Since the dotcom bubble burst in 2001, it seems that uncertainty has come in waves every eight years or so. In 2008 it was the Global Financial Crisis and in more recent times the 2016 US election and the ongoing challenges across Europe, such as populism and continuing political uncertainty, have shaken many of our assumptions.
But what does this mean for European competitiveness?
It’s my strongly held view that the perceived uncertainty is not a reason for the business community to lose confidence. Far from it. It’s my belief that now is a time for optimism. This isn’t to be dismissive of the issues the region faces, but it is to remind ourselves that digital innovation means we are living in an era of profound opportunity for individuals, businesses and communities. Just take the number of tech startups creating jobs and building value for their businesses, the smart city initiatives reducing energy consumption or the assisted living projects supporting people in the community live independent lives through digital innovation.
The European Commission estimates the region will grow €415 billion per year, if we can successfully support digital business. This isn’t a new concept; in fact, European companies have been leading the way in digital innovation for many years.
I believe there are four key areas through which digital is cementing our competitiveness.
The Fourth industrial Revolution
Widely trailed at Davos, the Fourth Industrial Revolution has become a mainstream theme across business and policy making circles. It refers to the fusion of technologies blurring the lines between the physical, digital and biological spheres – leading to advances in areas such as supply chain automation, robotics and 3D printing. But it encompasses so much more too.
For many countries in Europe, embracing this new wave of digital transformation is seen as a crucial catalyst for boosting economic growth, empowering businesses, up-skilling the workforce and solidifying infrastructure. These digital technologies are already transforming European industry, so we must take advantage of the opportunities this brings.
With huge implications for how industrialized economies operate the lead taken in Europe provides a significant strategic advantage.
Leading the charge in AI innovation
The recent TCS Global Trend Study found that over half of European business leaders see AI as being “transformative” and say it will be “important” or “highly important” to remaining competitive in 2020. The same study found that European businesses invested on average $80 million in AI and robotics, more than any other region globally.
And it doesn’t stop there. By 2020, European companies envisage 51% of AI investments will go towards improving existing business processes and 49% will go towards transforming it – promoting new ways of working and creating a wealth of opportunities. According to our study, Europe is investing more than any other region in the world in this nascent innovation.
Investment leads not only to enhanced business operations but directly to the bottom line. The companies that realized the greatest AI-related revenue improvements and cost reductions spent five times more on the technology than the companies with the lowest AI-related revenue and cost improvements. In turn, leaders in Europe generated average revenue increases of 16% from AI initiatives, compared to other regions that saw a modest 5% revenue growth.
Skills in the digital age
The demands of the digital economy necessitates new skills and approaches from employees too. Like all countries and regions, striving to build the appropriate skills base in a dynamic digital economy is challenging – not least because job roles are constantly evolving. Who would have known 10 years ago there would be social media managers or coding would be a mainstream subject at school?
The good news is that on skills, Europe shows promising signs. Our #Gendirect study which canvassed 5,000 young people from 15 European countries, found that 45% of those polled indicated they had used social media to find jobs – perhaps one of the contributors to the EU28 unemployment rate declining to 8.9%, reaching the level it was in 2009 for the first time after 7 years.
Source: TCS Gendirect study
The insights from the report conclude that Europe’s young entrepreneurs, students and professionals are extensively using digital tools to expand their professional opportunities – securing jobs, enhancing their skills and creating economic growth of their businesses. As one example, 70% of young entrepreneurs have indicated that they were able to successfully secure investment for the ventures through social media.
TCS alone is also working with well over 200 schools across Europe to enhance STEM (Science, Technology, Engineering and Mathematics) education. With the number of careers requiring STEM rising far quicker than the number of people graduating with this skillset, the collaboration between business, policy makers and educators across Europe to instill digital skills positions the region well for the future economy.
Europe has taken a lead in shaping policy that actively supports the digital economy. One of the key pillars of this has been the Digital Single Market initiative, launched in 2015.
The policy momentum is to be welcomed. Take efforts in security and privacy. The cybersecurity strategy for the European Union and the European Agenda on security provide the overall strategic framework for the EU initiatives on cybersecurity and cybercrime.
On connectivity, which is at the heart of the digital revolution, the development of the 5G networks is an important leap forward. Although the full rollout strategy is ongoing, it’s encouraging that it’s such a priority. Especially considering the Commission’s own study on 5G found that it could bring €113.1 billion per year, along with new thousands of jobs
The Digital Single Market aims to remove friction from digital business. But importantly it also focusses on cementing trust in the digital system, vital to the readiness of consumers and citizens to take full advantage of opportunities in the future economy.
Of course competitiveness is made up of countless other elements. The physical infrastructure of a country, access to finance, transport connectivity, good governance and regulation. The list is endless. But to me and the businesses we partner with, digital is at the heart of Europe’s success and key to its future.
I believe we’re on the right track, but I also believe we still need to question the ‘business as usual’ mindset. Only when we all open our eyes to the opportunities digital creates for us, will the huge benefits of the future economy be delivered.