Things change quickly every few weeks. In 2023, employees and companies will be conservative and not courageous. It will be the ‘conserve cash’ year. Here are five trends I see:
Next year, India’s GDP growth is expected to be between 5 and 6 percent. From 2008, India’s GDP is correlated to the global GDP; we benefit and lose with the global trends. 2022 was the year when the old economy took revenge and the new economy slowed down. Oil supply and price played a huge role in that; coal came back, and tech slowed down after growth during Covid. The first half of 2023 will be tougher compared to the second half, as most global economies are expected to do better by then.
Real estate, travel and tourism, life sciences and IT will be the winners of 2023. The year will also see India implementing BRSR (Business Responsibility and Sustainability Reporting) for the top 1,000 companies and the ESG targets will also get a sharper focus.
Rise of Manufacturing
Indian manufacturing will move from being the service sector’s poor cousin to being an equal. The enablers for this are already here: PLI scheme in 14 sectors plus Atma Nirbhar Bharat plus reduction in tax rates for new units. To achieve this, the manufacturing sector needs a makeover – we need to move from being a male-centric industry to hire more women to the workforce; we need to move from working around tools to working with information and knowledge; we need to move from a blue-collar workforce to a grey-collar workforce; and we need to make manufacturing an attractive sector in the 5.0 world.
Indian manufacturing will be shifting from a wage-arbitrage model to a productivity-enhanced model. The country’s productivity in terms of manufacturing (which is half of Indonesia and a fourth of China) will see automation, training, and upskilling next year. We must earn in dollars while spending in rupees, like the IT and the pharma industry do. Manufacturing exports could help do that in 2023. So, the value chain of manufacturing should see a lift with auto and healthcare driving it.
India takes pride in its digital ecosystem. The G20 presidency will give the country an opportunity to showcase its digital prowess to the world. 2023 will mark a big year as we will see the unique combination of Aadhar, UPI and ONDC at work. The entry of ONDC (Open Network for Digital Commerce) has become a game changer for the country. Imagine ONDC as India’s super app. It gives the ability to have all buyers and sellers on one integrated platform which will be a big boost for all brands – big, small, and niche. Real prices will come down as ONDC will take out inefficient costs in every part of the chain. ONDC gives consumers the benefit of choosing what they want in a value chain and not just a brand or platform. Revenue management will be a sought-after skill for companies working with ONDC. The digital platform domination of select big players will be challenged, and everyone will get a level playing field.
2023 will be an employer’s year. All companies are worried about passing on inflation to the customers. So, this year, companies will be conserving cash. Most will downsize or freeze the headcount to stay cost-competitive. This will be a big change from 18 months ago when every company was head over heels in love with employees and offered them flexible policies. While the employee-employer cold war on the former’s desire to work from anywhere and latter’s wish to see the employee in the office rages on, the debate on productivity in a work-from-anywhere environment still remains inconclusive. For employers, there are many good CVs in the market now. So, the employees should be pragmatic with their job switches next year. Managers should be reskilling and upskilling themselves in 2023. I think skill courses will overshadow degrees in seeking jobs in 2023.
Let me make a bold prediction – Metaverse is the future. Imagine it as the combination of the physical and digital worlds. Many have written it off, but I think 2023 could be a good year for the metaverse since 5G is here, and if the headset price drops below ₹10,000, metaverse will be appealing to more masses, just like how the drop in phone prices and the price-per-call paved the way to a digital India. This ₹10,000 price can only happen if China participates aggressively like they did with all the other consumer technology. We can expect metaverse taking off as use cases in education and health, and quickly spread to daily monetisation activities like shopping.
The first half of the year is going to be tight but the world’s big economies will do better in the second half. So, if individuals and companies can get through the first half unscathed, then the second half will be smooth. Conserve is the caution.
Shiv Shivakumar is Group Executive President, Corporate Strategy, at Aditya Birla Group