Software Development Services – Digital Brick and Mortar for the New Economy
21 December 202117 March 2021 | Insights
Table of Contents
- COVID-19 Recovery Reliant on Digitization
- Software Development Services as Fuel for Innovation
- Software Development and the Future of Work
- Engagement Models in the Software Development Industry
- Software Development – The Infrastructure of the Future
A recent McKinsey survey suggests 9 out of 10 business executives believe that COVID-19 will fundamentally change how we do business over the next five years.
With hindsight, the global economy was already structurally fragmented across institutional, business, and social dimensions long before the pandemic hit. This fragmentation was further deepened by the coronavirus outbreak, as it forced companies to enter survival mode and operate in silos, each doing whatever it took to weather the storm. As a result, some industries have skyrocketed, like e-commerce. Others, however, have plummeted, e.g., airlines, wreaking havoc across the financial markets and leaving tens of millions unemployed.
The World Economic Forum points to the path to recovery being heavily reliant on digitization and innovation. That said, it’s going to take more than merely copy-pasting the old ways onto a new, digital canvas. The real opportunity for growth lies in revisiting and adapting business models to operate online while rendering them agile, responsive, and placing customer experience first.
Leveraging disruptive technologies like AI, RPA, Cloud, IoT are no longer edge-cases. They are vital prerequisites for thriving in the new reality. However, not all companies have the adequate capabilities in-house to define and implement the right digital transformation agenda. Forging the right cross-industry alliances with technology partners will largely decide how companies perform post-COVID-19.
As a KPMG study points out, digital technology has become “the critical lifeline for most businesses. There’s simply no longer business strategy and technology strategy. There’s just strategy, and technology is driving it.”
The IMF announced in October last year the world economy had started to recover yet warned the return to pre-pandemic levels will be “long, uneven, and uncertain.” It would be only natural then to assume that for businesses, the worst is now behind. That would be a wrong assumption, however. A recent McKinsey survey on “Innovation through Crisis” shows that 2 out of 3 executives believe that it’s the upcoming five years that will be the most challenging stretch of their careers. The overwhelming majority of them also agree that the right digital expertise and resources to pursue new growth opportunities are scarce.
Just how scarce, you might wonder? Microsoft predicts the global labor market will need to absorb a staggering 149 million new technology-oriented roles by 2025, with nearly 100 million in software development services alone. To put things in perspective, the overall digital skills community in the economy at the moment is estimated at a “mere” 40 million. Be it a V-, U- or W-shaped recession, analysts agree that what will truly catapult the global economy back into gear after the pandemic will be the speed and quality of its digital transformation.
As per a Harvard Business Review report on the post-COVID-19 impact on the economy, the big bang side effect on digitization is that “many businesses, especially in developing economies, are digitally disconnected. They may not have access to workers with the right skills and face challenging business environments.” As we speak, traditional industries are being stress-tested by the pandemic in varying degrees. It is becoming increasingly clear that not all organizations will have the capacity to accelerate, recover, or imagine the future by themselves.
“The unprecedented disruption by COVID-19 is accelerating the urgency for agility, adaptability and transformation.” –WEF
Companies large and small, across all industries, now have a “digital-first” mandate for their leadership teams. We see Healthcare companies talking not about digital transformation but a digital revolution in their sector. The Financial Services space now boasts over 250 neobanks globally, operating exclusively online without traditional physical branch networks. Meanwhile, automotive giants go all in on digitization by forging multibillion-dollar strategic partnerships with IT Services powerhouses.
A recent KPMG CIO survey shows that the technology skills shortage has reached its peak point since 2008. The tech talent gap is only expected to grow due to the accelerating need for digital innovation in the economy, generating a context wherein traditional company boundaries and supply chains are forced to begin to dissolve.
Even before COVID-19, sourcing tech talent had become one of the labor market’s most vibrant scenes. When it came to IT talent acquisition, companies already had a growing number of options to choose from, including direct hiring, outsourcing, gig economy platforms, staffing agencies, and many others. In the aftermath of the pandemic, IT recruitment is bound to become an even more daunting task given the increased demand and skills gap.
