The Role of Technology Brands in Driving Economic Growth

Every year BrandFinance, the brand valuation firm, releases its annual ranking of the Top 500 global brands, at the World Economic Forum at Davos.

This year was an exception.

The big unveil was done online on Zoom. In a way, this exemplifies the very role that technology is playing in keeping things running in our current world.

The Rise and Rise of Tech Brands:

The Technology sector emerged as the most valuable sector worldwide in 2021, making up for 14% of the total brand value in the 2021 ranking, with 47 companies listed in the Brand Finance Global 500, accounting for a combined US$ 999 billion in brand value.

“With the onset of the pandemic, tech brands have experienced unprecedented demand for their products and services. At the same time, across sectors, brands which have pushed the boundaries of technological innovation have remained a cut above the rest, able to pivot their business to adapt to consumers’ changing needs. 2021 is the final call to get on board for all brands still stuck in the 20th?century.”

- David Haigh, the CEO and Founder of BrandFinance.

Additionally, 20 out of the Top 100 CEOs rated to be the best guardians of their brands, were from the technology sector - including our own - the CEO of TCS, Rajesh Gopinathan, who was rated at #5 globally. TCS also consolidated its position in the Top 3 ranks of its industry. Apple topped the charts, reclaiming its pole position, just ahead of Amazon and Google. This was largely reflected across the tech sector: Microsoft?was up 20% to US$140.4 billion,?SAP?up 9% to US$18.0 billion, Salesforce?up 29% to US$13.2 billion and Adobe?up 25% to US$11.7 billion.

Perhaps this sectoral outperformance helped determine the primary topic of discussion at the event. We were hosted by the CEO and the MD of BrandFinance, in a dialogue on the role that Technology brands play in the global economy.

I had the pleasure of speaking at this virtual launch along with Louisa Loran, from Google Cloud, Bill Gajda, former SVP of Innovation from Visa, and the keynote speaker, Punit Renjen, the global CEO of Deloitte.

The Scenario Avoided

The panel was united in its conclusion that the role which technology has played in our pandemic-affected world, is second to none.

If you think about it, had the pandemic happened 20-25 years ago, we would have had no Netflix to keep ourselves entertained, no Youtube to learn cooking lessons from, Amazon then was just a basic book and music seller, and we wouldn't have had Zoom, Webex or Microsoft Teams for work from home (WFH) or remote education for our children.

Worst of all, we would have had something called - Dial-up Internet, which was excruciatingly painful! For those who are too young and don't know what I am talking about, take a look at this video. This is what the Internet sounded like, when you dialed into it from your fixed line in the 1990s :-)

This pandemic would have been far louder and far worse!

In every way technology brands have kept the world going.?And they have a huge role to play in the future as well.

The Four vital roles that Technology Brands Play:

1)?????Anchor of Stability for Essential Services: The IT industry has played a prime role across the world in helping critical sectors to keep operating without disruptions during the lockdown phases of the pandemic. Hospitals, banks, power utilities, public services, online retail and pharma were all underpinned by IT to deliver essential services and products over the previous year. Hence, I take great pride in the work of the millions of colleagues in my industry, who have worked with their clients worldwide to ensure there was no disruption of vital services to people restricted by lockdowns. All of this could have easily gone wrong,. Instead, in spite of the challenges and tragedy around us, the world has continued to function to a large extent. It is largely thanks to the capabilities and efforts of the tech sector, working hand in hand with frontline workers.

