth of the global economy, the technology industry is expected to be more resilient and to continue expanding at a higher rate than the GDP.
This growth is driven by increased demand for digital transformation and global demographic changes; technology companies are optimistic about the future of their industry.
However, there may be a "gap" in growth within the technology industry, with demand for business-to-consumer services decreasing while demand for business-to-business services remains strong.
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