Companies boosting tech budgets despite recession risk

Dive Brief:

• Companies are stepping up investment in IT, digital transformation and cybersecurity even amid warnings of an imminent recession, PwC found in a survey.
• PwC in its recent Pulse Survey — taken periodically to track changing business priorities — polled 722 U.S. executives including CFOs and finance leaders, chief human resource officers, tax leaders, risk management leaders, chief operating officers, technology leaders, marketing leaders and corporate board directors. The respondents work in private and public companies spanning six sectors.
• “Much of this generation of executives haven’t had a lot of experience navigating a recession, bull market or long-term economic downturn, but they feel confident, agile and capable to counter what may be thrown their way,” Kathryn Kaminsky, PwC’s vice chair and trust solutions co-leader, said in an emailed response to questions. “Ultimately, executives know they can’t control inflation and they can’t control whether a recession is coming or not. But they can control their business strategy, and growth should be a significant part of it,” she said.

Dive Insight:

Businesses are increasing spending on technology to address several concerns, with cybersecurity leading the list and talent acquisition and rising production costs close behind, PwC said.

“After more than two years dealing with uncertainty related to the pandemic, business leaders recognize the urgent need to focus on growth in order to compete,” Kaminsky said. Even with a risky economic and business environment, businesses still need to grow to survive. C-suite leaders are “playing both offense and defense,” she said.

Although inflation remains a leading concern for executives, their worries about price pressures are easing. In a prior survey, 69% of executives said that inflation is likely to remain elevated for the next 12 months compared with 62% in the recent survey.

Focused on growth, 70% of executives are considering acquisitions at a higher rate and 53% are increasing investments in digital transformation, PwC found in the survey. Roughly half of respondents also plan to boost budgets for IT, cybersecurity and customer experience.

Nearly half of executives aim to invest more to advance their companies’ environmental, social and governance (ESG) performance. “Today’s business leaders are expected to build trust with their stakeholders to deliver better, sustained outcomes — and lead on both business and societal issues,” Kaminsky said.

Investing in these areas can help improve efficiency and scalability, as well as boost productivity as companies continue to deal with talent shortages, PwC said.

”The role of the CFO — and the finance function — is dramatically changing,” Kaminsky said. In order to ensure success, executives need to tap in to soft-skills and “partner and collaborate across the organization to truly understand the implications of broad-reaching risks,” Kaminsky said.