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DIGITAL ENTERPRISE 4.0 - Digital Persistence Amid Volatility

June 30, 2023 573 0 Digital Transformation

DIGITAL ENTERPRISE 4.0 - Digital Persistence Amid Volatility

Digital Enterprise 4.0: Digital Persistence Amid Volatility is the fourth study in the series that analyses responses from 500+ global end-user companies of various sizes, spread across twelve sectors and five major global regions, to assess the year-on-year transition in the contours of digital transformation maturity measured across technology spend and digital investments, mainstream and emerging technology prioritization, business process transformation, outsourcing decisions, cloudification, digital talent strategy, workplace models (onsite vs. WFH/WFA), and ESG adoption. In FY2023, there has been a definitive increase in digital spending and focused value-oriented investments. This trend is expected to continue in FY2024, wherein, companies are expected to increase spend across multiple technologies, in hiring and upskilling digital workforce, and for better ESG compliance preparedness.

Key Highlights

  • Technology spend will be critical for long-term business growth; short-term priorities may shift in response to market dynamics – 75% Enterprises anticipate spending 20%+ of their technology spending on digital priorities 
    • The study tracks y-o-y technology spend shifts as a percentage of annual revenue, indicating slight sobering down in the technology budgets in FY2023.
    • The study shows trends in overall digital services contracting, outsourcing trends.
    • The study offers a breakdown of the digital spend across technology products, services, workforce, M&A and R&D categories.

 

  • Mainstream digital technology spend increased across the board as focus shifts to integrated use cases & investment optimization:
    • The study captures trends in spending and highlights how FY2023 became a year of investment and value optimization.
    • Cybersecurity, cloud, robotics, 3D printing, and AI/ML are the top five mainstream digital technologies likely to see an increase in spend by25% or more from last year.
    • The study analyses how talent strategy across the top mainstream technologies will map out in terms of demand-supply gap.

 

  • Companies have also increased emerging digital technology investments to deliver faster PoC-to-production–77% enterprises invested up to 20% of the total digital spending on emerging technologies in 2022
    • The study assesses investment trends from planning a PoC to increasing investments for production-grade implementations across emerging technologies.
    • Metaverse, digital twins, and Web 3.0 will witness high early-stage investments, while connectivity technologies, such as 5G/6G and smart wearables will get into mainstream utilization.
    • The study further reports how RoI from previous investments are being funnelled back into funding newer initiatives.

 

  • Digital talent demand and gap in core areas of cloud, cybersecurity, and AI are set to soar, driving enterprises to focus on reskilling/upskilling existing and domain talent: 
    • ~30% enterprises will have 15%+ of their overall workforce as digital talent in 2023, double the number from 2022.
    • The report tracks y-o-y shifts in digital workforce acquisition and skilling strategies, with greater preference for full-time employees and skill-building.
    • The study also highlights the growing acceptance and stabilization of hyrbid work models and the trends likely to shape in 2023.

 

  • Different verticals have moved at different speeds in terms of digital maturity: 
    • High-Tech will retain the top spot as the sector allocating the highest technology and digital budgets in 2023;
    • Aerospace & defense, healthcare & life sciences, and travel & transportation have also demonstrated an increase in overall digital maturity
    • Different sectors have shown varied factors that have worked for their higher digital maturity, from digital talent focus, to cloud adoption, and increase in emerging tech investments.

 

  • Outsourcing of technology services, and more digital services, continues to be robust and India retains the top preferred location: 
    • India is the most preferred outsourcing location, nearly 3X more preferred than the next preferred location, Mexico.
    • The study shows mobility in outsourcing location preferences in 2023.
    • India will once again retain the top spot.
    • More than 60% contribution to India-bound outsourcing deals comes from five major sectors – BFSI, discrete manufacturing, high-tech, telecom, media & entertainment, and travel & transportation.

 

  • Business workflow digitalization in IT and procurement & supply chain deepens with more workloads migrating to the cloud: 
    • 43% enterprises digitalized 60%+ of IT workflows in 2022.
    • The study offers deep-dive into the specific processes and sub-processes that have witnessed higher cloud migration.
    • In non-IT functions, supply chain and procurement workflows have emerged as being more digitalized using IoT, AI, and blockchain.

 

  • Organizational strategies in future work models and ESG are being impacted by the level of digital maturity
    • Hybrid models mature and formalize as employees weigh flexible work options in job evaluations, with a 2-3 day/week work-from-home model likely to sustain
    • The study offers in-depth analysis of the trends in hybrid work models by different sectors.
    • Enterprise maturity in the adoption of globally accepted ESG standards on the rise: 60% enterprises either adopted globally accepted ESG norms or built internal ESG norms in line with local/global reporting requirements in 2022.
    • The study indicates rising demand for IT services in enabling ESG reporting, with a analysis of the specific types of IT services being sought for ESG reporting.

 

  • Recommendations to further deepen digital maturity across global enterprises: 
    • At an organizational level, there is growing focus on a building a connected, optimized, and flexible technology architecture that can integrate multiple technologies and be responsive to the increasing demand variability.
    • At an ecosystem level, it is pertinent to invest in open platforms, innovation collaborations and digital skilling at scale for a faster and more widespread digital impact.

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