The pandemic also proved remote work is viable, efficient, cost-effective, and here to stay. With physical proximity to the job at hand no longer a factor, nearshore and offshore software development companies are back in fashion. This fact, in turn, helps further accelerate the cross-industry innovation pace globally as geographical silos historically keeping talent pools and job opportunities apart are being brought down. With the global economy opening up to remote software development services, IT companies from regions such as Central and Eastern Europe, rich in tech skills available at an affordable price point, are now experiencing an unprecedented surge in demand. As per McKinsey, the region leads the world in public R&D spending and accounts for a quarter of global industrial R&D spending. Its educational system includes 31 of the world’s top 100 science and engineering universities as well as five of the world’s leading research institutions.
The World Economic Forum predicts “70% of new value created in the economy over the next decade will be based on digitally enabled platform business models.” Along with technology innovation demand, the pandemic has inspired a more strategic and intimate type of collaboration between the tech talent Demand and Supply sides. Enter the era of cross-industry partnerships and joint ventures – the agile economy of the future, powered by technology at its core.
It is by now evident that no matter the market focus, rapid innovation fueled by technology will be vital to surviving and thriving in the post-COVI-19 world. The necessity to fine-tune the customer experience is more acute than ever in the new remote-first economy. Making technology an integral part of the core business is one of the long-awaiting opportunity, now amplified by the pandemic. It’s digital or die.
Fortech’s clients across various business verticals, i.e., Financial Services, Healthcare, and Automotive, stand as evidence. Many of them experienced disruption last year and now regard access to the right tech skills as paramount for business continuity and growth after the pandemic.
Choosing the right engagement model might make the difference in any transformation project. These are several different partnership types, suited for different client scenarios that Fortech has been exposed to and can assist with.
- Client-supplier relationship: This is the traditional partnership model. The clients buy custom software development services from a vendor, aiming to complement and scale up its in-house team.
- New client value partnership: The client works with the software services provider in a close, consultative fashion. Each partner brings in specific know-how and assets to provide value to the final customers that neither could efficiently deliver in silos.
- Investment partnership: The client and the tech organization share a vision for new value being created on the market and invest resources to create it.
While there’s no such thing as one size fits all, here are some of the advantages of partnering cross-industry with a software development services provider instead of running innovation 100% in-house.
- Building the right tech partnerships can help tailor skill maps at speed and scale by forming agile dedicated software development teams, able to perform in distributed working models.
- Fuel a twin-track approach: focus on current core business while pivoting future cases that are responsive and suited to the remote-first economy.
- Allow for quick prototyping, development, deployment, and scaling of next-generation products and solutions that your vertical customers demand.
- Increase revenue potential by gaining market reach for the elevated offering, as well as by avoiding major investments in assets.
One real-life example of a successful cross-industry joint venture is Fortech’s alliance with US-based financial services group Core Capital Management. We joined forces to form AIPERION: a consulting, technology, and scientific research firm specialized in risk management solutions. This business/ tech partnership quickly released its first product (Risk Key) onto the market in under a year, an AI-fueled investment solution allowing investors to better understand portfolio behaviors and risks.
A brand new state-of-the-art investment risk modeling and analytics framework for sophisticated institutional investors
The two parties each played to their strengths in synergy. Core Capital stayed focused on ideation, strategy, and business viability, contributed with their research and domain expertise while also spearheading go-to-market efforts. Fortech, on the other hand, supported the partnership by tapping into its technical expertise, proven delivery practices, and capacity to scale. A trusted technical advisor, it enabled its business counterpart to supercharge the innovation process without jeopardizing its domain and market focus.
Hard-pressed by the coronavirus outbreak, technology innovation has risen to the occasion as it was called upon to prevent the global economy from collapsing. When all said and done, 2020 will go down in history not just as the year of the pandemic but also the year when IT elevated its role in the economy and became the “infrastructure of the future.”
From our ongoing conversations and work with clients across industries, we envision a tidal change away from the transactional buyer–vendor paradigm. We see tech services suppliers morphing into strategic business consultants for their clients, proactively delivering innovation and, by doing so, embracing the role of architects of the new digital world of work post-COVID-19.
If you’d like to learn more about some of our other client success stories, please visit our showcase page or get in touch with us.
Collective input, directed by Andreea Buza
Andreea believes that well-applied technology can improve many of our life experiences. Through beautiful words and visual systems, she aims to connect the buyer and provider of software services who aspire to design future scenarios enabled by technology. At Fortech, she orchestrates the execution of the complete marcom cycle from research to marketing strategy, content, creative and communications.Fortech