Half a year ago, we reviewed the top business trends and predicted this year to be a year of advanced technologies. However, the Russian invasion of Ukraine changed history and disturbed the very course of the world.
Recently we have been witnessing how the full-scale war has been causing inflation, energy and metal price surges, food crises, a rise in the cost of living, supply chain disruption, and geopolitical tensions globally. This now puts bouncing back in post-pandemic recovery and risk prioritization at top billing on every executive’s agenda. Volatile markets seek to regain stability and build resilience amid crises. That’s why today TEAM is sharing three actionable strategies that currently define 2022 and can help you future-proof organizational success.
Top 3 global business insights for 2022 and beyond
It’s been a rough six months so far. But what’s new? Doing business is always about managing risks. So, now industry leaders must learn how to navigate through new threats with innovative risk mitigation approaches. Meanwhile, the main challenge of outperforming competitors still remains. So, what models do forward-looking managers use to secure their business growth?
1. M&A keeps driving transformations and prosperity across industries
S&P Global listed mergers and acquisitions among their top 2021 trends shaping the economy. We now put it on our own 2022 list, as it remains a strategic priority for corporations and PEI firms alike. There was a slowdown in Q1, indeed. However, 1,300 executives in the landscape Deloitte surveyed for its “2022 Future of M&A Trends” report expect a steady volume of deals this year. Their predictions indicate that respondents now embrace new types of agreements and tactics to cope with the “next normal.” Remember Microsoft’s announcement of buying Activision Blizzard for $75 billion? That’s what we’re talking about.
2021 was record-breaking for M&A with an all-time high of $5.9 trillion in global volume, marking an impressive rebound from the pandemic-shaded 2020. The high demand for digital transformation, telecommunications, workforce availability, healthcare and biotech, corporate restructuring, and business scaling dominated the M&A sector last year. Practitioners strived to diversify their mergers and acquisitions approach, equally exploring both offensive and defensive strategies. Considering the world’s current state of affairs, we believe these drivers will remain the top choice for dealmakers in 2022.
What’s trending in 2022’s M&A
#1 Alternative deals
Practitioners combine their traditional mergers and acquisitions approaches with multifaceted growth strategies. The transformation and restructuring field will see more strategic partnerships, beneficial alliances, joint ventures, and SPACs to boost businesses’ productivity and enhance capacities.
#2 Virtualization is here to stay
Virtual due diligence, fully-digital deals, and hybrid M&A process management—executives have been shifting to remote dealmaking pretty smoothly. This approach accelerates more transformational change with lower expenses during a transaction and allows you to overcome remaining travel restrictions.
#3 Cross-border deals
Offshore and nearshore activity becomes more attractive as the COVID-19 restrictions ease and supply chains are on the verge of deglobalization. The labor shortage also plays a prominent role as companies seek to augment their workforce.
#4 ESG-influenced transactions
The spiking pressure of environmental, social, and corporate governance regulations (ESG) increases buyers’ readiness to evolve their strategic priorities in many industries. Decision-makers seek to extend portfolios with more ESG-friendly projects to unlock new business value. For example, oil and gas companies actively invest in renewables, LNG terminals, and hydrogen.
What challenges M&A deals face in 2022
- Post-pandemic higher interest rates and inflation
- Sanctions against Russia and Belarus
- Increased taxes and volatility
- Governmental and financial regulatory scrutiny
Still, business owners are confident that these economic headwinds won’t stop market activities for good. According to Deloitte, 54 percent of dealmakers even think the tightening regulations will stimulate the market after the adaptation period ends. Ambitious executives now focus on divestitures, cost reduction, and portfolio rebalancing. Summing up, companies have a great chance to support their agility and resilience by leveraging mergers and acquisitions.
2. The IT outsourcing industry keeps thriving in 2022
Software development outsourcing is not a new trend. However, business paradigms that emerged during COVID-19 and current crises have shifted industry leaders’ priorities a bit. As the remote and hybrid work models remain popular, executives actively explore gig contracts, build-operate-transfer (BOT), nearshoring, friendly-shoring, and other benefits of modern IT outsourcing.
Why invest in spacious offices, on-premise equipment and infrastructure, and large in-house teams when you can have it all remotely for a much lower price? Moreover, how would you deal with growing tech salaries, job hopping, or the inability to staff critical positions locally? The outsourcing industry can easily solve these and other problems, facilitating business recovery as it prospers in the post-pandemic years.
But what’s changed in terms of selecting IT service vendors? Before the war, Ukraine, Russia, and Belarus were the go-to markets, with $6.8 billion accounting just for Ukraine’s IT exports in 2021. Now Western countries must deal with a widening tech skills gap caused by the Russian invasion and The Great Resignation simultaneously. Organizations that prefer to play it safe will be looking closely at other countries. Fortunately, the global IT outsourcing market offers a rich landscape of providers rising to the occasion.
3. Sustainable businesses keep winning consumers’ attention
Climate change threats continue to double as heavy military operations add to it even more. So, market leaders consider navigating net-zero their main priority for resilient post-pandemic recovery. Meanwhile, the Russia-Ukraine conflict has sparked louder talks about environmental issues in business and political quarters. The EU aims to give up Russian fossil fuels entirely by 2030-2035, for instance. International communities agree that we need a clean energy transition, investments in renewables, emissions reduction, decarbonized materials, green IT, and other resources to remain a resilient society.
Responding to the changing public mood and market demand, c-level and thought leaders strive to develop innovative strategies that will ensure stable, inclusive growth. Because managing disruptions proactively facilitates sustainability more than focusing on continuity issues. We can safely say sustainability leadership is a must in the long run. What’s more, greater transparency about the environmental impact of your business will play in your favor as 93% of global customers prefer socially responsible brands.
Moreover, Fortune Business Insights projects the global green technology and sustainability market to reach $51.09 billion in 2029. So, we think 2022 is the perfect time to start capitalizing on a responsible business model and boost your brand awareness by offering more eco-friendly products and services.
Without change, there is no innovation: make 2022 your breakthrough year
Undoubtedly, the pandemic and Russia-Ukraine war have triggered a broad-based economic shock that could undermine worldwide recovery. But even though some reports and forecasts may look stressful and challenging, the global economy remains highly resilient as COVID-19 enters the endemic stage. The world is also united in dealing with its immediate priorities—ending the war, preventing famine, optimizing supply chains, and tackling inflation. So, we believe slow but steady growth will continue through the rest of 2022.
However, we’re going through a transition period that requires agile leadership to ride out the storm and readiness to reimagine outdated strategies. We recommend mitigating risks proactively and seeking innovations for your production cycle, operations and asset management, and business processes to turn disruptions into opportunities. Assess your existing enterprise capabilities to identify blind spots that can halt your sustainable, inclusive growth in 2022. You can either consider the reviewed trends or define a custom approach that will meet your business objectives.