Technology, Media & Telecoms Update
Over the last couple of years TMT companies have been at the centre of all our lives. The lockdowns brought about by the pandemic have meant our reliance on them to work, entertain ourselves and remain in touch with our loved ones has increased substantially. Unlike other sectors, they have seen their activities boosted by Covid and will now have to make sure they can keep that momentum going.
The economic downturn and the cost-of-living crisis means that digital advertising budgets may get reduced and, as we are starting to see, consumers are cutting down on the number of subscriptions they have. Most companies will have to be more innovative to retain subscribers, viewers and clients that may reassess their priorities. Investing in advanced digital capabilities and AI will be a priority for several companies to offer a more personalised client experience. Just like Netflix is working on introducing a cheaper subscription model that will include adverts, TMT companies may have to rethink their pricing options to remain competitive and retain their client base.
Consumers are now able to go back to live events and to interact in person so investing to generate new content to watch or offering more interactive experiences will be key to retain customers.
As we have seen recently with Microsoft’s bid for Activision Blizzard, companies in the sector may need to set out a clear M&A strategy to target products or segments that they would like to diversify in. Partnerships will also have a huge role to play in either accessing a new clientele or in accelerating a business transformation.
The metaverse is a new territory which offers plenty of opportunities for companies. The digital disruption that could emerge from this new “reality” is certainly something TMT firms will want to be a part of and monetise. Devising a plan on how to capitalise on the metaverse to build a competitive advantage should be high on the priority list of most of the companies in the sector.
With a constant flow of newcomers and disruptive companies entering the TMT market, historical or large players may need to reconsider their internal organisation. Operating silos may have made sense as capability was gradually added on but now is the time for firms to rethink their structure. Synergies could likely be found by reorganising departments therefore facilitating collaboration but also finding efficiencies and saving cost.
Lastly, TMT companies are highly exposed to sustainability issues. Climate change will likely have a growing impact on existing infrastructures as we see more catastrophic events that could damage our telecommunication network. This industry is also a high energy user through its large data centres. Addressing sustainability by setting clear targets to reduce its carbon footprint and gradually moving to net zero will become critical for the industry over the next few years.
In most industries, currently, there is a shortage of high calibre talent and hiring good quality candidates is very competitive. None more so than in the technology and telecommunications sectors where these challenges are particularly acute. With the fundamental need for rapid growth driven by housebuilding, getting new technology offerings to market ahead of competitors and the desire to increase market share to establish economies of scale. Employees are moving to competitors attracted by higher pay rates, each business trying to offer more in a desperate attempt to meet their customer demands and to drive their own operations and innovations.
As a result, there is, in effect, an artificial spiral of remuneration inflation, with a necessarily limited candidate pool. Additionally, in an industry which has been historically male dominated, the requirement to balance the workforce in terms of gender and diversity is further fuelling the situation and contributing to the need for businesses to rationalise in other areas and to hire abroad. In the case of these sectors, technical capability of the required kind is at a high standard in central and eastern Europe when there is still cheaper labour, albeit the same challenge is also beginning to escalate there also, with a number of businesses we are speaking with experiencing the same challenges with their workforces there.
Hiring trends seen by Partner Executive
