Chief Executive Officers (CEOs) are currently operating in an unpredictable economic environment: regulation is increasing and geopolitics are uncertain. As a result, CEOs in the technology sector are taking a cautious but optimistic approach to planning their company's future. With the KPMG 2023 Global Technology CEO Outlook, we provide insights and perspectives from 127 tech CEOs worldwide on business and economic developments over the next three years.
The technology sector is a pioneer in the development of innovative and smart solutions. It is driving digitalisation and has expertise in data management.
Dr. Markus Kreher
Partner, Audit, Regulatory Advisory
KPMG AG Wirtschaftsprüfungsgesellschaft
The power of artificial intelligence
Artificial intelligence (AI) is changing almost all areas of life and is increasingly finding its way into society and everyday business life. Even though there are more questions than answers about the impact of generative AI, CEOs in the tech industry recognise its power and potential. As a result, they are investing in the technology and exploring how it can be best utilised.
An overwhelming majority (84 per cent) - more than the average for other industries - agree that investing in generative AI is a top priority. A fifth of respondents (21 per cent) see the greatest benefit of the technology in the fact that it enables them to increase profitability. In addition, 25 percent state that their top priority is to promote digitalisation and networking. This is how they want to grow over the next three years. To this end, 58 per cent of CEOs are investing more in new technologies.
Chart (in German only)
How enthusiastic tech CEOs are about AI is reflected in KPMG's latest Global Tech Report: 38 per cent of tech CEOs said they are supported by their executives in emerging technologies - an increase of 28 percentage points compared to 2022. However, 55 per cent of companies said that the development of automation has been delayed. This was due to concerns about how AI systems make decisions. More than half (53 per cent) of tech CEOs surveyed are concerned about ethical challenges associated with generative AI, such as plagiarism, privacy, bias and lack of transparency.
Security expectations
With increasing attention being paid to AI, it will probably be necessary to develop thorough guidelines and recommendations for action for all employees in an organisation. These should be clearly formulated and can be applied with confidence. However, global tech CEOs also expect governments to regulate the use of AI in order to create security for their companies.
Although they welcome generative AI, tech CEOs are also concerned that AI is risky for cyber security. While it can help detect cyberattacks, 79 per cent think AI could also provide new strategies for attackers. Only 53 per cent of CEOs say they are prepared for a cyber attack, with almost half (48 per cent) agreeing that they feel unprepared due to the increasing sophistication of cyber threats and attacks.
As more AI regulations are developed globally, CEOs should ensure their organisations adopt responsible, robust AI frameworks. These should include protection and governance measures.
Growth prospects
Global tech CEOs' confidence in their company's growth fell to 79 per cent between 2022 and 2023. This is a drop of eight percentage points and represents a three-year low for the industry. This means that their confidence is slightly higher than that of global CEOs, which is also at a three-year low of 77 per cent. In contrast, tech CEOs recorded a three-year high in confidence in the global economy at 80 per cent (compared to 57 per cent in 2021 and 65 per cent in 2022). 83 per cent also trust the industry as a whole more - an increase of one per cent compared to 2022.
Last year, there was a clear shift in the priorities that tech CEOs set for company growth. For a quarter, promoting digitalisation and networking is the top priority. Other priorities include growing organically (17 per cent), improving the customer experience (13 per cent) and understanding and implementing new technologies (six per cent) - always starting from zero per cent in 2022.
Chart (in German only)
Caution with mergers and acquisitions
Enthusiasm for mergers and acquisitions remains high, albeit somewhat subdued in light of high inflation and the weak economy (87 per cent compared to 90 per cent in 2022). In the technology sector, such deals are of crucial importance. However, many CEOs are waiting for interest rates to stabilise before making any major moves.
Tech CEOs are concerned about potential threats to their business growth: geopolitics and political uncertainty (20 per cent), emerging or disruptive technologies (16 per cent) and cyber security concerns (14 per cent). This emphasises the need to be strategically proactive in order to overcome these issues.
Divided opinion on forms of work
The attitude of global tech CEOs to the preferred way of working is ambivalent: some are unwaveringly sticking to the pre-pandemic state: 47 per cent expect a full return to the office in three years - an increase of 14 percentage points compared to 2022. On the other hand, 44 per cent say they can imagine hybrid forms of work (a decrease from 50 per cent last year). Interestingly, 93 per cent of respondents say they will reward employees who return to the office with benevolent assignments, pay rises or promotions.
When companies plan to return to the office, managers should consider the long-term value proposition to employees. This way, they can ensure that their employees feel supported. The opportunity to live in lower-cost areas, such as outside Silicon Valley or other major cities, can attract and retain talent and improve inclusion, diversity and equity within the organisation.
Chart (in German only)
For future business success, it is important to combine this innovation and technological expertise with a suitable ESG strategy. This is not just about raw materials, recycling and energy consumption, but also about working conditions and the responsible handling of data and AI solutions.
ESG is and remains crucial
Technology CEOs around the world are increasingly recognising that ESG is an indispensable part of their business strategy. 69 per cent say they have fully integrated ESG into their business for value creation; 24 per cent believe their ESG strategy will have the greatest impact on customer relationships in the next three years.
However, they also prioritise governance models and transparency protocols, including best practice reporting (34 per cent). Almost as important to them is tackling environmental challenges, such as becoming carbon neutral (31 per cent). This is because they realise that if they fail to meet stakeholder expectations, it will make it more difficult and expensive to raise capital and difficult to recruit staff. CEOs in the technology sector admit that they still have a lot of work ahead of them: 83 per cent state that they are not prepared to withstand the scrutiny of stakeholders with regard to ESG.
Chart (in German only)
In the short term, 31% of respondents consider the complexity of decarbonising supply chains to be an obstacle to achieving climate neutrality. In addition, work and investment in climate neutrality by the tech sector is dampened by the struggling economy. Ultimately, however, the tech sector is in a position to lead the way if all companies report on their ESG commitments.
Just as with remote working during the pandemic, the sector will continue to play a key role in sustainability - ultimately helping companies become more resilient in many areas.
Growth opportunities
Technology
Use generative AI in such a way that it is ethically justifiable, makes sense for your company and is geared towards the needs of your employees.
Keep up to date with cyberattack strategies so that you and your employees do not put the company at risk.
Encourage your employees to experiment with innovative ideas and strategies.
Talent
Think long-term if employees want to work in a hybrid environment. This is how you can promote talent.
Set the tone. Top management should prioritise inclusion, diversity and equity, set real goals, fund initiatives and task management with leading programmes for which they are clearly accountable.
ESG
Position sustainability as a driver for value creation in corporate growth and not as a risk to be controlled. New opportunities open up when ESG is discussed in the context of growth.
Stay informed about changing ESG regulations to maintain your organisation's relationships and reputation. Also, consider how you can help others report on their own ESG commitments.
Focus ESG investments on areas that align with your values and those of the company.
