But risks remain, not least the threat of more traditional industries looking to target tech talent
In a pandemic world where many businesses were forced to move their operations to a remote working model almost overnight, it’s perhaps no surprise that the technology, media and telecommunications (TMT) sector was one of the least negatively affected industries from an operations perspective. By the very nature of what they do, the infrastructure was already there to make the transition relatively smooth, while they will have also benefited on the demand side as more traditional organisations drew on the support from TMT partners to digitalise their business models.
Aon’s recent COVID-19 Risk Management and Insurance Survey would appear to reinforce that conclusion, indicating that more than half (53%) of the TMT businesses surveyed have proved resilient to the changes brought about by coronavirus, while 13% say their business has thrived – that’s compared to a cross sector benchmark of only 7%. Despite the encouraging reaction to the pandemic, however, the TMT sector still has plenty to think about as it ‘reshapes’ for the future, not least in the protection of its people and assets, supply chain concerns and how it manages future shocks such as business model disruption.
Retention of key employees a key concern
Aon’s survey lists the protection of people and assets as the number one ‘reshape’ priority for TMT. Within that ambition, preserving employee wellbeing is listed as a key concern, as is the retention of key employees. With many traditional industries changing their business model to take advantage of technology and modernise their workforce/workplace, the talent within TMT has become a greater target.
Traditionally industrial manufacturers, for example, might now just as likely regard themselves as tech businesses and want the employee skillset to match. That means TMT businesses will need to think more carefully about the protection of their human capital: are we paying employees properly? Are we treating them well and taking care of their work/life balance?
Supply chain under strain
Another interesting consequence resulting from the pandemic for the TMT sector are the demand and supply-led challenges. According to Aon’s COVID-19 Risk Management and Insurance Survey, two thirds of TMT respondents (66%) say they have experienced supply issues in what can often be a complex chain involving interdependencies in manufacturing, technology and R&D. There is, however, a big opportunity for TMT organisations who are a part of the supply chain into more traditional organisations who want to evolve their business models to take advantage of the cost and process efficiencies that technology can deliver. The TMT sector will be front and centre in the implementation of these solutions and should see a strong uptick in demand for their services.
Looking ahead, future disruption of the business model has become the biggest concern for the TMT sector. New digital platforms are challenging media organisations, for example, and pioneering new ways of engaging with customers. TMT businesses are also more exposed to technology disruption both for their own operations and for the businesses they serve as they become increasingly reliant on technology.
Future proof
From a risk management perspective, there needs to be a concerted focus in terms of what companies can do better and how to make business models more resilient in the event of another pandemic or similar global event. In telecoms especially, we’re seeing questions asked around future proofing operations so businesses can just flick a switch and go straight to a robust and effective business continuity plan. But it should now be less about simply adapting – a feature of the last year – and more about having a clear vision of what the business wants to achieve in the more strategic ‘reshape’ phase. Against this backdrop we can expect to see an accelerating level of M&A activity in TMT as the economy bounces back and companies reshape either by divesting non-core assets or by scaling up in other areas through acquisition. This may result in a shift in the enterprise risk profile as companies pivot to take advantage of upcoming opportunities.
To find out more about the impact of the pandemic on the technology and telecommunications sector and how future decision making will be shaped, read Aon’s COVID-19 Risk Management and Insurance Survey report.