2024 technology

industry outlook
2024 technology industry outlook

What’s inside

Executive summary 3

Angling for a comeback, with help from cloud,

AI, and cybersecurity 4

Striking a balance between globalization and self-reliance 6

Setting the stage for growth with generative AI 7

Reckoning with regulations for the tech industry 9

Signposts for the future 11

About Deloitte’s Outlooks

Our 2024 outlook for the technology industry seeks to identify the strategic issues and opportunities for tech organizations to consider in the
coming year, including their impacts, key actions to take, and critical questions to ask. The goal is to help equip US technology organizations
with the information and foresight to better position themselves for a robust and resilient future.

2
 2024 technology industry outlook

Executive summary

The technology industry flourished during the early pandemic years might shift or augment their offerings to meet that demand. While
as companies accelerated their digital transformation efforts. But the generative AI has sparked imaginations and headlines, with tech
industry has hit several speed bumps over the past two years. High giants investing billions9 and startups playing a key role,10 enterprise
inflation, elevated interest rates, and considerable macroeconomic and purchasing in this specific category isn’t expected to ramp up
global uncertainties contributed to a softening of consumer spending, until at least the second half of 2024.11 Deloitte expects nearly all
lower product demand, falling market capitalizations, and workforce enterprise software and service companies to integrate generative AI
reductions in 2022.1 Headwinds continued into 2023, with slight capabilities into at least some of their offerings in the coming year.12
weakening of global tech spending and rising layoffs. But there are now
• Striking a balance between globalization and self-reliance.
glimmers of hope that a tech comeback may be imminent: Economists
The worldwide, interconnected nature of the tech industry heightens
have lowered their assessments of recession risk, and analysts are
the risk of disruptions from geopolitical unrest, supply chain
optimistic that the tech sector could return to modest growth in 2024.2
volatility, raw material shortages, and new regulations and policies.
Leaders should diversify their supply chains and manufacturing and
As the technology market faced heightened global challenges over
development locations, spreading operations among trusted regions
the past few years—geopolitical tensions, supply chain volatility, raw
and ensuring redundancy. As governments refine trade policies, tech
material shortages, and emerging regulations—Deloitte urged tech
companies should be agile in adapting their strategies.
leaders to evaluate where manufacturing happens, to improve the
transparency and resiliency of their supply chains, and to prepare • Setting the stage for growth with generative AI. The next
proactively for future systemic risks.3 We suggested leaders use year is expected to be transitional for generative AI, with tech
technology to streamline business processes, rely more on intelligent companies experimenting and finding applications that can drive
automation, reduce tech debt by implementing leading practices efficiency and productivity. Some will likely evaluate how to speed
for software development, and modernize legacy architectures by up software development with generative AI-enabled tools. At the
migrating to cloud resources and XaaS.4 We also recommended same time, providers can determine how to best deliver generative AI
that tech companies consider how to extend their reach into other capabilities and how to monetize them. As generative AI investment
industries, using digital advancements to spur transformation.5 Finally, and experimentation accelerate in the coming months, the legal and
we advised leaders to build up talent in critical areas such as artificial regulatory landscape may evolve rapidly, setting the stage for greater
intelligence (AI), robotic process automation (RPA), and cybersecurity.6 adoption in the second half of 2024 and into 2025.

• Reckoning with regulations for the tech industry.

With global and economic uncertainties continuing into 2024, these
Governments around the world are evaluating the impacts that
recommendations remain important. But it’s likely time to refocus on
massive tech platforms and social networks have on businesses
innovation and growth as well. A Q4 2023 Deloitte survey of 122 tech
and consumers. In the coming months, regulations in the European
executives revealed an optimistic perspective: 55% of respondents
Union and the United States will likely take effect, pushing tech
rated the tech industry as “healthy” or “very healthy,” and even more
companies to prioritize data protection, harm reduction, the ethical
(62%) believe it will be at that level six months from now.7 Asked to
use of AI, and commitment to sustainability goals.13 A global minimum
choose their company’s primary area of focus, “efficiency” topped the
tax aims to close loopholes and push corporations to pay more, while
list (with 25% selecting it), while “innovation” and “productivity” tied for
new credits and incentives are designed to spur sustainable growth
second place at 21%. “Growth” was a close third, at 19%. These leaders
and job creation. With strong collaboration between business,
described the current state of the tech industry as “innovative” and
legal, accounting, and finance teams, tech companies can elevate
“evolving”—and nearly two-thirds (62%) believed it was a good time
compliance efforts into competitive advantages.
for their company to take greater risks.

Each of these themes represents a strategic opportunity for tech

Some of the strategies we expect tech leaders to focus on in 2024
companies to reduce risk and set the stage for sustainable growth
and beyond include:
in the next 12 to 18 months. Prudent investment in supply chain
• Angling for a comeback, with help from cloud, AI, and resilience and data governance may serve as a hedge against
cybersecurity. Enterprise spending on software and IT services— geopolitical and regulatory shifts, while generative AI can streamline
particularly artificial intelligence, cloud computing, and cybersecurity operations in the immediate term and accelerate longer-term
technology—is expected to enable the most growth in the tech innovation efforts.
market over the coming year.8 Tech leaders should assess how they
3
2024 technology industry outlook

Angling for a comeback, with help

from cloud, AI, and cybersecurity

High interest rates, worries about the potential for a slowing economy, continued to contend with lower VC deal activity and valuations—
and geopolitical challenges contributed to a slight weakening of global but Deloitte expects that the valuation corrections may fuel renewed
tech spending in 2023.14 Facing decelerating revenue growth, many interest from venture capitalists and corporate buyers.20 The 2023
tech companies ramped up layoffs last year, continuing to adjust their uptick in tech IPO activity—following a slump since the end of
workforces after aggressive hiring in prior years.15 Now, there may be 2021—could signal the start of a positive trend that allows more
light on the horizon: Economists are more optimistic about the US tech companies to exit successfully.21 While there are some positive
economy as a whole, lowering the risk of a recession in 2024 to below indicators, tech leaders should remain vigilant about ongoing risks
50%. Deloitte’s analysis pegs the risk at just 20%.16 and forge their own careful strategies for growth in 2024.

