IT is set to play a crucial role in the economic recovery from the coronavirus pandemic. While the lockdown has led to massive economic damage, a report from Western Union notes that digital service providers and services that simplify collaboration are booming.
According to the Global services trade revolution report from Western Union, the rapid digitalisation of the economy during the pandemic has created the foundations for modern IT-enabled services to play a critical role in the approaching economic recovery.
While the crisis has accelerated digitalisation of the economy, according to Western Union, there is also now a clear gap in performance between organisations that embrace new technologies, and those that are digital laggards.
“Technologies that ease remote work have quickly grown in popularity, and millions of new customers have been introduced to online services including mobile banking, telemedicine, food delivery, online education, e-commerce, digital streaming services and social media,” the report’s authors wrote.
“Successful firms have been able to operate a digital workplace that maintains its output and productivity through the crisis while also staying connected to customers and suppliers.”
A recent survey presented in the report found that roughly three-quarters (73%) of IT managers expect to either accelerate or maintain digital transformation spending through the pandemic. As a result, Western Union said it expects that the value of cross-border flows of business-to-business (B2B), ICT and financial services will only decline by around 6% in 2020.
According to Western Union, as the global pandemic radically – and rapidly – alters business models, firms that lacked digital agility are now quickly retooling.
“Despite the expected near-term declines, looking past the pandemic we expect the value of international trade in services to rise significantly, to $8.0tn by 2025, up from $6.1tn in 2019, an increase of almost a third (31%).
“We expect digitally deliverable B2B, ICT and financial services to contribute almost two-thirds (62%) of the expected $1.9tn increase in the value of total services trade between 2019 and 2025,” the report’s authors wrote.
Western Union said the IT-enabled service categories will tend to favour those advanced economies with the digital infrastructure, innovation ecosystems and workforce skills necessary to succeed. It said these countries will also have companies with very strong market positions in certain digital services.
The study suggested that, in the near-future, digital technologies will create new services flows, sometimes replacing flows of physical goods. As an example, Western Union said that additive manufacturing (3D printing) could enable goods to be produced locally at the customer’s location, with digital designs and software services replacing the need to ship physical goods.
“While still in its infancy, 3D printing promises to upend existing manufacturing and supply chain processes, as companies transition from physical to digital inventories and to manufacturing on-demand,” the report’s authors wrote.
Western Union predicted that 3D-printing technologies could also revolutionise other industries such as the use of 3D-printing systems to regenerate tissue or create organs using the patient’s own DNA.