The latest report from Deloitte Private, “2023 Mid-market Technology Trends,” highlights a significant surge in technology investments among mid-sized businesses, reaching levels not seen since before the pandemic. According to the findings, a remarkable 53% of participating organisations have allocated over 5% of their annual revenue to technology this year, showing a substantial increase from 43% in 2019 and a stark recovery from a mere 20% in 2021.
This comprehensive survey was conducted online between May 4 and May 24, 2023, by an independent research firm, encompassing a diverse range of participants. Fifty percent of the respondents were C-suite executives, while the rest were non-C-suite decision-makers from various U.S. companies with annual revenues between $250 million and over $1 billion. The majority of these companies (80%) were privately held, while 20% were publicly traded, spanning industries such as technology, media, telecommunications, financial services, consumer and industrial products, energy, resources, life sciences, and healthcare.
Wolfe Tone, Vice Chair and U.S. and Global Deloitte Private leader, commented, “Middle market private companies are capitalising on a strong technology agenda, translating to higher revenue growth and an enhanced ability to venture beyond their traditional industries, all fuelled by increased tech spending.”
Ryan Jones, Private Equity Leader and Principal at Deloitte Consulting LLP, also weighed in, highlighting the blurring lines between industries and the need for mid-market companies to adopt an innovative mindset and develop assets that can generate value outside their core sectors.
The report also emphasises the burgeoning interest in artificial intelligence (AI) among mid-market businesses, with 40% of respondents identifying AI as their top tech investment priority in 2023—a stark increase from just 12% in 2021. Businesses actively engaging with AI solutions reported a 47% increase in revenue growth of 20% or more, showcasing the profound impact of AI adoption on financial performance.
In terms of cybersecurity, 74% of the respondents expressed high or very high confidence in their businesses’ cybersecurity capabilities, with those utilizing AI solutions demonstrating even greater confidence in their cybersecurity measures.
The survey also revealed the adaptability of mid-market companies in the face of potential competitive threats from other sectors, with 51% acknowledging these threats but also demonstrating readiness to expand into adjacent industries. Furthermore, a substantial 70% of respondents have developed assets with potential for monetisation outside their core sector.
Talent retention continues to be a paramount concern, with companies employing various strategies to retain tech professionals, such as competitive benefits, flexible work environments, and investment in diversity and inclusion programs. However, the intensifying demand for AI-related skills is leading to fierce competition for talent.
In conjunction with this report, Deloitte Access Economics and the Deloitte AI Institute have released “Generation AI: Ready or not, here we come!” This new study provides insights on the rise of Generation AI (Gen AI) and its increasing prominence among students and employees in Australia, based on economic research and surveys of 2,550 individuals across 18 different industries.
