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How TMT businesses can retain their resilience in 2021

By Tom Wrenn, Partner at ECI Partners

2020 was certainly a disruptive year for businesses, however, one sector which remained resilient throughout was TMT. While perhaps not surprising given the increasing need for technology in the last 12 months, there were also a number of underlying drivers that allowed the sector to withstand the pressures of the Covid-19 crisis and the mass market disruption that has been caused as a result.

According to our latest Growth Index research, a significant 80% of TMT businesses were still classed as resilient by the end of 2020. Resilience was classified by looking at the impact of Covid-19 on growth predictions, of which in TMT, only one in five businesses saw a reduction in growth throughout the pandemic.

So, what did TMT businesses do to ensure their resilience, and how can this be retained throughout 2021?

TMT’s core offering

Firstly, many TMT businesses offer services which are ‘always on’. Tech solutions and products which do not need ongoing manual inputs can function 24/7, something that is significantly harder for many businesses in the consumer or services space. This means more automation and less service interruption, even during a pandemic.

As an example, Investis Digital is a global powerhouse in digital communications and marketing. Its ability to provide clients with the technology and ‘always on’ service means clients know their digital footprint and brand reputation is secure and protected at all times of the day. While existing clients have therefore continued to see this as an essential service, the firm has also won new clients during the pandemic. This exemplifies how a TMT business can make itself invaluable to clients, allowing the business to remain resilient, and even grow, despite the pandemic.

Additionally, many firms in the sector have businesses models based on subscriptions or have high levels of recurring revenue through retained contracts or other long-term customer agreements, which not only enables them to continue servicing clients through the crisis, but also gives them visibility of predicted future revenues.

Investing in the future

TMT businesses have also invested smartly in technology themselves. Over half (54%) of TMT businesses have invested in cybersecurity in the last 12 months, and 44% expected to invest more in cybersecurity as a result of the pandemic. This investment allowed them to protect the platforms on which they operate, ensuring ongoing provision of solutions to their customers.

In addition to being more cyber secure, TMT businesses are also wanting to work smarter and more efficiently – 44% have invested in automation, and a similar number (41%) in AI, which not only provides more adaptability and ease of pivoting to more remote operations, it also means that business’ employees can spend more time on the strategic and customer-facing aspects of their roles to continue high levels of service.

International presence

Clearly, there is a huge benefit of international revenues and profits on business resilience. In practice, this meant that businesses that weren’t internationally diversified in 2020 struggled more during the pandemic. In fact, the businesses considered to be the least resilient through the 2020 crisis were three times more likely to operate domestically. Once again, when comparing different sectors, TMT businesses turned out to have the strongest international presence, with over half (52%) of firms operating in Europe, and 43% with operations in North America. Our analysis shows clear links between resilience through the crisis and a North American presence, both of which were clearly demonstrated by businesses in the TMT sector.

In a positive outlook for the sector, as we move into 2021, many TMT businesses are already predicting that they will expand their international presence further, which will likely support continued resilience in the future. Of those TMT businesses that are looking to expand overseas, over half (56%) expect to grow into Europe, followed by North America (44%) and Asia Pacific (36%), which is highly promising, particularly amid political uncertainty in Europe and the US.

TMT business models are clearly geared towards resilience, with ‘always on’ operationality, the prevalence of subscription-based models, coupled with investing smartly in technology and operating internationally. The sector’s resilience and growth prospects, which look set to continue into the future, are not just positive news for the sector, but great news for the UK’s economy as a whole.

Opinion

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