The technology industry has grown immensely over the past decade and will continue to skyrocket in the coming years. The latest advances and innovations drive this evolution, presenting many unique opportunities for established companies and up-and-coming startups.
One area that has brought the tech industry opportunities and challenges is globalization. Tech companies can reach new customer bases, significantly increase revenue streams, and access new talent.
However, there are downsides. As a tech company, you must navigate complex regulations and changing legal frameworks — which are out of your control. There are also challenges surrounding increased competition, security concerns, etc.
Here is how to strike a balance to become more self-reliant without closing the door on globalization opportunities.
The Benefits and Risks of Globalization
There are pros and cons to anything, including globalization. Here is what to consider.
Advantages
There is plenty to be excited about concerning globalization, including:
- Access to global talent
- Diverse markets
- International innovation
Risks
With those pros in mind, you should also be mindful of the following:
- Geopolitical unrest
- Supply chain disruptions
- Dependence on global suppliers for raw materials, such as rare Earth metals and semiconductors
Supply Chain Volatility and Raw Material Shortages
The risks associated with globalization are critical, especially concerning the effects on tech production. Some projects are vast, and the entire project could be compromised if issues arise mid-production, such as a lack of crucial material. When strict deadlines are important concerning project launches or budgeting, the effects could be devastating.
For example, reliance on international suppliers can increase vulnerability when facing geopolitical or supply chain issues.
COVID-19 and recent geopolitical tensions are prime examples of losing control over material access. These issues affected chip manufacturing and raw material access, limiting production for those in the tech industry.
New Regulations and Policies Can Create Challenges
New regulations and policies can sometimes be implemented without notice, creating significant uncertainty for tech companies, especially when trade is involved.
If companies in a certain country can not access supplies based on evolvingg policies, beginning or completing projects can be very challenging. Again, the consequences can be detrimental to certain companies — particularly those who have already invested heavily into a nearly completed project.
The impact of U.S. and Chinese trade policies within the tech sector is a prime example of how changes can create a significant ripple effect. In 2022, the United States implemented a strategy to limit technological development in China. This strategy is largely in response to “Made in China 2025“—the ten-year plan to make China the most dominant player in high-tech manufacturing. Trade rules and security risks are concerns.
The Goal of Becoming More Self-Reliant
It can be a sobering experience when such significant moves are made concerning globalization. Trade policies, shortages, and supply chain issues can cripple tech companies that are ready to scale.
So, how can players in the tech industry benefit from greater self-reliance?
While many hurdles are out of your control, there are steps you can take to gain greater peace of mind moving forward, including the following:
- Diversify supply chains: Invest in domestic production and alternative supply routes where possible. This tactic will help you mitigate the most pressing risks associated with tech globalization.
- Foster innovation locally: Encourage research and development within national borders while maintaining positive global partnerships.
The above strategies are based on the classic “don’t put all your eggs in one basket” concept. By taking a more balanced approach, you can still scale and benefit from globalization. The primary goal is to secure a level of self-reliance that minimizes risk.
Take a Balanced Approach Today
There is no denying that tech companies will face future disruptions and ongoing hurdles. These challenges may increase in severity as global competition increases. However, that does not mean that you should ignore the advantages of globalization — there are many.
As a tech company, you must be proactive and strategize to protect yourself from possible risks. The more prepared you are, the easier these risks are to navigate if they become problematic. Having backup plans and implementing a more balanced everyday approach to research, design, and production will remain crucial.
Read more: Technology Transformation: Who Should You Be Hiring?
Takeaway: Build a Talented Globalization Tech Team
Having the right systems and tools and a talented team matters.
Creating a team you can rely on during growth and struggle will help ensure continued growth, even in times of uncertainty. Hire people who can conduct market research based on the countries you plan to do business with and who can build strategic partnerships within those collaborations. The same applies to those who will guide you through security risks and an improved digital infrastructure.
The global landscape will continue to change. Create a team and build a business that will allow you to weather any pending storm. Work with an expert talent advisor today!