Business investment would increase though firms in many countries are dealing with the highest interest rates they have seen in years, said Grant Thornton recently.
Globally, more than half of respondents the firm surveyed expect to increase investment across technology, R&D, and staff.
Technology is the area most firms plan to invest in, with 61% of mid-market firms expecting this to happen over the next 12 months, up from 57% in the second half of 2022, Grant Thornton’s survey indicated.
“Traditionally, investment in technology was led by larger firms with deeper pockets, and the productivity gains came later down the line,” said Nick Watson, Partner, Global head of technology, Grant Thornton UK. “But now, technology is accessible to companies of all sizes, and this has largely been driven by the rise in the use of the cloud. For mid-market firms in particular there are huge opportunities available.”
The most notable benefit of investing in technology for these firms is the additional productivity gains from better data and the automation of business processes, he pointed out.
With employment costs rising, automation offers a clear way to reduce labour costs, he added.
Business investment: Survey highlights
- Despite rising costs and persistent economic uncertainty, businesses are increasing investment in R&D.
- Globally, this has risen slightly from 51% at the end of last year to 54% this year, significantly higher than it was pre-pandemic (45% in the first half of 2019).
- Mid-market business leaders are demonstrating their focus on the future and desire to keep innovating to stay ahead of competitors and keep abreast of the fast pace of technological change.
- The increase in optimism among mid-market business leaders has been accompanied by a stronger desire and expectation to invest overall.
Business investment: Top three takeaways
Grant Thornton recommends firms to consider the following when making investments.
Take the time to scrutinise the use of technology. Firms must dedicate the time in understanding the impact of changing technology. Ongoing exposure to this will allow firms to focus on where the investment can have the biggest benefit.
Don’t forget the human side of business. Technology is moving at a rapid pace but human skills are still essential for growth. Leverage investing in both talent and technology to drive real value in the long term.
Don’t rush into investment decisions. With interest rates at an all-time high, explore different funding options. Take a longer-term view and have clarity on the return on investment and the impact it will have.
