U.S. Technology Services Providers May Face Challenges Abroad
Interest in digital transformation has helped the U.S. become a major global provider of information technology services. However, shifting trade policies and increased global competition may end up hampering American service providers’ business growth abroad, according to an article in CIO.
Digital Transformation Surplus
Due to digital transformation efforts and the emergence of cloud computing, U.S. IT firms are running a major surplus and exporting digital services to foreign businesses. In fact, a CompTIA report found that although the U.S. imported more manufactured technology than it exported last year, it ran a trade surplus of $32 billion in tech services. Moreover, the CompTIA study found U.S. technology companies sold a little over $200 billion in manufactured goods globally — a 1.3 percent drop since 2015, CIO notes. However, IT services have continued to dominate a large share of U.S. technology exports and have more than doubled since 2005.
Tim Herbert, CompTIA’s senior vice president of research and market intelligence, noted that the increased demand for technology services in markets around the world is spurring new job growth and expanding share of industry revenues.
“Customers in many markets around the world are following the digital transformation path that we’ve seen with U.S. companies,” Herbert told CIO. “The desire to enhance productivity, engage in e-commerce or automate routine processes [is] most often a function of investments in software and IT services.”
Technology Services Overseas
In turn, as more companies abroad need support for digital transformation, American technology services vendors may have the opportunity to expand even further if other external factors remain constant.
“Customer demand for software and services is on a growth trajectory, providing ample opportunities for U.S. tech providers to further increase their exports,” Herbert noted, according to CIO. “Of course, this assumes current economic and trade policy conditions remain relatively stable.”
Enterprises must also consider the effect of increased global competition in the future and its potential impact on U.S. IT service vendors.
“Foreign tech firms are keenly aware of the growth in software and services and will be working hard to capture a larger slice of the pie,” Herbert told CIO.
The news source also reports that other threats to American IT service providers include trade barriers, logistical management, localizing products and services, currency and exchange rate issues and weak demand in important international markets.