Tech Companies Expected To Spend 1 - 5% Of Revenue On IT Security

SANTA CLARA, Calif., June 17, 2015 /PRNewswire/ -- Three-fourths of technology executives expect their companies to spend one to five percent of their revenue on IT security over the next 12 months, according to the annual Technology Industry Business Outlook survey from KPMG LLP, the U.S. audit, tax and advisory firm.  At the same time, 23 percent of those surveyed say their company has suffered a security breach in the past 12 months.

"The survey findings on security are an important marker since tech companies are the pacesetters in IT security. How much and where tech companies spend on IT security, and how successful they are, can serve as guides for all other industries," says Gary Matuszak, Global Chair, KPMG Technology, Media and Telecommunications practice.

The KPMG technology survey of 111 U.S.-based technology executives also found the continuing emergence of a broad portfolio of technologies, joining mobile and cloud, as revenue drivers.  The industry leaders said their company's largest revenue drivers over the next 24 months will be mobile (27 percent), followed by healthcare IT, devices, applications, data and analytics, digital media, cloud, social, shared economy, security and the Internet of Things.

"Unlike a few years ago when respondents picked cloud and mobile as the biggest projected revenue drivers, they're now identifying a much broader range of technologies to boost growth in the coming 12 months," Matuszak says. "Yet, regardless of how confident they are in their strategy, in today's hyper-competitive marketplace marked by rapid technology innovation, it is important for tech companies to remain agile, in case they need to pivot."

Tech companies counting on U.S. market in light of global uncertainties
Regarding their revenue outlook, eight out of 10 surveyed expect their company's revenue to increase. Almost nine out of 10 say the U.S. market will provide the highest percentage of revenue growth over the next 24 months, significantly ahead of the number who selected Canada (44 percent).  More than half say the speed of the economic recovery presents the greatest risk to company growth, while 40 percent cite the impact of new regulations, and 32 percent say U.S. corporate tax reform/OECD international corporate tax action plan/expiration of "tax extenders" and uncertainty about extension by Congress.

As is usually the case, employment growth follows revenue growth expectations. Six out of 10 tech business leaders expect their companies to increase headcount in the next 12 months. Eighty one percent said the U.S. would have the highest employment growth over the next 24 months, followed by Canada (43 percent).

KPMG's Matuszak says, "the global economic uncertainties probably play a role in the focus on the North American market and the continuing concern for the speed of the economic recovery."

Asked where in the U.S. they'd invest, more tech leaders say they plan to increase investment and/or jobs over the next 24 months on the East Coast (32 percent) and in the Midwest (32 percent) than in the West (23 percent) and Southeast (17 percent).

Additional findings

• 17 percent of tech leaders say their companies are planning to move manufacturing back to the U.S. in the next 24 months and 17 percent say their companies are planning to add to U.S. manufacturing operations.
• Security is the biggest challenge for businesses in adopting mobile technologies and Cloud.
  Risk management and security are the biggest challenges for businesses in adopting the Internet of Things.
• Changes in customer demand and the need to innovate to meet the demand and differentiate their offerings from the competition are expected to be the top two reasons to transform tech companies.

KPMG Technology Industry Business Outlook Survey
The KPMG survey was conducted in the U.S. in April 2015 and reflects the responses of 111 primarily C-level and senior executives in the technology industry. Of the respondents, 54 percent are in companies with revenues of $1 billion or more and 46 percent are companies with revenues in the $100 million to less than $1 billion range.

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 162,000 professionals, including more than 9,000 partners, in 155 countries.

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SOURCE KPMG LLP

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