3 Business Predictions You Need to Know in 2023 (2024)

Nothing like a few fireworks to ring in the New Year. The biggest sparkler of them all might very well be the significant shift in the tech industry’s operating model – the first of its kind in 30 years. Led by the Fed’s interest rate reaching nearly 5%, the tech industry is resetting and rethinking the way it builds its companies.

While change is afoot in the way tech businesses run, the progress enterprises are making with digital transformation continues and is moving from “growing pains” to maturity. At the same time, we’re seeing artificial intelligence penetrate nearly every aspect of our day-to-day lives and expect cloud adoption to become nearly universal. Together, these developments (and others) will make the coming months exciting for digital-first businesses, customer experience innovators and Software as a Service (SaaS) providers—even against an economically uncertain backdrop.

So, buckle up—things are about to get interesting. Here are some of my business predictions for 2023.

Worldwide, dissatisfaction with globalization will disproportionately hurt local businesses.

There has been considerable backlash against globalization in recent years, and it isn’t hard to see why. While globally connected markets have made commerce easier and more convenient (both on the macro and micro scale), they have also raised geopolitical concerns—from job insecurity to economic inequality. In fact, some economists are predicting a significant contraction in global integration, similar to what happened in the wake of the 2008 financial crisis.

In an interview with CNBC, Kevin P Gallagher, economist and director of the Global Development Policy Center at Boston University, said, “You know how stock markets have bubbles? And then there’s a correction. I think there’s been a globalization bubble, and we’re trying to correct it.”

What would that “correction” look like? It depends on what side of the bubble you’re on. Single markets, like the European Union, will suffer considerably more than nonintegrated ones, like the United States and India. In fact, I expect the U.S. dollar to emerge stronger than it’s ever been, as more organizations (and individuals) favor its stability over that of the plummeting euro.

However, while the U.S. and India—which is poised to become the world’s third largest economy—are better positioned than most, not all economic powerhouses will be so lucky. China will likely face greater headwinds than most, largely due to global debt and monetary policy spillover. That’s the macroeconomic picture.

On the micro side, we’ll see businesses that are globally spread out—but not stretched too thin—having a hedge on the turbulent economy. That’s because business growth cycles typically shrink during periods of high volatility. Businesses that are largely localized expand and contract—often wildly—with their local economies. By contrast, global businesses can weather localized volatility by keeping one or more feet firmly planted in more stable or upward-trending markets. So, if growth slows in Europe, for example, a company can lean into its operations in high-growth places in India.

While the coming months will be challenging for many businesses, I believe, they will be especially tough for those that are highly localized. I expect many to adopt strict austerity measures and more than a few to fold completely. I also expect global businesses to continue to grow—slowly at first, then more sharply as conditions stabilize. While this is true for all industries, it is especially true for the technology sector (more on that below).

Business-wide, AI and cloud transformation will be the top two trends (and investments).

We’re already seeing artificial intelligence transform from data science novelty to enterprise necessity. That trend will take a quantum leap in 2023 as more businesses embed AI-based applications into their very fabric of being. In fact, in its 2023 AI Predictions Report, Forrester forecasts that ten percent of Fortune 500 enterprises will generate content with AI tools and one in four tech executives will report to their board on AI governance. And with AI spending expected to top $500 billion next year, we’re fast approaching mainstream adoption levels.

We’ll also see AI more in our day-to-day lives, particularly in our commercial interactions. While AI “disruptors”, like OpenAI’s ChatGPT (Generative Pre-Trained Transformer), are the current darlings of the tech and business communities, those that follow AI trends closely (myself included) are more excited over advances in adaptive AI and generative AI that promise to make a more lasting impact on how brands and their customers interact with each other. These developments will enable brands to create more hyper-personalized content, which consumers have increasingly come to expect. This is especially important as consumers continue to show strong preference for digital interactions over in-person ones in the wake of the 2020 global pandemic.

All of these interactions—and the volumes of data gleaned from them—will, of course, happen on the Cloud. During the past few years, the rate of enterprises migrating to the Cloud has reached breakneck speed. And 2023 will be no different. In fact, Gartner predicts public cloud spending to reach $592 billion next year. In the coming months, we’ll see most, if not all, industry leaders complete their Cloud migration journey, with early adopters reaching early maturity levels.

Industry-wide, SaaS will be the better long-term bet in the tech vendor space.

No discussion on the future of AI and Cloud technology would be complete without discussing the vendor market. While many businesses have invested heavily in Cloud-based AI point solutions (and some have even built their own infrastructure in-house), these efforts are exceedingly costly and often focus on shortsighted outcomes that yield limited results. SaaS businesses offer alternatives that deliver better business outcomes through dynamic customer engagement and continual solution refinement. As a result, SaaS solutions offer unparalleled scalability and flexibility for future development.

While last year saw many SaaS providers overvalued, 2023 will be a whole different story. With many top-tier companies operating at upwards of 80 percent margin, SaaS remains one of the most efficient and lucrative business models in the world. Consider this: a true SaaS company that operates at 80 percent gross margin with net revenue retention of more than 120 to 130 percent can generate more revenue than manufacturing. That’s remarkable.

So, why aren’t companies rushing toward SaaS solutions en masse? Simple: companies are focusing on today rather than tomorrow. And it’s easy to see why. Business leaders are bracing for a rough year and only making short-term bets that can pay off, if even modestly, within a few quarters or a couple of years. That puts point solution providers in a slightly more favorable position—for now. Because of the rapid changes impacting todays' businesses, those companies that invested in SaaS solutions when times were tough will be infinitely glad they did so in the years ahead.

While SaaS is by no means immune to today’s economic turbulence, its inherent flexibility and innovative agility make it a better long-term bet than other tech business models. Put a SaaS offering next to a traditional licensed software offering, and you’ll see a significant difference in ROI over the next 12+ months, with SaaS users raking in huge gains by comparison.

I know that covers a lot: the global economy, business trends and the tech vendor landscape. But it’s all interconnected. And we’ll soon see in the coming months how just one piece of the puzzle can change the whole picture. Yes, it’s going to be a wild ride, but I’m willing to bet those who can weather the storm, will come out stronger in the end.

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About Umesh Sachdev

Umesh Sachdev is a successful entrepreneur and the Co-founder and CEO of Uniphore, a software-as-a-service (SaaS) company focused on conversational Artificial Intelligence (AI) and Automation across the enterprise. Sparked by Umesh's vision to use technology to bridge the gap between the human voice and modern machines, Uniphore has morphed into a hyper-growth startup that has changed how businesses operate and solve complex enterprise customer service challenges. As one of the fastest-growing companies in the AI space, Uniphore’s pioneering work has transformed how business enterprises harness the value of conversations with their customers to create a future-proof customer experience – for every industry.