For the tech sector specifically, analysts are optimistic about a potential What could help drive this tech rebound? Global IT investments are
return to modest growth in 2024, with more robust prospects for 2025. expected to be fueled largely by double-digit growth in spending
Predictions for growth in global IT spending in 2024 cover a range from for software and IT services in 2024.22 Analysts estimate that public
5.7% to 8%.17 cloud spending will grow by more than 20%, and they foresee
stronger demand for cybersecurity.23 AI investment (not specifically
There are signs that aspects of a tech rebound may already be generative AI) is also seen as contributing to overall spending growth.24
underway. In 2023, the stock values of the so-called Magnificent Economists have projected that AI-related investments could reach
Seven—the seven largest US tech companies—surged, outperforming $200 billion globally by 2025, led by the United States.25 Beneficiaries
the rest of the S&P 500 Index.18 The heavily tech-weighted Nasdaq of that spending include companies that create and train AI models,
Composite index took a mere 18 months to recover 80% of its 2021 all- provide infrastructure to run AI (such as cloud services), and supply AI
time high—versus taking 14 years to regain 80% of its 2000 peak after applications or services.26
the dot-com crisis.19 At the smaller end of the spectrum, startups

4
 2024 technology industry outlook

A Q4 2023 Deloitte survey of tech executives reinforces the analyst An uptick in tech mergers and acquisitions (M&A) in 2024 would be
viewpoints: The survey asked leaders which technologies they another sign of a tech recovery—but is far from certain. Leaders have
expected to enable the most growth in the tech industry in the traditionally viewed strategic tech M&A as a growth engine, but with
next 12 months.27 Artificial intelligence,28 cloud computing, and the continued high cost of financing and focus on belt-tightening, 2023
cybersecurity topped the list (with 52%, 47%, and 40% of tech proved disappointing for tech M&A. Deal volume and the total market
leaders choosing each as a top-three technology, respectively).29 value of those transactions remain well below their 2021 highs.36 On
the bright side, a handful of billion-dollar-plus enterprise tech deals has
What about generative AI, which has grabbed headlines, captured given analysts a reason to hope that the tide may turn for tech M&A
the attention of tech leaders, and fueled a notable wave of in the coming months.37 Technology geared toward productivity and
experimentation over the past year (see “Setting the stage for growth efficiency improvement—including industrial automation and decision
with generative AI”)? Deloitte expects generative AI growth in 2024 to intelligence platforms—is seen as having the potential to spark
be modest, with adoption and spending picking up in the second half, renewed M&A activity.38 AI may also prove to be a driver: Companies
followed by more robust growth in 2025.30 Tech execs seem bullish may obtain AI technology and expertise via acquisitions, rather than
about imminent generative AI spending: More than a quarter (27%) building their own capabilities.39
of respondents to the Deloitte survey selected generative AI as a
top-three industry growth driver for the coming year.31 Perhaps due
to the level of investment or effort required for full-scale generative
AI initiatives, respondents from larger companies (those with 10,000+
employees or US$10B+ in revenue) selected generative AI at a higher Strategic questions to consider:
rate than others. Notably, tech giants with plans to invest billions
in generative AI will likely play a part in the sector’s rebound.32 • How will our company navigate the evolving economic landscape,
continued high cost of borrowing, and ongoing geopolitical
challenges while still achieving our growth objectives?
Cybersecurity is also expected to play a key role in the comeback.
Analysts forecast that global spending on security and risk • Has our company evaluated how adopting AI—specifically
management will see low double-digit growth from 2023 to 2024.33 generative AI—might help us drive productivity and efficiency
gains? Have we considered how embedding generative AI
Motivators include a persistent threat landscape, ongoing cloud
capabilities into our products and services could help drive
adoption, remote work, the emergence of generative AI, and evolving revenue and competitive advantage?
data privacy and governance regulations.34 While the rapid adoption
• Is our company continually assessing the security threat
of generative AI may expose organizations to new attack surfaces
landscape and keeping up with the latest advances in security
and techniques, AI may also play a pivotal role in speeding up and risk management? Are we considering how AI could play
breach detection and containment.35 a role in helping us boost our defenses?

• How can we ensure that our workforce has the right mix of
skills for competitive success? Are we focused on building
expertise in growth areas, especially cloud, generative AI,
and cybersecurity?

• Are we considering how strategic acquisitions could

complement our existing capabilities, help us innovate,
expand our market reach, and even augment our talent?

