Ninth survey of C-suite and executive leaders indicates a record-high rise in tech spending, industry convergence and AI-fueled competition for tech talent.
NEW YORK, Oct. 26, 2023 /PRNewswire/ — Mid-market technology spending is at its highest level since before the pandemic, according to Deloitte Private’s “2023 Mid-market technology trends report.” More than half (53%) of respondents said their organizations are spending above 5% of revenue on technology in 2023, up from the 2019 peak of 43%, and a dramatic recovery from only 20% mid-pandemic in 2021.
Since 2013, Deloitte Private has conducted the survey of mid-market private company executives from organizations with annual revenues ranging from $250 million to more than $1 billion.
Additional findings:
- AI jumps ahead of other technologies as the top tech investment priority for the mid-market. This year, 40% of respondents say AI is their top tech investment priority; in 2021, just 12% of respondents predicted AI would have a significant impact on their business within a year. More than twice as many respondents with active AI solutions (47%) report revenue growth of 20% or higher compared with those not using or exploring AI (23%).
- Leaders appear to be seeing results from a sustained focus on data security. Three in 4 (74%) respondents indicate high or very high confidence in their business’ cyber security capabilities. Notably, respondents with active AI solutions are more than two-and-a-half times as likely to have very high confidence in their cyber security capabilities compared to businesses not using or exploring AI at all (32% vs. 11%).
- Industry boundaries blur. More than half of mid-market companies (51%) are aware of competitive threats moving into their markets from outside their sector but appear prepared to expand into adjacent industries. In the survey, 70% of respondents report that their organizations have developed an asset that could be monetized outside of their sector; that number rises to 81% among organizations reporting the highest ROI on their tech investments.
- Mid-market companies pull multiple levers to retain tech talent. Providing competitive benefits and compensation (36%) and offering flexible/hybrid work environments and geographic options (36%) are cited as the most successful strategies to retain tech talent, followed closely by creating flexible career paths, transparency and better performance feedback (34%) and investing in diversity, equity and inclusion programs (34%).
- Demand for AI skill sets intensifies competition for talent. Still, businesses are struggling to find the right talent, with respondents reporting their business is having difficulty attracting AI strategists (40%), engineering talent (37%), as well as data and deep-learning scientists (35%).
“Middle market private companies are reaping the benefits of a robust technology agenda, including higher revenue growth and greater preparedness to expand outside their industry — fueled by tech spending,” said Wolfe Tone, vice chair, and U.S. and Global Deloitte Private leader. “When it comes to talent, digitization is also calling for these companies to leverage a mix of competitive approaches to develop and retain the tech skills needed not only for success today but to be prepared for what is needed five or ten years from now.”
“As boundaries between traditional industries, competitors and collaborators continue to blur, middle market private companies will likely face off against companies and sectors not traditionally seen as competitors,” said Ryan Jones, private equity leader and principal, Deloitte Consulting LLP. “Thriving in this dynamic environment hinges on adopting an innovation mindset and actively putting the resources behind the development of assets that can be monetized for value outside their traditional sector to drive growth.”
About the survey
Deloitte Private conducted the survey to examine technology trends in the private and mid-market company segment. The survey was fielded online by an independent research company between May 4 and 24, 2023. Half of the respondents were C-suite executives, while the remainder were non-C-suite decision makers representing companies in the U.S. with annual revenues of US$250 million to more than US$1 billion. Eighty percent of the respondents represented companies that are privately held, while the rest were publicly-traded firms. Companies represented industries including technology, media, and telecommunications; financial services; consumer and industrial products; energy and resources; and life sciences and healthcare (LSHC).
For more information about this series and survey, please visit 2023 Mid-Market Technology Trends Report.
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About Deloitte
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SOURCE Deloitte
