Tech sector scales back economic growth forecasts

The Australian technology sector has significantly scaled back its growth and hiring expectations amid the current economic headwinds, the Australian Information Industry Association (AIIA) has revealed. The once optimistic projections of expansion of the sector have given way to more modest predictions, with the proportion planning for flat or small growth growing from 7% in 2023 to 26% in 2024.

The proportion of ICT sector companies expecting revenue growth above 10% has likewise fallen from 56% to 39%, while organisations expecting revenue growth of 5–10% has declined from 22% to 21%. The survey also found that 72% of information industry respondents believe Australian governments are failing to understand the role ICT plays in the Australian economy.

In the depressed economic climate, the proportion of companies expecting a more than 10% increase in hiring of full-time equivalent roles fell from 56% to 26%, while those expecting flat to small growth increased from 7% to 38%.

The survey also found that an overwhelming 99% of respondents believe that that graduates from vocational education and training (VET) and higher education institutions are not adequately prepared for the workforce.

Organisations are taking matters into their own hands by reskilling their workforce to bridge skills shortages, but some are being forced to look offshore for talent due to concerns over persistent talent shortages in certain areas, the lack of job-ready graduates and rising labour costs.

AIIA CEO Simon Bush said the survey suggests that difficult times are ahead.

“The tech sector is facing multiple concurrent challenges: a lack of government leadership and vision in fostering technology innovation and commercialisation, a shortage of job-ready talent and an uncertain economic outlook. Together, these challenges are hitting the tech sector, with the survey telling us that fewer Australian tech companies are looking to expand in overseas markets," he said. “Whilst the tech sector is still growing, it is clear that government inaction and increasing regulation with the corresponding economic storm clouds developing, combined, is dampening growth and serves as a warning to the broader Australian economy.

“Technology is an enabler across every sector of the Australian economy that will drive productivity growth at a time when economic growth in Australia is flat to negative.”

To access the 2024 Digital State of the Nation report, visit the AIIA website here.

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