5
2024 technology industry outlook

Striking a balance between

globalization and self-reliance

The worldwide, interconnected nature of the tech industry, with crises underscore the risks of over-relying on tech talent in any one
its global supply chains and international manufacturing and location.48 Leaders should consider expanding their workforce in
development centers, makes it highly vulnerable to global shocks secure regions and taking care that pivotal functions and roles are
including natural disasters, pandemics, and geopolitical tensions.40 distributed. Tech jobs have specialized training and educational
needs that continue to evolve due to advancements such as
Supply chain resilience is no longer simply prudent; it’s critical. generative AI. Redistributing talent pools likely means partnering
To help mitigate the risk of disruption, tech giants are diversifying with universities and engineering schools; working more closely with
their manufacturing and development locations and supply chains, local tech schools, vocational schools, and community colleges; and
reducing reliance on single suppliers or countries.41 Leaders often supporting national institutions that promote STEM fields.49
now view it as imperative to establish relationships with suppliers
worldwide and spread operations across various trusted regions. All Tech companies may be able to boost resilience in their operations
critical product components and elements of the value chain should and supply chains by co-investment and knowledge-sharing initiatives
have redundancies and alternate sources. Moreover, tech companies with channel partners, contract manufacturers, and suppliers. This
should work closely with suppliers to ensure resilience and flexibility could involve helping suppliers with approvals and logistics as they
throughout the production network. work to establish facilities in different regions, as well as offering
essential talent, engineering, and administrative proficiency as they
As the geopolitical landscape continues to shift, governments spin up new operations.
worldwide are redefining their trade policies. Tech companies should
monitor these changes and align their strategies accordingly. Countries Throughout 2024, tech companies will likely continue to prioritize
and trading blocs often offer incentives, subsidies, and tax credits to sustainability and resilience, aiming to strike the right balance
encourage the localization of technology supply chains and innovation between globalization and onshoring/self-reliance. Organizations
hubs.42 This trend is particularly evident in the semiconductor should continue to globalize their operations to take advantage of
industry, where the United States and Europe are making substantial lower costs, greater access to talent, and faster innovation. However,
investments to build out domestic chip fabrication capacity, especially they should also look to onshore or self-source critical components
at advanced processing nodes. They’re also ramping up assembly and and operations to reduce their risks from global disruptions.
packaging capabilities, although from a low base.43 Strategic planning
should include sustainability assessments, tracking, and reporting,
both to secure maximum credit and ensure compliance with local
and international regulations.44
Strategic questions to consider:
After severe chip shortages began in 2020, the US government
passed the CHIPS and Science Act of 2022—which provides $52 • Has our company adequately evaluated our supply chain
billion in financial assistance to spur research and manufacturing and operational vulnerabilities? Do we have a strategy for
mitigating them?
in the domestic semiconductor industry.45 Semiconductor
manufacturers are working to identify which parts of their supply • Is our company’s supply chain designed for flexibility in the
chain should be domestic (onshoring), which parts can be in short term and sustainability in the long term? Have we
implemented multi-sourcing strategies to ensure a stable
countries close to home (nearshoring), and which parts can be
supply chain?
handled in countries considered to be allies (friendshoring).46
For some tech companies, particularly hardware and electronics • Have we determined the right blend of onshoring,
nearshoring, and friendshoring?
manufacturers, full onshoring may be impractical or infeasible—
but a blend of onshoring and friendshoring could help provide • Have we assessed the stability of our onshore and global talent
a hedge against instability.47 pools, ensuring that critical functions are not concentrated in
vulnerable regions? Is there a way to distribute our tech talent
to make it more resilient to global disruptions?
As organizations identify potential choke points and determine how
to reengineer their operations and processes to improve resilience,
they may also focus on building redundancy into their research
and development operations and talent pool. Recent geopolitical

6
 2024 technology industry outlook

Setting the stage for growth

with generative AI

Over the past year, generative AI sparked the public imagination, Tech leaders should consider how to best utilize and deliver this new
unleashed new avenues for creativity, fueled a surge of startups, functionality. This could involve using “off the shelf” solutions from
and became a strategic consideration for many of the world’s largest cloud and tech providers with generative AI integrated, building their
companies. The next year is poised to be a time of transition, with own proprietary solutions (which could be prohibitively expensive),
tech leaders assessing how to best deliver and monetize generative or partnering with co-developers.
AI, how to integrate the technology into their operations, and how
to address considerable challenges around data privacy, copyright, Tech companies may use all these approaches to incorporate
and emerging regulations. generative AI into existing or new offerings. One possibility is that AI
solutions will evolve into an ecosystem where large players provide
Innovating with generative AI foundational platforms and contextual models as commodities,
In the past year, US tech companies focused intensely on generative while additional parties build capabilities and functions on top to
AI, embedding it into their offerings and signaling plans to double cater to the specific needs of their customers.58
down on investments.50 Across the sector, many tech companies will
face the challenge of how to augment their products and services Focusing on productivity
with generative AI to remain competitive. On the software front, Like their counterparts in other industries, many tech leaders
Deloitte has predicted that nearly all enterprise software companies are experimenting with embedding generative AI capabilities into
will embed generative AI into at least some of their products in their workflows to assist professionals and augment business
2024 and that the revenue uplift (for these companies and for the processes.59 At this stage, many are focused on optimizing
cloud providers of generative AI processing capacity) will approach productivity and efficiency. A recent Deloitte survey of marketing
a US$10 billion run rate by the end of the year.51 Deloitte expects leaders found that 26% already use generative AI (e.g., for content
2024 to be a transition year, as generative AI-enabled software tools marketing), and another 45% expect to use it by the end of 2024.
launch and adoption and revenues start to gain traction, setting the Users estimated the technology has saved them more than 11 hours
stage for more robust potential growth in 2025.52 On the hardware per week.60
front, Deloitte expects the uplift for chips and servers that execute
generative AI to surpass US$50 billion in 2024.53 Generative AI is being used to facilitate sales—from interpreting
customer requirements documents to developing proposals and
Several tech companies associated with generative AI experienced prioritizing leads—and to improve customer service (e.g., helping
rising valuations in 2023, partially due to excitement around the human agents respond to questions and solve problems and even
technology’s potential.54 However, they’re still figuring out how anticipating customers’ future needs).61 Research has revealed
to monetize and profit from generative AI. Deploying and scaling that more than eight in 10 sales professionals surveyed feel using
generative AI involves heavy-duty servers packed with expensive, generative AI helps them speed up customer communication and
power-hungry chips, and the operational costs can range from US$0.01 increase sales, while nine in 10 service professionals believe it
to US$0.36 per generative AI query.55 Some providers who charge helps them address customer needs more quickly.62 Companies
a per user per month (PUPM) fee may be losing money currently are also driving back-office efficiency by embedding generative AI
due to those who use the service more heavily than anticipated.56 capabilities into functions such as finance and order management—
We expect that tech companies will continue to grapple with how to accelerating processes, reporting, and insights. Tech leaders should
translate generative AI into increased revenue, experimenting with consider where to adopt generative AI in their company to best
a variety of pricing models (such as consumption-based, PUPM, improve productivity and how they might use it to improve customer
or a hybrid approach).57 interactions and enhance tech support.

