BCG: Next Generation Tech Innovators in Emerging Markets

Digital technology discussions and debates tend to focus on the west coast of the US and the east coast of China – the so-called “gold coasts”. But according to Boston Consulting Group (BCG), the global tech industry is more diverse and dynamic, with exciting digital disruption and innovation coming from emerging markets.

According to BCG’s analysis, tech companies from Africa, Asia, Israel, Latin America, Russia, Turkey, and the UAE may not yet achieved the global scale of the likes of Apple or Alibaba, but they are bringing products and services to market – often in new ways, and growing fast in both size and number. 

These innovators are reinventing their industries and gaining the attention of existing major players as a result. 

In this latest edition in the global challengers series, BCG examines 100 emerging-market tech challengers – their innovative, rapid growth, and expanding global positions.

Geographic Diversity and Leadership

China has dominated the emerging-market tech scene in recent years, but other markets are growing in sophistication. Entrepreneurs are improving their access to technology, ideas, and capital. A next generation of younger, smaller, and much more diverse tech companies is emerging. 

Of the more than 10,000 tech companies that have been founded in emerging markets since 2014, almost half are located outside China. Among emerging-market tech unicorns (companies valued at US$1 billion or more), a third are not from China. 

The 100 global tech challengers on BCG’s 2020 list are truly global, representing 14 countries from all major regions. They are active in multiple sectors, spanning B2C and B2B. While two-thirds focus on consumer apps or services, the rest are active in B2B – transforming how other companies work. More than half have expanded beyond their domestic market, and 40 percent are active in developed markets.

These tech challengers average US$2bn in revenues, yet are still experiencing annual growth of almost 70 percent.

Innovation Reigns For Tech Challengers

These companies are innovative. Some develop products and services designed to solve problems in emerging markets. Others go beyond new products and services to innovate transformative business models in their industries.

Many tech challengers are addressing such challenges as socioeconomic problems related to lack of infrastructure, limited financial inclusion, and inadequate health services. Innovation often sees them reshape markets, address inefficiencies, and establish new industries. Increasingly, tech challengers are challenging multinational competitors from developed markets and gaining recognition on the global stage.

Challengers Reshaping Tech Sector

Tech challengers are reshaping the sector, as well as other industries where they see opportunities, and many are keen to expand beyond their initial market or sector.

They face incumbents on three main battlegrounds. The first is existing revenues and profit pools in local markets, which challengers attack through technological and business innovation. The second battleground involves a focus on future value pools of emerging markets. The third battleground is global, as some tech challengers reach far beyond their local markets to establish an international presence.

Challengers also provide opportunities for partnership and collaboration. Their tendency to work through ecosystems encourages them to be more open to collaborative models than many of their predecessors. 

Recognizing the value and the collaboration potential of challengers, many incumbents see challengers as attractive opportunities for investment or even acquisition.

Whether as adversaries or as allies, emerging-market tech challengers are a force to be reckoned with.