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January 17, 2022

Filings buzz in the tech sector: 11% decrease in digitalization mentions in Q3 of 2021

By Verdict Staff

Mentions of digitalization within the filings of companies in the tech sector fell 11% between the second and third quarters of 2021.

In total, the frequency of sentences related to digitalization between October 2020 and September 2021 was 48% higher than in 2016 when GlobalData, from whom our data for this article is taken, first began to track the key issues referred to in company filings.

When tech companies publish annual and quarterly reports, ESG reports and other filings, GlobalData analyses the text and identifies individual sentences that relate to disruptive forces facing companies in the coming years. Digitalization is one of these topics - companies that excel and invest in these areas are thought to be better prepared for the future business landscape and better equipped to survive unforeseen challenges.

To assess whether digitalization is featuring more in the summaries and strategies of tech companies, two measures were calculated. Firstly, we looked at the percentage of companies which have mentioned digitalization at least once in filings during the past twelve months - this was 91% compared to 82% in 2016. Secondly, we calculated the percentage of total analysed sentences that referred to digitalization.

Of the 50 biggest employers in the tech sector, Huawei Investment & Holding Co Ltd was the company which referred to digitalization the most between October 2020 and September 2021. GlobalData identified 321 digitalization-related sentences in the China-based company's filings - 7.1% of all sentences. ChinaSoft International Limited mentioned digitalization the second most - the issue was referred to in 3.9% of sentences in the company's filings. Other top employers with high digitalization mentions included China Communications Services Corp Ltd, Cognizant Technology Solutions Corp and Capgemini SE.

Across all tech companies the filing published in the third quarter of 2021 which exhibited the greatest focus on digitalization came from Telstra Corp Ltd. Of the document's 1,119 sentences, 120 (10.7%) referred to digitalization.

This analysis provides an approximate indication of which companies are focusing on digitalization and how important the issue is considered within the tech sector, but it also has limitations and should be interpreted carefully. For example, a company mentioning digitalization more regularly is not necessarily proof that they are utilising new techniques or prioritising the issue, nor does it indicate whether the company's ventures into digitalization have been successes or failures.

In the last quarter, tech companies based in Eastern Europe were most likely to mention digitalization with 2.08% of sentences in company filings referring to the issue. In contrast, companies with their headquarters in the United States mentioned digitalization in just 0.53% of sentences.