Digital geopolitics is an emerging concern for multinational corporations, showcasing the close ties between technology and government, according to the 2022 Gartner Board of Directors Survey. Four in 10 of the 273 respondents cited geopolitical power shifts and turbulence as significant risks to performance.
Geopolitics is broadly defined as international relations in the context of geographical realities. Digital geopolitics folds technology into that equation.
Gartner forecasts that 70% of multinational enterprises will adjust business strategies to reduce risk exposure to digital geopolitics in the next four years. This includes navigating trade disputes, government-imposed restrictions and armed conflict.
Geopolitical change is both a challenge and an opportunity for CIOs, who can proactively address potential risks to IT operations and rearchitect digital systems and strategies, according to Gartner.
Recent events on the international stage, including war in Ukraine and escalating tension between the U.S. and China over Taiwan, have centered geopolitical instability as a major concern for multinationals.
Disruptions are also an issue for any company that outsources to, relies on, or does business with overseas partners.
As tensions between global powers escalate, so do tactical and strategic cyberthreats from state and non-state actors outside of the U.S. Localized conflicts, like the war in Ukraine, impact supply chains and can cut off access to vital resources at a time when semiconductor shortages and difficulty getting silicon chips from Taiwan are already a problem.
War in Ukraine exacerbated the chip shortage because businesses were unable to access the noble gasses required in manufacturing, said Hyoun Park, chief analyst at Amalgam Insights.
That could affect computer chip production, according to Park. Similar supply chain constraints also impact cloud costs.
Anticipating geopolitical instability can help CIOs plan for costly disruptions, according to Gartner. Understanding the geopolitical landscape can also present CIOs with opportunities and solutions.
Art Zeile, president and CEO of DHI Group, points to companies looking to Mexico and Central America as an answer to the ongoing shortage of domestic tech talent — an answer that avoids the inconvenience of situating IT teams halfway across the globe in India or in proximity to the Ukraine conflict.
The realistic response to the tech talent crunch is to offshore or nearshore those needs, Zeile said.
“There’s been a rebellion against using resources in India or even in Eastern Europe, which has its own set of issues now,” Zeile said. “There are going to be more companies looking in southern and central America, because of the time zone. The beneficiaries are going to be Argentina, Mexico, Colombia, and also Costa Rica, because those are the countries that have well established university programs in technology work.”