NOVEMBER 11, 2021
9 min read
The COVID-19 outbreak has made a lot of business owners backpedal — either deciding on the business closure because of constant lockdowns or pulling through the debts for its survival. Looking at this outcome globally, India, Mexico, and the United Arab Emirates are the most affected markets by the pandemic. In the meantime, France, China, Hong Kong, and Indonesia can boast of quicker adjustment to the new market conditions, in which customers have developed their savings skills. So, the savings tendency is becoming one of the main concerns for investors who think about how to drive markets wise.
The financial advisors claim that the ongoing users’ tendency to save more money appears a natural reaction to the COVID-caused economic ups and downs. All in flux, and the US market is no exception. Thus, 70% of Americans show the pattern of putting more money into their savings to cope with the unstable time. However, there’s also a great number of those who buy investments in key market sectors — 45%. Accordingly, to support the customers under such chaotic circumstances and bring them much value, the IT investment priorities in 2021 were security, customer experience, and infrastructure. Among the best IT investments, cloud and automation were also at their peak. Reasonable enough, but what to invest in 2022, you might ask. Or even what should be minded while weighing all pros and cons?
Impossible to say without the market analysis first. Hence, DashDevs suggests taking these helpful reference points to shape or correct the investment strategy for 2022 that will work!
Market Expectations for 2022: Look Closer at Determining Factors!
To identify the IT priorities for 2022, dig deeper into the current market background, switch on the critical thinking function of your brain, and only then decide on the investment idea. So, it’d be remiss if you ignore the power of the following factors. Better take each of these 10 seriously if you wanna make some headway in the big tech world of today!
1. Inflation Consequences
No matter what your wish is, inflation sets a backdrop for your business course. Even if your product or your flow of clients seems loose in touch with the inflation rate itself, you definitely cannot underestimate how inflation influences your portfolio. For instance, if one thinks of the financial services sphere in this regard, the most tangible market volatility is usually felt by the central banks who need to regulate their supply and cost sides accordingly. Moreover, inflation also matters much when it comes to bonds, reducing the purchasing value of cash and raising the cost of goods simultaneously.
What’s the current situation with inflation? According to the fresh statistics, the inflation indices continue to go high and have already reached the 6.2% jump in October 2021. Sounds rather alarming if knowing that this is the largest 12-month upward leap since November 1990. Is it an obvious precursor to the stricter monetary policies? The Fed’s reaction is awaited in 2022, and for the time being, DashDevs recommends you to stay away from bonds investing.
2. Stocks Ownership by Big Five Tech
Though stocks are more resilient to inflation fluctuations than bonds, it’s not the reason to mellow out too soon. Instead, let’s clarify what’s meant by the big 5 techs. To put it simply, these are 5 leaders that share global dominance in the stocks market. We’re particularly talking about Facebook, Apple, Netflix, Alphabet, and Amazon. Today they’re cutting the delicious big chunk of S&P 500 (22.9%) and the Nasdaq 100 (41%). But do you clearly see what this dominance is about?
First, it may be equated to illusive diversification as an investment in stocks rarely ends up with an impact on the overall S&P index. Second, when the immense stocks share is in the hands of only 5 players, the wealth destruction affects them to a greater extent, leaving less chance for recovery in case of market bounces. Third, the tech tycoons’ prevalence in the market also evokes the question of economic welfare. Does the chase for innovation always justify their ultra-conservative capital management approach? And ultimately, the pandemic has also stirred the pot here by pouring even more money into the big techs’ pockets, but would it happen under fair tech competition conditions? Better answer these questions before agreeing on stocks funding!
3. Post-COVID Economic Context
While ruminating about IT investment in 2022, you need to account for the peculiarities of the post-pandemic economy. Specifically, the first hallmark of today’s reality is the Great Resignation, which implies the high quit rate and, consequently, the uptick of new job openings. For businesses, this factor may affect the labour cost changes in 2022 and the corresponding push on the improvement of work conditions to fill in the job gaps. Besides, the post-COVID economy is characterised by tensed consumer sentiment. This signifies that the business owners need to elaborate the tactics to convey a positive image about their product, whereas transparency and absent investment fear are the must-have spices when serving.
But is it all so complicated? Let’s find the silver lining here! With all these changes coming into force because of the pandemic, there’s also a big bonus to benefit from — the new promising geographies for running your business. If you look for a place to invest in a fintech startup, you may be surprised to hear that it’s not only the UK or the US. Africa shows the tendency of becoming the next startup hub, with the well-thought ecosystem created in Kenya and boost of software development funding in Namibia, Nigeria, Ghana, and Cape Verde. So, will you dare to try your investment hand at the new lode?
