EY Summarizes Strategies for Facing 2023 for Technology Companies

The technology industry is known for its innovative spirit. As new technologies emerge and consumer needs change, tech companies and startups need to adapt their business models to stay relevant.

Entering 2023, the technology industry is facing changes that require companies to take a new approach to stay competitive. Report released by Ernst & Young (EY) reveals that the technology sector can survive and overcome adverse conditions to encourage better economic growth.

Here are a number of strategic steps that technology companies can adopt to survive this year.

M&A potential

Aksi mergers and acquisitions (M&A) has been pursued by a number of startups in Indonesia. According to the EY report, this is a strategic step when looking at the current macro situation and financial volatility. Large-scale, transformative acquisitions are said to open up opportunities for technology companies into new markets or adjacent verticals, such as healthtech or fintech.

As VC investment trends begin to slow down, this situation increases opportunities for corporations to conduct M&A with companies that are developing or are already showing positive traction and growth.

Some of the M&A agreements that have taken place include acquisitions Kiddo by Singapore-based company Flying Cape. In addition, similar actions were also carried out Goto to logistics startup Swift. In early 2023, MyRobin acquired by India-based workforce management platform Better Place.

"Whether the goal is acquiring new talent, technology, business or market share, M&A will be a great way to enrich the startup ecosystem. This is an option startup founders and investors should continue to pay close attention to this year," said EY Indonesia Strategy and Transactions Partner Oki Stefanus.

Analytics to optimize revenue

In today's digital era, business people collect data from various sources, such as interactions with customers, traffic website, social media, and sales reports. However, collecting data alone is not enough. Companies need to capitalize analytical tools to understand the data and leverage it to optimize their revenue.

According to EY, analytical tools can be used to decide on a strategy by considering various scenarios, such as inflation factors, geopolitical uncertainties, and other risks. This will help companies determine prices across different business models.

Changing the supply chain system

Transforming supply chains is the process of rethinking and reengineering a company's supply chain to achieve better results. This can involve procurement, production, distribution, logistics, deployment of new technologies and systems to optimize the flow of goods and services.

EY noted that supply chains have been disrupted in recent years due to factors such as a decline in the political, economic and financial climate. Tech companies need to reduce their dependence on geopolitically unstable geographies by doubling down on localization. Companies need to segregate their supply chain, incl nearshoring and restoring.

"The sector now needs to spread its industrial footprint across multiple geographic areas requiring heavy investment. Companies will be supported by regulatory support from governments, and those who are not deterred by the inevitable rising costs," said EY Americas TMT Leader Ken Englund.

Retaining the best talent

Retaining the best talent is very important for business success. Losing the best employees can result in increased costs, reduced productivity, and a negative impact on morale. Therefore, companies need to implement strategies to retain their best talent.

In his summary, EY stated that there was a realignment in work priorities during the pandemic. 56% of employees in this sector indicated that they are considering leaving their current job for higher salaries, better welfare programs and new career opportunities.

The technology industry is not only facing a talent shortage to drive long-term growth, but also hiring and layoffs (PHK) in response to economic uncertainty. While many layoffs are currently being made by technology companies, they are sometimes necessary to restructure companies or respond to economic pressures.

"In this complex landscape, businesses must balance the workforce by taking steps to retain the best employees, redefining the work experience hybrid, fostering a diverse team and inclusive culture, and addressing employee concerns that arise," said EY Global TMT People Advisory Services Leader Susan Robinson.