7
2024 technology industry outlook

Particularly important for tech companies, generative AI tools are International regulations governing privacy, potential harm, and
boosting programmer productivity and may be on the verge of ethical practices are also high on the list of concerns for generative
transforming software development.63 These tools can act as coding AI adopters. The EU’s AI Act, for instance, is expected to be adopted
and testing partners, suggesting lines of code, developing boilerplate in the second quarter of 2024, with a 24-month implementation
code, writing documentation, generating synthetic test data, and period for most obligations.72 US companies are working to comply
creating test cases.64 A survey of professional developers found that with the Biden administration’s October 2023 executive order
44% are already using AI tools in their development process, and governing the safe and secure development and use of AI.73 The
another 26% plan to do so soon.65 With productivity gains reported order will require certain developers of “very powerful” foundation
in the 10% to 30% range, tech leaders should evaluate where they models to share safety test results with the government. It will also
can bring generative AI into their development processes.66 impose requirements for federal agencies, including the use of
watermarks to identify AI-generated content, measures to protect
Adopters that are further along in their evaluations and may have user privacy, and efforts to minimize bias (see “Reckoning with
completed successful pilots with generative AI will likely focus on regulations for the tech industry”).
the challenge of scaling up and operationalizing the technology.67
Moving to production use will likely involve prioritizing highest-
value use cases, mapping them to core capabilities required for
implementation, and developing an implementation road map.
Strategic questions to consider:
Avoiding legal and regulatory pitfalls
The use of generative AI raises considerable challenges around • Have we determined which use cases and workflows could
data privacy and content use. One area of concern for tech leaders be best improved with generative AI? Have we assessed
where we could deploy generative AI in our value chain?
is whether the large language models (LLMs) used in generative
AI implementations have been trained using copyright-protected • Are we evaluating how generative AI could create
content.68 To address concerns, several leading software companies opportunities for new products, services, business models,
and, ultimately, new revenues?
have pledged to assume liability in case their tools expose customers
to IP infringement claims.69 Another misgiving is whether a company • Does our workforce have the right set of skills for upcoming
might lose control of its own data when it’s added to public models, generative AI initiatives? For example, have we considered
training existing staff to improve generative AI literacy? Are
whether through accidental data leaks or adversarial prompt
we recruiting the right talent?
engineering.70 As a result, Deloitte expects that more companies will
begin training generative AI on their private enterprise data—but • How will the changing legal and regulatory landscape affect
our generative AI plans? Are we setting the right guardrails on
this approach could raise challenges around access to talent and
our generative AI initiatives?
specialized GPUs.71 Generative AI adopters should weigh the risks of
publicly trained models and the expense and expertise required for
building proprietary models as they decide which approach is right
for their company.

8
 2024 technology industry outlook

Reckoning with regulations

for the tech industry

Large online platforms built up enormous power and influence over

the past decade, and regulators are considering how to best address
the potential risks. Tech companies of every size are under pressure
to ensure data protection, harm reduction, ethical use of AI, and
commitment to sustainability goals. They’re also tasked with pivoting
to maximize tax credits and incentives while minimizing effective tax
rates in the face of new global tax regulations.

Content and corporate conduct

The largest tech companies are affected by the European Union’s
Digital Services Act (DSA) and Digital Markets Act (DMA). The DSA
includes a raft of new rules around consumer protection, holding
online platforms and service providers responsible for content
moderation, fraud, and unscrupulous uses of their technologies.74
It also imposes stringent requirements on consumer-facing tech
companies that collect customer data.75

The DMA requires platforms to eliminate practices that stifle

competition, including granting third-party businesses and
advertisers more access to data and allowing them more freedom
to engage customers outside the platform. Some of the “large
platforms” identified by the EU are challenging their designations
in court.76

AI everywhere
The proliferation of AI has also spurred a new wave of regulatory
developments.77 Expected to begin taking effect in 2024, the EU’s
AI Act—which is nearly finalized—takes a risk-based approach to
AI implementations, requiring visibility into the quality of data
sets used, technical documentation and recordkeeping, human
oversight, accuracy, and cybersecurity.78 It applies to any AI system
that outputs results used in the EU, and it is expected to impact AI
providers in the United States.79

