Report: 84% of tech CFOs expect business revenues to increase in 2018

A new survey from BDO found that CFOs believe revenues will see a net increase of 12.2%.

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Building a slide deck, pitch, or presentation? Here are the big takeaways:
  • 84% of tech CFOs expect business revenues to increase in 2018, thanks to a strong economy and healthy investment in the space. -- BDO, 2018
  • Tech CFOs anticipate a net revenue increase of 12.2% in 2018, which would be the highest in the past 11 years. -- BDO, 2018

Some 84% of CFOs in the technology sector said they believe the industry will see revenues increase in 2018, according to a recent BDO survey. Those CFOs said they anticipate a net increase of 12.2% that, if it comes to pass, would be the highest increase in the 11-year history of BDO's survey.

Geographically, the growth is expected to be highest in the US, reported by 34% of the respondents. Additionally, 26% said they believe China will see the highest growth and 24% believe India will have the top spot for growth.

Because of the healthy market perception, nearly half (48%) of CFOs said they expect to be involved in some sort of merger and acquisition (M&A) deals in 2018, the report said. Last year, that same statistic was just 31%.

SEE: IT budget research 2018: Funding and spending priorities (Tech Pro Research)

There are roadblocks, though, including US immigration policy shifts, which make it harder to find and retain good talent, the report said. As such, 51% of CFOs said they believe that recruiting and retaining talent will be their biggest challenge as an executive this year.

"We expect 2018 to be a metamorphic year for tech, but success won't come easy," Aftab Jamil, assurance partner and global leader of BDO's Technology practice, said in a press release. "Leaders are battling major political and economic forces that threaten to throw them off course, from changing trade agreements to shifts in immigration policy to sweeping tax reform. Nevertheless, the industry's resilience is not to be underestimated, nor the community's ability to transform setbacks into opportunities."

The recently passed tax law (formerly known as the Tax Cuts and Jobs Act) will also be a major CFO focus, as 65% of those surveyed said fully understanding its implications was their top tax reform challenge in 2018. And even though the corporate tax rate is being reduced from 35% to 21%, that doesn't mean that all tech companies will come out ahead, David Yasukochi, tax office managing partner and co-leader of BDO's Technology practice, said in the release.

"Various international tax provisions may tilt some tech companies in favor of domestic operations, but the overall impact on both domestic and international tax structures is still unclear," Yasukochi said in the release. "The first round of earnings this spring will help shed light on how tax reform is impacting the sector."

Security was also a big focus of the report. Some 82% of CFOs said their company used new software security tools in 2017, and 37% said they hired a chief security officer. When it came to actually tackling a breach, 62% said they were "very confident" their organization could detect it.

Big investments were also expected in infrastructure, with 70% planning on putting money in cloud computing. Another 64% said money was going to improving data analytics. And AI, despite its hype, wasn't on many executives' radars, with 85% planning to make no investment in the space.

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