Tech execs expect growth in 2024
Leaders describe the sector as healthy, innovative, and poised for growth thanks in part to AI, cloud, and cyber.
The tech industry navigated some headwinds in 2023, with a dip in global tech spending and layoffs across the sector. But some analysts are optimistic that the tech sector could return to modest growth in 2024, as companies determine how to leverage generative AI, migrate more workloads to the cloud, and adjust to new regulatory requirements.1 Tech leaders agree: Deloitte’s quarterly executive survey found that sentiment is upbeat, and they feel optimistic about upcoming quarters.2
To help keep tabs on this sentiment throughout 2024, the Deloitte Center for Technology, Media & Telecommunications will field quarterly surveys of tech executives, tracking their perspectives on the industry and on their own companies’ performance. Analyzing this sentiment over time can provide an “optimism index” that helps us better understand trends, identify potential shifts, and inform our predictions for future developments.
When asked what words best describe the industry today, respondents were most likely to select innovative, evolving, competitive, and powerful. Fifty-five percent of respondents said the industry is “healthy” or “very healthy” today, and when asked to predict industry health six months from now, the outlook for “healthy” or “very healthy” rose by seven percentage points (figure 1). Only 11% viewed the current industry state as “neutral” or “unhealthy”—and that shrank to just 4% when looking out six months. Reflecting on the health of their individual companies, 65% of executives surveyed selected “healthy” or “very healthy.”
This outlook likely stems from projected increases in software and information technology service spending.3 Leaders identified the technologies that they expect to enable the most growth for the industry this year, selecting artificial intelligence, cloud computing, cybersecurity, advanced connectivity, and generative artificial intelligence (figure 2).4 The surging popularity of AI seems to be driving a cycle of growth for the industry. Increased AI adoption necessitates investment in cloud, connectivity, and infrastructure modernization. As IT environments grow more complex and give rise to new potential attack vectors, cybersecurity spending increases concurrently.5
“Everything from management, security, compliance, configuration tracking, and reporting across the board [will be] continuing growth areas,” one technology executive explained in a Deloitte interview conducted in the last quarter of 2023, as cloud, AI, and new regulations contribute to the industry’s rising tide. At the same time, “Things like endpoint protection and threat intelligence and SIEM [security information and event management], and vulnerability management—you’re not dropping those.”
Dawn of enterprise gen AI
In a recent Deloitte survey of more than 2,800 business and technology leaders around the world, 62% reported that they feel excitement about gen AI—the only question is how quickly it will transform their organizations and industries. Almost a third (31%) said it’s happening right now or in less than a year. Another 48% said gen AI will take hold within the next one to three years.6
In our interviews, leaders spoke about their efforts to apply gen AI across a range of use cases: “Our investigation of AI [involves] pockets of opportunity where we think AI could help us be more efficient or more effective in delivering our products and services,” one observed. “We’re starting to branch into, ‘How can we use it in our internal business development?’ We’re looking at AI for design services, design explorations, and the products that we build … We’re looking at writing technical specs.”
Almost two-thirds (62%) of the executives surveyed feel now is a good time for their company to take greater risks. When asked about strategic initiatives underway at their companies today, respondent selections seem to follow the same trend toward IT modernization, with infrastructure investments (39%), scaling their companies (35%), integrating AI (33%), and enhancing customer experience (32%) as the most important. Optimizing current business and developing new products ranked close behind, at 29% and 27%, respectively.
Looking 12 to 24 months ahead, leaders expect that their capital build-outs and AI integrations will begin yielding positive results. They selected “scaling the company,” “fostering trust,” and “investing in research and development” as the top initiatives for 2025 to 2026.
Uncertainty lingers into 2024
Executives are also realistic about a raft of ongoing headwinds. In ranking challenges they expect to face this year, respondents cited regulatory concerns, market disruption, and talent issues.
On the regulatory front, tech companies of every size are under pressure to ensure data protection, reduce potential harms, and put ethical guardrails around AI implementations.7 New disclosure requirements in the United States and European Union are fueling investment in data governance and reporting tools, as well.8
“If every country in the world, if every state in the United States, is coming up with their own regulations—whether it’s for AI, for privacy, for cybersecurity disclosure—and they're different, how can companies possibly manage that?” one leader mused.
Global uncertainty and materials shortages are two disruptive factors that are fueling uncertainty, especially in the short term. As explained in Deloitte's TMT Predictions 2024, tech companies may mitigate the potential risks by exploring ways to recycle raw materials from e-waste, digitizing their supply networks, and encouraging domestic authorities to create strategic stockpiles.9
On the talent front, workers who have the skills to manage IT environments and implement AI at scale are in high demand. In a Deloitte survey of 106 tech leaders in late 2022, nearly 90% identified recruiting and retaining talent as moderate or major challenges, while 72% ranked “meeting workers’ broader needs” as a moderate or major challenge. Mentorship programs, flexible work arrangements, and clear paths for skills development will likely help build a company’s talent pipeline and build loyalty among new employees.10
Questions for leaders and Deloitte to consider
As results from subsequent waves of this executive survey come in each quarter, we will track changes in sentiment and adjust our questions to build accurate assessments of the sector. The questions we may explore in coming surveys are likely relevant to tech leaders today, as well:
- What are some good key performance indicators for measuring value from digital transformation and achieving long-term growth? Are companies looking at KPIs beyond traditional financial and customer metrics, such as workforce performance and alignment with organizational purpose?11
- In the United States, regulatory requirements for AI continue to evolve.12 Are organizations ensuring that AI projects—generative or otherwise—are being rolled out with the requisite risk assessments and guardrails?13
- As gen AI is integrated with employee- and customer-facing solutions and back-end systems, how will companies navigate the buy versus build dilemma, staff up in a field that changes daily, and find ways to differentiate their offerings?14
- Considering projected growth, ongoing challenges related to talent recruitment and retention, and increased competitive pressures, is now the time to focus on mergers and acquisitions to achieve strategic benefits in the medium and long terms?
