With CEOs citing rising wages and labour shortages as their most pressing concerns,2 and an ongoing need to drive productivity gains (made more urgent in countries with rapidly aging populations), we expect companies to invest in AI in a bid to improve business outcomes and reduce costs.
While productivity gains should help pay for these tools, we expect that over the mid to longer term, some of this budget will likely come from headcount, similarly to how budget for new IaaS/SaaS platforms came from budget previously used for hardware and software licenses. A normal trajectory of headcount growth typically sees companies spend an additional 1.5% – 2% each year on salaries. Even if a quarter of these additions were displaced by intelligent software, we estimate companies could save US$300 billion of incremental spend in the US alone — versus a total software market of around US$700 billion today.3
This will benefit not only providers of AI, but also its enablers — software companies involved in increasing computational power, storing and managing data, and enhancing connectivity.
Cybersecurity risks are proliferating – With more points of access and increased digitalisation across enterprises, cybersecurity risks have become increasingly prevalent. According to Cisco, distributed denial-of-service (DDoS) attacks — which target networks — were on pace to increase twofold from 2018 to 2023. But not only are we seeing an increase in the number of attacks, the scale and economic impact of these is also growing.
The evolving nature of cybersecurity attacks and their potential to damage credibility while incurring high costs will make investments into cybersecurity an ongoing, and increasing, imperative. This creates an opportunity for cybersecurity providers to emerge as leaders in the field. This is another area where AI can be a useful tool, helping with network security, threat detection, data protection, analytics and identity services. However, AI will inevitably also introduce new risks and usher in a new paradigm for enterprise cybersecurity.
Trends and transformation distilled: Our 2024 outlook in brief
Our experts explore investment opportunities and risks for the year ahead.
Multiple authors