4. Common Prosperity Principle
Even if you consider yourself far away from politics or simply disinterested in it, don’t make a snap decision by undermining the weight of this factor. The political objectives inevitably affect the market, whatever narrow niche for starting your business you’ll choose. At the end of 2021, the most prominent ideological trend to sneak up on businesses was common prosperity or internal circulation. As a matter of fact, this principle takes birth from China but continues to conquer all other parts of the globe. Its gist lays in achieving global growth by means of social equality and diminishing the wealth gap.
Consequently, the way the businesses are governed is also subject to changes: banning of illegal incomes, stricter taxation prescription, charity and donations encouragement. A bright example of this principle in action is Tencent Holdings, which have confirmed their readiness to invest $15.47bn in common social well-being. The other social game-changer is the shared ecological sustainability that is now massively supported by modern tech companies. Are you ready to belong to this high aim too?
5. Execution Risk
Though you could be more obsessed with the market risk to your business before, today the execution risk brings a new concern to business owners seeking the idea of a successful investment. In 2022, this factor is expected to set down roots even deeper, especially when we take the private equity deals.
In short, the private equity market is characterised by high valuations, starting from a venture and ending with a buyout. The reason for its popularity stems from peers public trading and dependence on historical returns of assets. This explains why the bid in capital fundraising for private equity is projected to increase by $330bn till the end of the year. In particular, within this funding, the most lucrative private equity investment destinations include energy, microfinance, and financial services, whereas housing, infrastructure, education, and others follow the lead. Hence, if your business relates to one of these industries, consider the execution risk more carefully.
6. Digital Transformation
According to the recent Europen Union report, a digital transformation strategy gets in the top-3 adoptions by the SMEs in reply to the COVID-19 wind of change. Why so? There are 2 main progress drivers: the structural redesign of the business model and the development of the new products. In both cases, the zest for automation turns digital transformation into the leverage for the marketing upgrade, able to comply with the customers’ needs on a more profound level. The illustrative case is brought by AI, which has attracted $68bn of the world corporate investment in 2020 and is expected to keep working further in asset management, trading, portfolio optimization, etc.
However, let DashDevs be blunt, digital transformation doesn’t always coincide with the well-thought regulatory governance, in which the European companies still dominate. Thus, it’s because of legal ambiguity, the realization of the digital transformation plan is unequally distributed among the regions.
7. Data Handling
How does synthetic data usage sit with you? Do you believe in its anti-fraud mighty to deal with privacy violations? Well, that’s the promising instrument in the financial services and insurance firms that allows identifying the threat of money laundering with the help of AI techniques. Again AI… But it’s almost impossible to imagine the IT business of 2022 that handles the issue of cybersecurity more effectively than AI does.
In addition, don’t ignore the fact that contemporary users get more suspicious about personal data disclosure. That’s why the VPNs or even false information for registration at the new service are frequently used by the current customers. The statistics testify to this phenomenon: 63% of UK consumers daily resort to VPN apps or other security tools. The US shows a similar behaviour pattern — 53%, while the most cautious European users are in Spain (36%), Germany (29%), and France (21%). Does it all mean that the investment in IT products should be consistent with the users’ attitude to data collection? No question!
8. Agile vs. Managers
Agile implementation, DevOps evolution, and remote or hybrid work models are the obvious indicators of an organisation’s workflow restructuring. One of the tangible consequences of this change is the reconsidered role of the manager. From this time on, the corporate teams will require fewer management positions as the advanced work operation significantly diminishes the need for the traditional team leads.
Would this title disappear? Not exactly. But regarding that 62% of teams already rely on self-service in 2021, brace yourself for lesser control on managers’ part. Meanwhile, even now this approach proves its efficacy by speeding up IT processes and reducing the product development life cycle, which is surely a benefit for your future investment.
9. Sales Pipeline Reorganisation
Finally, here comes the moment when the businesses have gone for redesigning the sales pipeline and the attitude towards the poor-fit customers. If earlier the companies were ready to clutch at straws for retaining every prospect, further on the focus on the quality of product-customer match would be minded more carefully. This is done after realising the costs for this hanging on with the respect to profits obtained.
As a result, while investing in IT products in 2022, mind this difference and use your budget efficiently. Sometimes it’s better to let the unproductive customers go than bury your personnel’s efforts in busywork, right?
10. Modular Business Focus
What does modular technology look like in software development? In essence, it ends up with a flexible architecture, i.e. susceptible to plug and work with other products. That’s why there’s now a strong tendency to create a product exactly on the modular architecture, which allows easy change-making and excluding/adding the necessary components to the app programme instead of being chained by the rigidly set composition.
DashDevs follows this trend as well by creating the fintech modular-based software products that can be reused, perfectly maintained after the release, and customised according to the shifted customer’s needs and market volatility. And are you interested in investing in disruptive technology?
So, What Is the Best Investment Strategy for 2022?
Now you know what to consider while modifying or working out your IT investment strategy and probably have got some ideas to try. Contact DashDevs software company to help you with creating the dream app or getting expert consulting in the sphere of fintech. Let yourself make a clean break for 2022!