DATELINE: San Francisco

/in /by
  • CEO’s say tech growth will continue thru ’17
  • 23% see top profits ’18 +
  • CEO issues: rapidly changing customer dynamics; 57% see ‘skills gap’; 79% now concerned about product relevance in 3 years or sooner
  • CEOs expect to add M&A to growth strategy

US-based tech CEO’s believe tech’s growth will continue unabated for the next few years, with peak profits predicted by most for 2017 and strong hiring into 2017, according to the results of a survey by KPMG LLP, the U.S. audit, tax and advisory firm. “While some industry observers wonder whether the tech run will continue, our survey of tech CEOs and their three-year view makes clear these leaders see strong revenue and hiring growth ahead,” said Gary Matuszak, Global Chair, KPMG Technology, Media and Telecommunications practice. “This extends what we saw in our survey of tech executives in KPMG’s twelve-month industry outlook.”

The survey of 53 tech CEOs found 40 percent expect their greatest profits in 2017, with another 23 percent seeing highest profits in 2018 and beyond. At the same time, 36 percent of the tech CEOs intend to increase their company’s headcount by 11 – 25 percent over the next three years, with 21 percent planning a 6 to 10 percent increase.

Take care of current customers to drive growth To drive their company’s growth during the coming 36 months, the tech leaders’ priorities are building their business with current customers and selling existing products.

The focus on current customers dominates tech CEOs’ thinking in several areas. Interacting more with customers is the top organizational priority, and the CEOs are taking steps to foster more customer-centric companies by training junior staff earlier in their careers to interact with customers, charging senior leaders to invest more time with customers and personally spending more face time with customers.

“These chief executives also believe that having stronger customer or client relationships, and as a result gaining better insight, are key to overcoming what they cited as the biggest hurdle to innovation — rapidly changing customer dynamics (57 percent),” said Matuszak. “Budget constraints are a distant second, cited by 32 percent.”

Matuszak said addressing the issue of rapidly changing customer dynamics is also related to the fact that 79 percent of tech CEOs, in a time of rapid innovation, are concerned about product relevance three years from now. Thirty six percent of the CEOs said they were extremely concerned with product relevance, and, in a finding that speaks to this concern, more CEOs expect to add M&A to their growth strategy.

One-third of those surveyed currently divide their growth strategy between organic and inorganic growth, and two-thirds have a mostly organic growth strategy. But by 2017, 42 percent expect to have their strategy split between organic and inorganic growth, and 53 percent will have a mostly organic growth strategy.

International investment and growth
Tech CEOs also identified that in the years ahead many see markets outside the U.S. producing a larger piece of their revenue and plan to increase investment there.

Forty-three percent expect a greater proportion of revenue from outside the U.S. in the next 2–3 years, while half (49%) expect the same proportion. Four out of 10 plan to increase investment in international operations over the next three years and 55 percent plan to maintain it.

Workforce and skills required to deliver growth The CEO survey captured tech leaders’ views on their company’s workforce and the skills required to compete and grow. When asked whether they have adequate talent and don’t see possible disruption over next three years, 28 percent agreed with the statement, 34 percent disagreed, and 38 percent were neutral.

Asked whether they have felt the effects of a skills gap but are adequately investing in training and education to address the gap, 57 percent of the tech CEOs agreed, 21 percent disagreed, and 23 percent were neutral.

KPMG Tech CEO Survey
The technology CEO insight was captured as part of a KPMG CEO Study of 400 CEOs across several industries. For additional information about the KPMG CEO Study, please visit here.

About KPMG LLP
KPMG LLP, the audit, tax and advisory firm (www.kpmg.com/us), is the U.S. member firm of KPMG International Cooperative (“KPMG International”). KPMG International’s member firms have 155,000 professionals, including more than 8,600 partners, in 155 countries.