In the United States, President Biden signed an executive order

on October 30, 2023, that seeks to promote the safe and secure
development and use of AI and creates requirements related to
the use of AI throughout the federal government. The executive
order directs the development of both voluntary and mandatory
guidance to govern the use of AI in the public and private sectors.
It includes more than 100 directives to agencies, which will mostly
be implemented over the next year. The Commerce Department
will play an important role in implementation and has formed
a US AI Safety Institute to help develop technical guidance for
other agencies.80

9
2024 technology industry outlook

Global tax equality which was signed into law in fall 2023, requires climate disclosures
Another factor that tech companies will likely encounter in 2024 is the and climate-related financial risk reporting from any company with
OECD’s Pillar Two global minimum tax (GMT). Some countries have revenues greater than US$1 billion doing business in California.85
passed legislation and many others are proposing legislation to activate
these rules. This ruleset is designed to ensure that multinational Taken together, these developments could drive increased
corporations pay a minimum of 15% regardless of location, removing investment in cybersecurity, data management, and ESG reporting
the incentive to locate headquarters in low-tax jurisdictions. solutions. Tech companies will likely benefit by working with
regulators and taking an active role in testing their products
Certain factors, including credits and incentives, may bring the effective and services for compliance.
tax rate in a country below 15%, in which case these companies will
have to pay a “top-up” tax to meet the 15% threshold. This may reduce
or eliminate the benefit of the incentive.81

For the tech industry, the way different jurisdictions operationalize Strategic questions to consider:
these rules and how they define and treat credits and incentives may
lead to operational shifts. Countries may jockey to build out incentive • How can we ensure that our AI implementations don’t expose
programs that don’t have an impact on effective tax rates. the company to potential regulatory and legal risk?

• What investments should we explore in cybersecurity and

ESG credits and compliance data governance to achieve compliance with new
No regulatory outlook would be complete without a discussion of consumer-protection regulations?
environmental, social, and governance (ESG) reporting requirements. • Can we leverage regulatory sandboxes to test our products
The EU’s Corporate Sustainability Reporting Directive (CSRD) and services?
expands the number of companies required to provide sustainability • How can we model potential tax scenarios now to inform
disclosures from around 12,000 to more than 50,000.82 It also operational decisions for 2024–2025?
imposes requirements around double materiality; companies must
• How can we maximize ESG credits and incentives while
report the impacts that ESG efforts have on their businesses and the preserving our effective tax rate?
impacts they’re expected to have on the environment, human rights,
social standards, and sustainability-related risk.83 These rules apply
to multinational entities (like tech giants) that meet certain revenue
criteria. European branches of these companies may have to provide
consolidated reporting on their parent company’s activities as well.

In the United States, the Federal Acquisition Regulatory Council

has proposed a rule that would require certain federal contractors
to disclose their greenhouse gas (GHG) emissions, as well as their
climate-related financial risk, and set science-based targets to
reduce their emissions.84 California’s Climate Accountability Package,

10
 2024 technology industry outlook

Signposts for the future

2024 finds the technology industry preparing for a return

to growth. Tech companies may protect themselves
against future global disruptions by engineering a balance
between globalization and self-reliance, and they’re
gearing up for a raft of expected regulations. Preparations
will likely involve doubling down on data governance,
cybersecurity, and supply chain resilience. At the same
time, tech companies are looking at generative AI as a way
to achieve greater efficiency in the near term—and as a
way to fuel innovation and growth for themselves and
other industries in the long term.

In the coming year, tech companies should be on

the lookout for potential signals of change in the
market, including:
• Shifting macroeconomic conditions that could affect business models, product
and service decisions, and workforce structure.
• Opportunities to grow; for example, making strategic M&A decisions to scale
capabilities and talent in new areas, such as generative AI.

• Changes to governmental trade policies or incentives to localize tech supply

chains—which could trigger a need to adapt strategies quickly.

• Signs of increased geopolitical unrest or other global disruptions, which could

require a rapid shift to alternate suppliers or locations.

• Opportunities to expand existing R&D centers and establish new talent pipelines
on friendly shores.

• Changes in how generative AI is delivered and monetized.

• A shift from single-agent generative AI assistants to multiple agents that provide

business process automation.

• Resolutions of lawsuits alleging that LLMs were trained on copyright-protected data,

as well as lawsuits around content moderation and unfair business practices—
which will likely create important precedents and lessons.

• Introduction of additional privacy measures and enhanced user controls by

consumer-facing platform giants to ensure compliance with EU regulations and
to prepare for US requirements.

11
2024 technology industry outlook

Contacts

Paul Silverglate
Partner
US Executive Accelerators
Vice chair and the
US technology sector leader
Deloitte & Touche LLP
+1 408 704 2475
psilverglate@deloitte.com

Paul Silverglate would like to thank Susanne Hupfer, Michael Steinhart, Prashant Raman, and
Ankit Dhameja from Deloitte’s Center for Technology, Media & Telecommunications (TMT
Center) for their contributions to the research and writing of this outlook. He would also like
to thank Andrew Daecher, Ayo Odusote, Doreen Cadieux, Baris Sarer, Steve Fineberg, and
Lara Warthen for sharing their insightful perspectives.

About the TMT Center

Deloitte’s Center for Technology, Media & Telecommunications (TMT Center) conducts
research and develops insights to help business leaders see their options more clearly.
Beneath the surface of new technologies and trends, the TMT Center’s research can help
executives simplify complex business issues and frame smart questions. The TMT Center
can help executives better discern risk and reward, capture opportunities, and solve tough
challenges amid the rapidly evolving TMT landscape.