2)?????Motor for Economic Growth: As we emerge from the pandemic, the need of the hour for the world economy (which saw a GDP drop of 4.5% in 2020 ), would be to counter the recessionary trend and restore economic growth. The technology sector has the potential to contribute significantly here, both by its own economic value creation and by building new innovative business models for other industries.

a.??????According to the latest forecast by experta at Gartner, technology spending in 2021 is expected to see an accelerated 6.2% growth in 2021, almost reaching the US$ 4 trillion mark. TCS had a strong quarterly result in January 2021 (our best for this seasonally weak quarter, over the last 9 year) which gives us confidence that the technology acceleration we have seen during the pandemic, will see further momentum in 2021. The financial performance of many other tech companies like Apple, Google, Microsoft, Salesforce, SAP etc. show similar positive momentum, which makes this industry one of the key motors that is pulling the global economy forward.

b.??????Digital transformation remains the single largest future economic opportunity for the world. As an example, a study from the European Commission indicated that if Europe invests in the right disruptive technologies like AI, Cloud, IoT, Edge Computing etc. it can see an uplift of 14% in its GDP by 2030 – an increment almost equivalent to the size of the French economy. A recent survey conducted of business leaders worldwide found that 90% of large companies have maintained or increased their spends on Technology, the top 4 being: collaborative technologies (65%), cybersecurity (56%), Cloud (51%) and advanced analytics (39%). This acceleration in the adoption of technology is undoubtedly going to help in the recovery and restoration of growth in every sector of the economy - from banks and telecom to retail and transportation.

3)?????Engine for Job Creation and Skills Development:

The ILO calculated that at the height of the pandemic we had lost an equivalent of 400 million job worldwide. As we recover, job creation will be our most vital priority. The technology sector has been a tremendous job creator. If you look at TCS’ history, we started of 52 years ago as a small internal office in the Tata Group, and spurred an Industry in India that employs 4.36 million people in India. TCS employs 469,000 people in 46 countries worldwide and we are continuing to hire.

The entire tech sector is set to be the leading creator of new jobs in 2021. A Microsoft report says that technology oriented jobs will increase nearly five-fold by 2025, rising from 41 million in 2020 to 190 million in 2025. This presents a huge opportunity for those looking for future employment.

Yet all this is not easy. There is one big area we need to focus on - reskilling.

We are at the onset of a ‘Decade of Skills’. The OECD estimates that by 2030 over 1.1 billion jobs are likely to be radically transformed by technology. This requires a significant retreading of the global labor force. The pathbreaking ‘Closing the Skills Gap’ project that TCS started with the World Economic Forum in 2016 has concluded very successfully. Of the target to reskill 10 million workers by 2020, a 70% surplus of 17.2 million was achieved. Much more needs to be done in the future. The IT industry has a big role to play here as an educator and catalyst for new skills which will be used in the future economy.

4)?????Bulwark against Future Risks - Pandemics to Climate Change: One of the lessons of the pandemic is that businesses which had invested early in and advanced their digital core, eCommerce and distributed operating capabilities were the least affected by the pandemic. They in fact took the opportunity to gain market share, while others were forced into rapid acceleration and catch up drives.

The role of the IT industry in ensuring stronger disaster recovery plans, outage strategies and enabling remote working capabilities is vital towards meeting any future risk head on.

As we define this digital future, at the heart of it should also lie the purpose of sustainability.?We have reached a tipping point in public insistence that governments and businesses create a different and a greener global economy. The economic logic of this is irrefutable. As we rebuild after the pandemic, the opportunity for growth and job creation by the green economy will work in a close parallel to the digital economy.

Digital technology can play a big role here too, whether it is through smart cities that use IoT, AI and optimization to bring down their carbon footprint, data analytics to protect and augment forest conservation, blockchain to bring transparency to sustainable supply chains, electrifications of our transport fleets, smart digital factories that reduce emissions and waste and a whole range of other areas.

The Opportunity Ahead

Each of these four roles that the Tech sector plays is vital. It is both a privilege and responsibility for me and all colleagues in the sector to help us all realize the potential that exists on all these fronts.

Digital can empower us to create a better world. More prosperous. More inclusive. More Safe. More Sustainable.

( The author of this article, Abhinav Kumar, serves as the Chief Marketing and Communications Officer for the 45 country international operations of Tata Consultancy Services, the most valuable IT company in the world and a Top 3 brand in the IT Services Industry. The views expressed here are an excerpt of his comments made during a panel discussion hosted by BrandFinance in January 2021, and reflect his personal opinions and reflections related to the tech sector he works in.)