KPMG 2023 Global Technology CEO Outlook

Amid an evolving regulatory landscape, geopolitical uncertainty and an unpredictable economic environment, tech CEOs are cautiously yet optimistically forging ahead with planning for their company’s futures. Part of the 2023 KPMG CEO Outlook gathered insights and perspectives from 127 global tech CEOs on the business and economic landscapes over the next three years.

Keep reading for their thoughts on what is in store for the sector.

Artificial intelligence (AI) is transforming nearly every facet of life and is embedded in more and more aspects of everyday business, and society. While there are more questions than answers about generative AI’s implications, tech CEOs recognize its power and potential and are investing in and exploring how to best use the technology.

A strong majority (84 percent) – and more than the average of other sectors – agree investing in generative AI is a top priority, with one-fifth (21 percent) naming increased profitability the top benefit of using it. As well, 25 percent say advancing digitization and connectivity is their top priority to achieving growth over the next three years. To help make this growth happen, 58 percent are investing more in buying new technology. 

Tech CEOs’ enthusiasm for AI is reflected in the recent KPMG global tech report, where 38 percent of digital leaders said they have leadership buy-in for emerging tech — an increase of 28 percentage points from 2022. However, 55 percent of organizations also said progress toward automation has been delayed because of concerns about how AI systems make decisions. More than half (53 percent) of tech CEOs surveyed for CEO Outlook share concerns over ethical challenges related to implementing generative AI (e.g. plagiarism, data protection, bias and lack of transparency).

As scrutiny of AI increases, creating thorough policies and practices for everyone in an organization will likely follow.  Those that can be articulated and applied with confidence will be key. Global tech CEOs are looking to governments to set regulations on AI use to help create certainty for their organizations.

Though they are embracing generative AI, tech CEOs are also concerned about how AI has heightened cyber security risks. While it may help detect cyber attacks, 79 percent believe AI could also provide new attack strategies for adversaries. Only 53 percent of CEOs say they are prepared for a cyber attack, with close to half (48 percent) agreeing they feel unprepared due to the increasing sophistication of cyber threats and attacks.

As AI regulations continue to be developed globally, CEOs would do well to ensure their organizations adopt responsible, robust AI frameworks that include safeguarding and governance measures.

Global tech CEO confidence in their own company’s growth prospects decreased to 79 percent between 2022 and 2023, a drop of eight percentage points — and a three-year low for the sector. Their confidence level is slightly higher than CEOs globally, who similarly reported a three-year low of 77 percent. To the contrary, tech CEOs registered a three-year high in confidence for the global economy, at 80 percent (compared to 57 percent in 2021 and 65 percent in 2022). They also report a higher level of confidence in the industry as a whole (83 percent), up one percent from 2022.

The past year has seen a significant shift in what tech CEOs say are their top operational priorities for achieving growth. For one-quarter it is advancing digitization and connectivity. Other priorities include organic growth (17 percent), improving the customer experience (13 percent), and implementing and understanding emerging technology (six percent) — all up from zero percent in 2022.

They still have enthusiasm for M&A activity, though slightly tempered given high inflation and a weak economy (87 percent compared to 90 percent in 2022). The deal market is critical in the tech sector, but many CEOs are waiting for interest rates to stabilize before they make any big moves.

Tech CEOs are concerned about how geopolitics and political uncertainty (20 percent) emerging/disruptive technology (16 percent) and cyber security concerns (14 percent) may risk the growth of their businesses, highlighting the need for proactive strategies to address these matters.

Global tech CEOs are almost evenly divided on their preferred ways of working. Some are steadfast in supporting pre-pandemic ways of working, with 47 percent anticipating a full return to office in three years — a 14 percentage point increase from 2022. On the other hand, 44 percent say they envision hybrid ways of working (down from 50 percent last year). Interestingly, 93 percent say they are likely to reward employees who come into the office with favorable assignments, raises or promotions.

As organizations consider return-to-office plans, leaders should take a long-term view that embraces the employee value proposition and ensures their people feel supported. Allowing employees to live in lower-cost areas outside Silicon Valley and other major cities could improve talent acquisition and retention, as well as inclusion, diversity and equity (IDE) in their organization.

Globally, tech CEOs are increasingly recognizing that ESG is an indispensable part of their corporate strategy. Sixty-nine percent say they have fully embedded ESG into their business to create value, with 24 percent believing their ESG strategy will have the greatest impact on customer relationships over the next three years.

They are prioritizing governance models and transparency protocols including best practice reporting (34 percent), closely followed by addressing environmental challenges like getting to net zero (31 percent) — with the recognition that failing to meet stakeholder expectations could make it more difficult and expensive to raise funds, as well as lead to recruitment challenges. Tech CEOs acknowledge they have more work to do, as 83% say they are not prepared to withstand ESG-related stakeholder scrutiny.

In the immediate term, 31 percent recognize the challenge of getting to net zero is hampered by the complexity of decarbonizing supply chains. Additionally, the struggling economy has slowed some of the tech sector’s work on and investment in achieving net zero. However, tech companies are ultimately well placed to help lead the way when it comes to creating ways for all organizations to report on their ESG commitments.

Just as the sector played a key role in remote working during the pandemic, it will continue to do similar for ESG — ultimately helping strengthen the resilience of businesses across numerous areas.