12
 2024 technology industry outlook

Endnotes
1. S&P 500 tech sector stocks lost nearly 32% of their value from January 1 through September 30, 2022. See: Jan Varsava, “Visualizing
S&P 500 performance in 2022, by sector,” Visual Capitalist, November 1, 2022; Gunjan Banerji and Hannah Miao, “Rate squeeze punishes
once-triumphant tech stocks,” Wall Street Journal, October 30, 2022.

2. Harriet Torry and Anthony DeBarros, “A recession is no longer the consensus,” Wall Street Journal, October 15, 2023; Daniel Bachman, Q4
2023 United States Economic Forecast, Deloitte, accessed December 18, 2023; IDC, “New IDC industry taxonomy reveals that software
and information services, capital markets, and life sciences will lead worldwide ICT spending growth through 2027,” press release,
September 21, 2023; Mark Haranas, “Global IT spending forecast to grow 8 percent in 2024, solution providers weigh in on economy,”
CRN, October 19, 2023.

3. Deloitte, 2022 technology industry outlook, 2022; Deloitte, 2021 outlook for the US technology industry, 2021.

4. Deloitte, 2023 technology industry outlook, 2023.

5. Ibid.

6. Deloitte, COVID-19 outlook for the US technology industry, May 2020.

7. In Q4 2023, Deloitte surveyed 122 technology decision-makers; 6% of respondents were in the C-suite, 30% were VPs/senior VPs, 48%
were directors/senior directors, 12% were heads of business units/departments, and 2% were managers/senior managers.

8. Stephen Watts, “IT spending & budgets: Trends & forecasts 2024,” Splunk, November 15, 2023.

9. Tripp Mickle, “Big tech rebounds and preps for transformative A.I. investments,” New York Times, August 5, 2023.

10. Shelby Hiter, “50 generative AI startups to watch in 2023,” eWeek, September 19, 2023.

11. Duncan Stewart et al., “Generative AI and enterprise software: What’s the revenue uplift potential?,” Deloitte, November 29, 2023.

12. Ibid.

13. Paul Lee et al., “Walking the tightrope: As generative AI meets EU regulation, pragmatism is likely,” Deloitte, November 29, 2023;
The White House, “Executive order on the safe, secure, and trustworthy development and use of artificial intelligence,”
October 30, 2023; The White House, “Fact Sheet: President Biden issues executive order on safe, secure, and trustworthy artificial
intelligence,” October 30, 2023.

14. IDC, “IDC’s forecast for worldwide IT spending in 2023 continues to slowly trend downward,” press release, April 5, 2023.

15. Layoff tracking website Layoffs.fyi reported that approximately 262,000 tech workers were let go in 2023—up more than 58% from 2022.
See: Layoffs.fyi - Tech layoff tracker and startup layoff lists; Charlotte Trueman, “Tech layoffs in 2023: A timeline,” Computerworld, accessed
December 22, 2023.

16. Torry and DeBarros, “A recession is no longer the consensus”; Bachman, Q4 2023 United States Economic Forecast.

17. IDC, “New IDC industry taxonomy reveals that software and information services, capital markets, and life sciences will lead worldwide
ICT spending growth through 2027”; Mark Haranas, “Global IT spending forecast to grow 8 percent in 2024, solution providers weigh in
on economy.”

18. Josh Schafer, “One chart shows how the ‘Magnificent 7’ have dominated the stock market in 2023,” Yahoo Finance, November 15, 2023.

19. Ryan Browne, “AI gave tech giants a $2.4 trillion boost to their market caps in 2023,” CNBC, October 17, 2023.

20. Heather Gates, “Venture capital chronicles of 2023: Pioneering artificial intelligence, course corrections, and uncharted waters,”
Deloitte, 2023.

21. Ibid.

22. Watts, “IT spending & budgets: Trends & forecasts 2024.”

23. Ibid; Belle Lin and Isabelle Bousquette, “Companies tried to spend less on cloud. Then AI showed up,” CIO Journal on the Wall Street
Journal, November 15, 2023.

24. Watts, “IT spending & budgets: Trends & forecasts 2024.”

25. Goldman Sachs, “AI investment forecast to approach $200 billion globally by 2025,” August 1, 2023.

26. Ibid.

27. 2023 Deloitte survey of 122 technology decision-makers.

28. “Artificial intelligence” and “Generative AI” were listed as separate choices. See: David Jarvis and Michael Steinhart, “Generative AI in tech:
Execs share adoption insights,” Deloitte, December 15, 2023.

29. Ibid.

30. Stewart et al., “Generative AI and enterprise software.”

31. Jarvis and Steinhart, “Generative AI in tech.”

13
2024 technology industry outlook

32. Mickle, “Big tech rebounds and preps for transformative A.I. investments.”

33. Watts, “IT spending & budgets: Trends & forecasts 2024”; IDC, “New IDC spending guide forecasts worldwide security investments will
grow 12.1% in 2023 to $219 billion,” press release, March 16, 2023.

34. Ibid; Matt Kapko, “Global cybersecurity spending to top $219B this year: IDC,” Cybersecurity Dive, March 17, 2023.

35. Michiel Prins, “How generative AI changes cybersecurity,” InfoWorld, September 25, 2023; Anna Peck, “Rising focus on cybersecurity:
Companies gear up to boost investments in 2024,” Clutch, November 2, 2023.

36. CB Insights, Tech M&A Q3’23 report, November 9, 2023.

37. Ibid; Peter Sayer, “The biggest enterprise technology M&A deals of the year,” CIO, December 27, 2023.

38. Dylan Thomas et al., The big picture: 2024 M&A industry outlook, S&P Global Market Intelligence, November 17, 2023.

39. Lyle Moran, “Most M&A dealmakers expect to acquire companies with AI capabilities,” Legal Dive, November 14, 2023;
Kristin Roth DeClark, “3 themes likely to dominate tech dealmaking in 2024,” Barclays, December 7, 2023.

