Tech Spending Trends, Labor Market Shifts, and Economic Indicators in 2024

[00:00:00] It's Monday, June 24th, 2024. And I'm Dave Solt. Three things to know today. US consumer spending growth slows the implication for SMBs and the broader economy. SAS security and AI personalization key drivers of tech spending in 2025 and navigating this shifting labor market opportunities in

[00:00:21] cybersecurity and talent retention strategies. This is the Business of Welcome to the last full week of Q2. Let's take a look around the landscape. It's easy to think that the stock market is where it's all at. But as the

[00:00:37] S&P 500 hits a record high, 75% of that is because of Apple, NVIDIA, Microsoft, MetaAlphabet, Amazon and Tesla alone. Tech stocks are significantly contributing to the S&P 500 performance with the index up 106% over the past five years, with tech stocks included, compared to a 69%

[00:00:58] increase without them. This year, the S&P 500 is up 16% overall, and only 9% without technology stocks. Meanwhile, the Russell 2000 up 0.58% for the year 1.62% the last five days, the S&P 600 is down 1.57% year to date, up 1.97% the previous five days. Those are both proxies for small businesses. The

[00:01:26] US consumer spending growth has slowed down this year, indicating a potential cooldown in the economy. May retail sales increased by 0.1%, hampered by falling gas station sales, excluding gas stations, sales rose by 0.3%. Spending and housing related categories declined while spending in hobby shops, clothing

[00:01:48] shops and e commerce stores increased. The control group data which feeds into the consumer spending category of GDP rose by 0.4% in May, slightly lower than expected. Why do we care? So this is why digging into the numbers is

[00:02:04] important. A cursory look at the headlines around S&P 500 would have said everything is great. It's more subtle than that. It's more level as an economy. The slowdown in consumer spending growth is a critical indicator of potential economic challenges ahead. Businesses need to monitor these

[00:02:20] trends as they could signal reduced consumer confidence and spending power. When considering the S&P market, buyers look a lot more like consumers. As many S&Ps also serve consumers, you're a lot closer to those buyers than a shareholder investor. Trinity cyber brings MSPs a revolutionary new

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[00:03:27] Visit trinity cyber dot com slash MSP four to learn about their discounted MSP pricing options. That's the market. Let's talk about technology spending. The annual SAS security survey report 2025 by Adaptive Shield reveals that organizations are increasingly prioritizing SAS security with increased

[00:03:49] investment and dedicated security teams. Companies have improved their SAS security capabilities but still face challenges with misconfigurations and visibility into security risks. However, SAS security investment is paying off as the number of security incidents has decreased compared to the previous year.

[00:04:07] Echoing that, according to a survey by the Cloud Security Alliance, 70% of enterprises are prioritizing investment in SAS security with dedicated teams being established to secure those applications. Despite economic instability, organizations increased investments in SAS security, adding head count and growing budgets. The survey also found that organizations have

[00:04:29] improved SAS security capabilities and visibility into their applications. However, challenges remain such as achieving visibility into business critical apps and addressing misconfigurations. And according to a study by the Information Services Group or ISG, enterprises that implement business process outsourcing programs or BPO can achieve an average of 15%

[00:04:52] savings compared to in house operations. The study also found that cost savings are the primary motivator for outsourcing with enterprises seeking more cost savings, innovation and improved customer experience from their BPO programs. While BPO has been successful in delivering cost reduction and

[00:05:10] efficiency, enterprises are demanding further cost and efficiency savings. The study also highlighted the anticipated impact of AI on reducing external staffing in outsourced operations. And according to the State of Personalization 2024 report from Twilio Segment, 89% of B2B and B2C directors believe that

[00:05:32] ethical use of AI can provide a competitive advantage. Additionally, 86% expect AI to support a shift from reactive to predictive personalization. The report also highlights other data points such as the belief that AI will change personalization strategies and the expectation that AI chatbots will

[00:05:52] have the most impact on personalization in the next five years. So why do we care? So, SaaS security on the rise. This makes sense as SaaS does continue to grow. I'm not sure this should be viewed as entirely new spend. I posit some of this

[00:06:10] spend is reallocation. That said, I'm more interested in the BPO work, particularly in a world of data and AI. Investing in AI driven personalization strategies can help businesses move from reactive to predictive approaches, enhancing customer engagement and satisfaction. And when one can tie it

[00:06:29] back to savings, 15% for example, well, there's reason to invest. And there's some labor market data too. Employment for software developers in the US has declined from pre-pandemic levels, making it more challenging to land high paying tech jobs. The slowdown in the tech job market is attributed

[00:06:50] to rising interest rates, the end of pandemic era trends and a slowing economy. While demand for software development jobs is healthy, it may take longer to find work, especially for experienced developers. However, the long term outlook for the industry does remain positive. And it's not just

[00:07:07] developers. A survey by CyberSN reveals a decrease in openings for insider threat analysis, product security engineering and DevSecOps. And according to new data from CyberSeek, there's a significant shortage of cybersecurity professionals in the US with nearly 470,000 job openings listed by

[00:07:28] employers. Only 85% of these positions can be filled, leaving a need for approximately 225,200 more cybersecurity workers. New college graduates are facing a challenging job market this year, with entry level job prospects dwindling and hiring slowing down. Only 13% of entry level job seekers have

[00:07:49] found work in the past six months, compared to a peak of 20% in 2022, according to a Goldman Sachs analysis of Commerce Department data. According to new data from the Survey of Working Arrangements and Attitudes, workers aged 50 to 64 are most likely to work entirely on site or full time from

[00:08:09] home, while workers aged 20 to 29 are more likely to work hybrid. Super commuting has increased by 32% post pandemic, and older workers have varying preferences for in office or remote work. And as reported in the BBC, the number of days employees spend in the office does not directly

[00:08:29] correlate with their sense of connection to the organization. Data shows only a 1% difference in the connection between those working four or five days a week and those working two or three days on site. Increasing in person days can actually decrease worker satisfaction with their work life balance.

[00:08:47] A blend of autonomy and two to three in person days a week can foster employee engagement and workplace connections. And finally, per new research in the Harvard Business Review, workers are increasingly disengaging in zoom meetings, staying on mute and turning off their cameras. This lack of

[00:09:04] participation could indicate disinterest or unnecessary meetings. Research from analytics firm Vytopa shows a correlation between camera usage in zoom meetings and employee attrition. Employees who left their company within a year had their cameras on only 18.4% of the time in small group

[00:09:23] meetings, compared to 32.5% for those who remained at the company longer. Why do we care? The current labor market reflects a mixed landscape with both challenges and opportunities. Strategic investments in talent acquisition and retention, particularly in cybersecurity and supporting new graduates

[00:09:43] will be crucial for long term success. It's a challenge for smaller companies for sure, but it's an opportunity to excel and differentiate. It's cliche to say your people are your difference. It's competitive to have a system that produces more of them.

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