From supply chain disruptions to labor shortages to geopolitical tensions, tech companies have been through a lot in recent years, and now their priorities are shifting.
- While labor shortages and inflation are among tech leaders’ worries, many are most concerned about macroeconomic uncertainties.
- In a Deloitte survey of tech industry leaders, executives revealed that macroeconomic issues were among the top strategic uncertainty companies face in the next three years.
- In May, 47% of company leaders said that their company’s economic conditions were worse now than six months ago.
- Tech companies seem to be in a holding pattern, waiting for more positive economic news before making new investments or riskier strategies.
- Still, these companies focus on reducing costs, balancing automation, and achieving an appropriate headcount.
Why it’s news
As tech companies focus on safe returns on investment, cost reduction, and taking advantage of automation, many have brought in a new, cautious era of tech development. How companies react to the more cautious approach to business could affect the next round of market growth, Deloitte found.
Most of the companies Deloitte surveyed reported being prepared for an economic downturn. Many are preparing for a potentially difficult time economically by slowing down hiring, delaying innovative projects, and focusing on closing current deals.
Experts have been predicting an economic downturn for nearly a year, but when or how bad that downturn may be is still unknown. Some experts are now expecting more of a slowdown rather than a recession.
Still, tech companies are focusing on efficiency and cost-cutting strategies while improving their core products and services. One executive told Deloitte that the hesitancy to invest in innovation was not a pullback but rather extra caution. He described his company’s strategy as “Let’s watch the industry and the competition closely and not be bleeding-edge and jump ahead unnecessarily.”
While this mindset may protect companies from difficulty during an economic downturn, it could have the unintentional side effect of sidelining the company during the next round of innovation. While tech companies need to protect themselves from over-extension in case there is a recession in the next year, they must also be careful not to fall too far behind in the development of new ideas and products.