40. Laura Alfaro and Davin Chor, “Global supply chains: The looming ‘great reallocation’,” National Bureau of Economic Research, Working
Paper No. 31661, September 2023; Qu Hui et al., “How a perfect storm created the global chip shortage,” Nikkei Asia, June 1, 2021.

41. US Department of Commerce and US Department of Homeland Security, Assessment of the critical supply chains supporting the U.S.
information and communications technology industry, February 24, 2022.

42. IMF, Trade, disrupted, Finance and Development, June 2023.

43. Christie Simons et al., 2024 global semiconductor industry outlook, Deloitte, January 24, 2024; David Shepardson, “Amkor to build $2 billion
Arizona semiconductor packaging plant,” Reuters, November 30, 2023.

44. Deloitte, “Supply chain innovation and sustainable value creation: A roadmap for responding to a new business imperative,”
October 2023.

45. Congress.gov, “H.R.4346 - Chips and Science Act,” accessed December 18, 2023; Jim Probasco, “CHIPS and Science Act of 2022,”
Investopedia, April 10, 2023.

46. Duncan Stewart, Karthik Ramachandran, and Brandon Kulik, “Chipping in to boost production: US and Europe move toward greater
self-sufficiency and resilient supply chains,” Deloitte Insights, April 24, 2023; Melanie Rojas et al., “Reshoring and ‘friendshoring’ supply
chains,” Deloitte Insights, March 24, 2022.

47. Rojas et al., “Reshoring and ‘friendshoring’ supply chains.”

48. Max A. Cherney, Mica Rosenberg, and Steven Scheer, “Israel’s tech sector could face disruptions after attacks, investors say,”
Reuters, October 9, 2023; Stephanie Overby, “Ukraine crisis puts global IT outsourcing on edge,” CIO, March 21, 2022.

49. Christie Simons et al., 2023 semiconductor industry outlook, Deloitte, January 23, 2023; Alan Patterson, “Chip experts see talent shortage
as main growth hurdle,” EE Times, July 21, 2023.

50. The Economist, “Big tech and the pursuit of AI dominance,” March 26, 2023; Mickle, “Big tech rebounds and preps for transformative
A.I. investments.”

51. Deloitte notes that this is a small fraction of the US$1.6 trillion in global enterprise IT spending projected for 2024, and also smaller than
the expected hardware uplift for chips and servers that perform generative AI of more than US$50 billion in 2024. While the market
potential for 2025 and beyond looks robust and the revenue uplift for enterprise software companies will likely be tens of billions of
dollars, Deloitte views 2024 as effectively a transition year. See: Stewart et al., “Generative AI and enterprise software.”

52. Ibid.

53. Duncan Stewart et al., “Gen AI chip demand fans a semi tailwind … for now,” Deloitte Insights, November 29, 2023.

54. Ryan Browne, “AI gave tech giants a $2.4 trillion boost to their market caps in 2023”; Tom Dotan and Deepa Seetharaman, “Big tech
struggles to turn AI hype into profits,” Wall Street Journal, October 9, 2023.

55. Dotan and Seetharaman, “Big tech struggles to turn AI hype into profits”; Will Oremus, “AI chatbots lose money every time you use them.
That is a problem,” Washington Post, June 5, 2023; Stewart et al., “Generative AI and enterprise software.”

56. Dotan and Seetharaman, “Big tech struggles to turn AI hype into profits.”

57. Stewart et al., “Generative AI and enterprise software.”

58. Jarvis and Steinhart, “Generative AI in tech.”

59. More than 70% of companies are experimenting with generative AI. See: Carl Franzen, “More than 70% of companies are experimenting
with generative AI, but few are willing to commit more spending,” VentureBeat, July 25, 2023.

60. Deloitte Digital, “Deloitte Digital’s latest research forecasts generative AI’s transformation of content marketing,” press release,
October 10, 2023.

14
 2024 technology industry outlook

61. Deloitte AI Institute, The Generative AI Dossier: A selection of high-impact use cases across six major industries, 2023; Tim Murphy, “How sales
teams can use generative AI,” TechTarget, August 18, 2023; Charlie Mitchell, “20 use cases for generative AI in customer service,” CX Today,
October 2, 2023.

62. Salesforce, “Sales, service, and generative AI: New research on what’s holding teams back,” June 28, 2023.

63. Harry Guinness, “11 generative AI programming tools for developers,” LeadDev, June 13, 2023; Prashant Bhavaraju, “How generative AI is
transforming today’s and tomorrow’s software development life cycle,” Forbes, November 17, 2023; Birgitta Böckeler and Ryan Murray,
“Generative AI and the software development lifecycle: Much more than coding assistance,” Thoughtworks, September 28, 2023; Felix
Laumann, “Beyond the hype: How generative AI is transforming software development,” Towards Data Science, May 30, 2023.

64. Katalon, “Benefits of generative AI in ensuring software quality,” accessed November 20, 2023; Paul Gillin, “Enterprise software
developers prepare for generative AI’s ‘productivity revolution’,” Silicon Angle, October 23, 2023.

65. Stack Overflow surveyed more than 60,000 professional developers. See: Stack Overflow, Developer sentiment around AI/ML,
June 12, 2023; Stackoverflow, 2023 Developer Survey, June 12, 2023.

66. Böckeler and Murray, “Generative AI and the software development lifecycle”; Bhavaraju, “How generative AI is transforming today’s and
tomorrow’s software development life cycle.”

