After a very difficult two years in the tech industry, everyone is hoping for a comeback. We are looking at a more positive economic picture, with the prospect of lower interest rates and little talk of a recession. Although growth is likely to be slow at first, there is renewed optimism that the technology sector may be entering a recovery phase.
That said, Deloitte has released its 2024 Technology Industry Outlook, outlining the strategies and focus areas expected from technology leaders in the coming year. A Deloitte survey of technology executives found that 55% feel the technology sector is currently healthy or very healthy, and 62% feel it will be that way within six months. Deloitte further stated that its top priority for 2024 will be efficiency, followed by innovation and productivity, and growth. It's highly telling that 62% feel now is the right time for their company to take a risk.
This year could be an exciting time for the technology sector, with some industry sectors in particular seeing impressive developments, with innovation and growth recognized as priorities and executives increasingly focused on risk-taking. there is. Below are some of the areas Deloitte expects technology leaders to focus on this year.
Increased spending on software and IT services
Deloitte predicts that business spending on software and IT services will be a key driver of growth this year. They specifically point to AI, cloud computing, and cybersecurity as specific technologies that will be important here. Gartner's report supports this idea. According to their data, IT services will be the largest segment of IT spending this year, and spending on IT services is expected to reach $1.5 trillion in 2024, an increase of 8.7%.
Deloitte suggests that technology leaders must be prepared to change their strategies to meet this demand. They expect the majority of enterprise software and services companies to add generative AI capabilities to their products within the next year, although they expect corporate purchasing related to generative AI to increase in the second half of 2024. I expect it to be integrated.
Globalization vs independence
Over the past few years, global developments have had a major impact on the technology sector. We have experienced a patchwork of pandemics, foreign conflicts, supply chain disruptions, and new domestic and international regulations. The technology industry has had to make significant pivots and develop new strategies in the face of a rapidly changing world.
The Deloitte report notes that tech companies should continue to be strategically agile this year, diversifying their supply chains and manufacturing locations, and considering dispersing operations across trusted geographies.
Generative AI continues to accelerate growth
The rapid development of AI in the world has caused a lot of excitement and controversy. Lawmakers continue to consider how to regulate an industry that is moving faster than regulation can keep up, and investors are eager to take advantage of the technology that is rapidly becoming a part of our lives. .
Deloitte predicts that 2024 will be a transition period for generative AI. Businesses will be looking at ways to increase efficiency and productivity, speed up software development with generative AI tools, and monetize by delivering generative AI capabilities. All of this is happening at a time when the legal and regulatory landscape is evolving.
dry powder
A recent report from BlackRock and Preqin found that “dry powder,” or money invested by investors and waiting to be called, has grown to about $4 trillion. When investors commit this level of capital, it means they should get a return that justifies it.
As times have gotten tougher over the past two years, investors have performed more thorough due diligence.
Valuations have fallen significantly at all levels. This should mean that trades made in the past two years have far better results.
2024 is shaping up to be an exciting year for the technology industry. Not only is the AI revolution happening before our eyes, but the transition from Web 2 to Web 3 is underway, and according to Goldman Sachs, Morgan Stanley, and Citibank, the value of his 8 From trillion he reaches $12 trillion.
Having a digital-first strategy, where companies build things digitally before they build them physically, will be a common foundation for companies. This requires a huge computer infrastructure and software applications to take advantage of such an architecture.
With so many global complexities and regulatory concerns, agility is key as leaders seek to execute strategies to drive growth and innovation.
