2021 was a roller coaster of a year – it started with some hope of the pandemic receding and was then hit with a raging second wave. The year coerced us into settling into the New Normal – punctuated by an almost unexpected global talent war triggered by rapid digitalization and fiscal stimulus in the developed world. Predicting what will happen in 2022 is a fool’s errand, but here are some thoughts on how to think about, and plan for yet another uncertain but interesting year.
2022 will continue to be a year of transitions. The world will accelerate the green energy transition while struggling to deal with the resulting inflation. Digital transition will accelerate as well, but without enough people to support the transition, it will hit roadblocks. Financial transition into DeFi (Decentralized Finance) will continue, despite politicians and central banks trying to strengthen the legacy systems. Supply chain transition will further accelerate as China will struggle with its harsh zero-COVID strategy. Other Asian countries will see significant FDI inflow into their Manufacturing sector, including India despite these countries struggling to replicate China’s scale, cost, and quality. Industry structure transition will accelerate – conglomerates will demerge to create smaller, focused units across industrial companies. Tiered industries such as Automotive, Consumer Electronics will integrate vertically as value moves from hardware to software.
CEOs of companies will face significant investor and market pressure to handle the impact of these transitions. Their focus will sharpen on growth, and they will continue to restructure their organizations to prioritize transformation. This will result in the creation of a dedicated transformation office that will be tasked with making the organization agile and finding the capital within the organization to fund growth. The central transformation teams will wield a significant amount of power as companies transition into a new structure. CEOs will be frustrated with the slow digital execution within their companies, resulting in some changes to the leadership in both the technology and talent organizations. The industry leaders in digital transformation will become more ambitious, and digital laggards will increase their reliance on mega technology platform companies.
Companies will continue to seek answers to ‘The Great Resignation’ during the first half of the year. And they will continue to explore and wander the world looking for talent to realize that there is no new oasis to discover. We expect ‘The Great Resignation’ trend to pick up pace post the holiday season. In fact, we might see a spike in H1 as companies roll out their annual performance raises, and also since some talent decides to pursue higher education. The resulting cost increase will also be a concern for companies that had tight finance models based on the earlier cost trends in India. This will increase global stakeholders’ concern about India’s viability as the top choice for GCC setup.
The start-and-stop process of the last few months on Return to Office will make employees skeptical about returning to the primary hubs. They will look for clear signs of the pandemic’s end before committing to rent and travel expenses. Some companies will fare better than others to get employees back to offices – these will lead with culture, mentorship, and employee camaraderie to attract the teams back to the office, instead of blanket mandates. Companies will struggle to sustain the momentum of center-level initiatives as the remote work model ties teams directly with their global functional teams than local site teams. This tighter integration will be an advantage to top talent who will position themselves well for global roles within their functional organizations.
On the whole, the Indian technology ecosystem will continue to grow at a rapid pace, with an increase in start-up funding, unicorns, acceleration of technology adoption in government and Indian enterprises, and the creation of a few more billion-dollar technology services firms.
GCC leaders will have to contextualize the above trends to their individual companies and try to answer the “so what” question and decide on the priorities for the year.
The foundation of all these priorities will be the focus on two essentials – culture and talent. And one thing is for sure – leaders who double down on culture and talent will be in a good position to execute on these priorities.