Tech CFOs Bullish On 2018 But Worried About The World

Chief financial officers polled in BDO’s 2018 Tech Outlook Survey are more bullish about their fortunes this year, but that's not a big surprise.  

According to the new report, 84% think their company’s revenue will increase this year, and they anticipate a significant 12.2% hike. But as BDO points out, the 10 biggest U.S. tech firms expect aggregate sales of over $1 trillion this year, which is an indication of the work (and opportunity) tech marketers have done this year.

To amend the old saying, a gigantic tide raises all boats. With the economy in high gear, technology is cruising.

They also expect a strong year in tech mergers and acquisitions (72% expect an increase in activity) and 48% expect to be among the players, one way or the other — up from 31% in 2017. 



“This year and next are going to be blockbuster years for U.S. tech IPOs,” predicted Christopher Towers, national managing partner for BDO’s Audit Quality and Professional practice, in the report. "While it might be unrealistic to hope for an IPO market as robust as the ones seen in 2014 or 2000, the overflowing pipeline of tech unicorns, combined with favorable market conditions, will be key ingredients in cultivating a plentiful harvest of public offerings."

Last year, CFOs polled predicted a 10% bump up in revenues, so this year’s survey is only slightly more bullish. 

But what may be more revealing is that these CFOs are most concerned about domestic and global political uncertainty — 35% say that’s the biggest factor that could give the sector a headache. There are some indications that tech companies are increasingly aware of cyberterrorism as well.  

The report reveals that 82% of the CFOs polled said their company employed new software security tools last year, 79% did a cybersecurity risk assessment, and 66% created a new response team for security breaches, among other safeguards.

They are also concerned about President Trump’s “Buy American and Hire American” campaign executive order that demands new scrutiny of H-1B visa applications, and now, extends that to  visa renewals.  

These actions have dealt a significant blow to the tech community, which relies heavily on H-1B visa holders for tech talent,” the report says. Fifty-one percent of the CFOs say “recruiting and retaining workforce talent” will be their company’s biggest challenge in 2018.

A statistic from U.S. Citizenship and Immigration Services dramatically underscores the importance of foreign workers to the tech industry. Between 2007 and 2017, over 2 million H-1B applications were from foreign workers for jobs at “computer-related” firms, by far the highest number. (The next highest category, “Architecture, Engineering and Surveying” accounted for 323,226 applications.)

These financial officers agree the new tax law will have an effect on their business, and 43% say the impact will be significant. BDO, which provides assurance, tax, and advisory services for privates and public firms, reports in this survey that the tech industry was already paying far less than the old 35% tax rate. With the new rate at 21%, they’ll still make out well but the change may not be that dramatic.

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