Technology industry outlook

Despite recent economic and geopolitical challenges, the technology sector is poised for a robust recovery. High interest rates and tensions impacted growth in 2022 and 2023, but as rates are expected to decline by late 2024, liquidity constraints should ease, fueling investment in AI and cybersecurity. The IPO market shows signs of revival, with Nasdaq reporting nearly 100 companies initiating the IPO process. While investor confidence grows, factors like inflation and the upcoming presidential election could affect timing. Nevertheless, decreasing borrowing costs and increased capital flow are set to drive sustained growth and innovation in the tech industry starting in 2025.

The emergence of new technologies is sending shock waves through the middle market business environment, with organizations quickly evaluating how to leverage innovation to enhance efficiencies, improve the customer and employee experience, and reduce costs. Everyone is talking about AI, and many companies—including those in media and entertainment—are set to ride that wave. In addition, telecom companies are working to satisfy the appetite for more high-speed connectivity with 5G-supported edge computing. How disruptive will the advancements in natural language processing, generative AI and the expansion of 5G infrastructure be to the middle market? Only time will tell, but the data-backed trends suggest the impact will be significant.

With a possible recession looming in 2023, 2022 was an interesting year for talent and the technology sector. With some of the nation's largest tech companies announcing layoffs and hiring freezes, middle market technology companies will find themselves in a newfound position of strength when it comes to locating and hiring talent.

Technology has always been a driver of change and innovation. As technology companies strive to innovate, race to be first to market and compete for market share, the fight for top tech talent has been increasingly competitive. Until recently, middle market firms have seemed locked in a losing battle against large public technology companies for talent. However, with climbing interest rates and stubborn inflation, many public tech companies have turned to layoffs as a means of managing profitability and share prices.