How High-Tech Companies Can Defy Macro Pressures; Grow Revenue & Margin

An inauspicious start to the year has been especially troubling for high-tech manufacturing, software and services companies. In this article, we uncover how AI and data science can help companies capture more margin and revenue despite external economic challenges.

High-Tech at a Crossroads

High-tech companies are accustomed to being first. They often set the trends and lead the disruption of the wider business community. Unfortunately, it’s now the sector getting disrupted by a precarious economy first - or at least the most visibly – in 2023.

According to industry tracker layoffs.fyi, more than 200,000 tech employees have been laid off since the start of 2022. “Alphabet to let go 12,000 employees amid broader tech layoffs” is the type of headline sending ripples throughout the industry in recent weeks.

The uncertainty in the economy right now is a universal burden, but high-tech firms that have spent more than a decade riding the wave up are suddenly faced with tough decisions and sizable threats to the top- and bottom-line.

It’s in times like these when errors of the past quickly reveal themselves. Poor pricing strategies and sales inefficiencies are easy to ignore or paper over in boom times. That air cover has now receded. The good news is there are existing pockets of revenue and margin improvements that already exist that high-tech manufacturing, software and services providers should lean on today.

With the U.S. Federal Reserve planning additional interest rate hikes, this young year’s rough seas are likely a sign of more uncertainty to come. So, let’s take a look at opportunities to wrest back control, and thus bring certainty back, to your commercial execution strategy.

What Levers Can High-Tech Companies Pull to Grow Margin?

Much hay has been made about the negative impact on tech stocks as profitability is in decline, after more than two years of soaring corporate profits. “Worries are rising that corporate profits are set to shrink broadly because of a slowing economy and still-rising costs amid high inflation,” reports the Associated Press.

It’s true that myriad factors are reversing margin gains; frustration mounts when factors outside of the organization’s control are the culprit. However, there is an opportunity to look inward to fix the areas of margin leakage that are entirely within your control. At Zilliant, we have analyzed billions of transactions to benchmark  recapturable B2B margin loss that can be addressed by sharpening pricing processes and capabilities.

We found that up to 17.1% of annual margin – a glaring amount – is consistently lost or left on the table regardless of market conditions. The causes are threefold: inconsistent pricing, misaligned market pricing, and inefficient pricing.

Take action: Compare your performance against benchmark data with our interactive tool

It may not seem like it at first glance, but this is good news for high-tech companies that are struggling to maintain profitability in a challenging environment.