67. Mohamad Said and Baris Sarer, “Operationalizing generative AI in the enterprise,” CIO Journal on the Wall Street Journal,
November 10, 2023.

68. Christopher J. Valente et al., “Recent trends in artificial intelligence litigation in the United States,” K&L Gates, September 5, 2023;
Christopher Hutton, “Generative AI set for era-defining clash with copyright law,” Washington Examiner, April 20, 2023.

69. Cristina Criddle, “Microsoft pledges legal protection for AI-generated copyright breaches,” Financial Times, September 7, 2023;
Ian De Freitas and Emily Costello, “Exploring AI indemnities: their purpose and impact,” Farrer & Co., October 3, 2023.

70. Jaydeep Borkar, “What can we learn from data leakage and unlearning for law?,” Cornell University, July 19, 2023.

71. Chris Arkenberg et al., “Taking control: Generative AI trains on private, enterprise data,” Deloitte Insights, November 29, 2023;
Lucas Mearian, “Chip industry strains to meet AI-fueled demands—will smaller LLMs help?,” Computerworld, September 28, 2023.

72. European Parliament, “EU AI Act: First regulation on artificial intelligence,” updated December 19, 2023.

73. The White House, “Executive order on the safe, secure, and trustworthy development and use of artificial intelligence”; The White House,
“Fact Sheet: President Biden issues executive order on safe, secure, and trustworthy artificial intelligence.”

74. European Commission, “The Digital Services Act package,” accessed December 3, 2023; Deloitte, “The Digital Services Act:
What to expect?,” accessed December 3, 2023; Alexandre Piquard, “European Union begins battle to apply regulation of tech giants,”
Le Monde, September 6, 2023; Deloitte, “The DSA and the DMA are here: New game-changer laws for our digital space,” accessed
December 3, 2023.

75. European Commission, “The Digital Markets Act: Ensuring fair and open digital markets,” accessed December 3, 2023; Samuel Stolton
and Jillian Deutsch, “Europe’s two-track approach to policing Big Tech,” Bloomberg, updated September 6, 2023; Martin Coulter,
“Big tech braces for EU Digital Services Act regulations,” Reuters, August 24, 2023.

76. Edith Hancock, “TikTok, Meta take EU to court over digital antitrust rules,” Politico, November 14, 2023.

77. Lee et al., “Walking the tightrope: As generative AI meets EU regulation, pragmatism is likely.”

78. European Parliament, “Artificial Intelligence Act: deal on comprehensive rules for trustworthy AI,” press release, December 9, 2023.

79. Deloitte, “EU AI Act adopted by the Parliament: What’s the impact for financial institutions?,” May 17, 2023.

80. The White House, “Fact Sheet: President Biden issues executive order,” October 30, 2023.

81. Deloitte, “Pillar Two Global Compliance,” accessed December 3, 2023; Deloitte, “Global minimum tax (Pillar Two): Frequently asked
questions,” August 2021.

82. Lauren Pesa, Katherine Donzella, and Suzanne Smetana, “The business case for ESG reporting for sustainable private companies,”
Deloitte, 2023; Workiva, “The annual reporting barometer 2023: Facing up to the CSRD,” May 17, 2023; Oliver Pike, “What companies
within and outside of the EU can expect of new European ESG regulations,” Thomson Reuters, May 4, 2023.

83. Deloitte, “The challenge of double materiality: Sustainability reporting at a crossroad,” accessed December 3, 2023.

84. US Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA),
“Federal Acquisition Regulation: Disclosure of greenhouse gas emissions and climate-related financial risk,” 87 FR 68312, November 14, 2022.

85. Kristen Sullivan, Ricardo Martinez, and David Sherwood, “Creating a climate of change digest,” Deloitte, March 2023;
California State Senate, “SB-253 Climate Corporate Data Accountability Act,” October 2023.

15
About Deloitte
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (DTTL), its
global network of member firms, and their related entities (collectively, the “Deloitte
organization”). DTTL ( also referred to as “Deloitte Global”) and each of its member
firms and related entities are legally separate and independent entities, which
cannot obligate or bind each other in respect of third parties. DTTL and each DTTL
member firm and related entity is liable only for its own acts and omissions, and
not those of each other. DTTL does not provide services to clients. Please see
www.deloitte.com/about to learn more.

Deloitte provides industry-leading audit and assurance, tax and legal, consulting,
financial advisory, and risk advisory services to nearly 90% of the Fortune Global
500® and thousands of private companies. Our people deliver measurable and
lasting results that help reinforce public trust in capital markets, enable clients
to transform and thrive, and lead the way toward a stronger economy, a more
equitable society, and a sustainable world. Building on its 175-plus year history,
Deloitte spans more than 150 countries and territories. Learn how Deloitte’s
approximately 457,000 people worldwide make an impact that matters at
www.deloitte.com

This communication contains general information only, and none of Deloitte Touche
Tohmatsu Limited (“DTTL”), its global network of member firms or their related
entities (collectively, the “Deloitte organization”) is, by means of this communication,
rendering professional advice or services. Before making any decision or taking any
action that may affect your finances or your business, you should consult a qualified
professional adviser. No representations, warranties or undertakings (express or
implied) are given as to the accuracy or completeness of the information in this
communication, and none of DTTL, its member firms, related entities, employees
or agents shall be liable or responsible for any loss or damage whatsoever arising
directly or indirectly in connection with any person relying on this communication.
DTTL and each of its member firms, and their related entities, are legally separate
and independent entities.

Copyright © 2024. For information, contact Deloitte Global.

8352933