CIO Optimism Continues To Fall As Skills Shortage Slows Tech Deployments 

CIO confidence continues to fall
StrategicCIO360’s Q1 CIO Trend Index finds optimism continuing to fade among America’s tech leaders, as tech demand slows and skilled labor remains difficult to find.

StrategicCIO360’s first-quarter poll of U.S. CIOs finds their outlook for business continuing to shift downward, shedding another 3 percent since we last polled our community of tech leaders in October 2022. CIOs have so far been among the most optimistic of the C-Suite, as businesses focused on speeding up digital transformation programs over the past three years.

But as the threat of a recession in the U.S. continues to loom and the labor market remains challenging, our data finds our forward-looking indicator registering at 6.2 on our 10-point scale (where 10 is Excellent and 1 is Poor). That is its lowest level since the summer of 2021, when we started polling CIOs about their outlook for business, with the Index now 17 percent off its August 2021 high, when it reached 7.45.

CIOs’ confidence in current conditions also waned this quarter, down nearly 10 percent since Q4 of 2022, from 6.77 last October to 6.13 this February.

Some of the polled IT chiefs said the ongoing shortage in required skills is putting a damper on projects and slowing execution. Others mentioned experiencing a consistent decrease in technology demand. Overall, however, the fear of a recession—or the overcorrection by the Fed—is what most say is affecting their confidence for the months ahead.

“My company’s primary vertical market is financial services, which has taken a serious beating in the last year. Nothing we are hearing from our clients or industry forecasts suggest any significant change for the next 12 months,” said Russ Donnan, chief information officer at mortgage services firm Certified Credit. “Data costs and capital costs increased sharply in the last 12 months. We are expecting both to stabilize at the new highs over the next year.”

Donnan says he expects a high interest rate environment for the next several years and high inflation to persist, coming down to the Fed target at a very slow rate. Many other CIOs participating in the survey shared a similar forecast for the U.S. economy—and how it would affect demand.

Dr. Paula Morris, chief instructional technology and innovation officer at Academy Charter School, said a lot of the rush to invest heavily in technology to navigate the pandemic environment is now tapering. “Many saw the pandemic period as a technological overdose; hence they are choosing to ignore/reduce rather than increase tool use in the brick-and-mortar operations,” she said. “Consequently, my prediction is that technological injections into the day to day of the organization will continue to slow down significantly over the next 12 months.”

If IT demand is slowing, the CIOs we polled say they nevertheless intend to double down on improving their companies’ capabilities. After a slump mid-year 2022, our data shows investments across the IT function are picking up. Eighty-eight percent said they plan to increase their overall IT investments in 2023—up from 73 percent when we asked them in Q4—and 80 percent said they specifically want to increase their cybersecurity investments—up from 77 percent last quarter.

Getting Over the Labor Hurdle 

The biggest hurdle for IT leaders in 2023, according to our poll: finding the skilled personnel to support the strategy. Arun Singh, CIO at family-owned industrial manufacturer Gemini, says companies that manage to retain and attract the workers they need will come out winning.

“If recession continues to go down, companies who can hold on to critical workforce will be good,” he said, noting that his company has tapped the contract worker pool to help curb the labor shortage, though he still expects to grow his internal IT staff by more than 20 percent in 2023, compared to 2022.

He’s not alone. Other CIOs also shared concerns about finding the skills they need to ramp up the tech strategy. Fifty-five percent said they plan to hire in the months ahead—up from 47 percent last quarter—and while layoffs at tech giants are making headlines, only 9 percent of the CIOs we polled this month said they expect to have to decrease their IT workforce, down from 11 percent last fall.

Interestingly, our poll found most CIOs are not planning to rely on contract workers to fill skills gaps. Exactly half said the gig economy only makes up less than 2 percent of their IT team, and 67 percent said they had no intention to turn to gig workers to help curb the talent shortage. That’s not to say they don’t believe in the concept: 46 percent said the gig economy is a viable solution for organizations, even beyond the current economic environment.

So, is AI and automation the solution to a scarce labor market? CIOs say no. With all the buzz over the latest generative AI tools and capabilities—and how the technology may eventually take over jobs—three out of five of the CIOs we polled said they had no intention of using ChatGPT or other AI platforms to augment work speed or mitigate labor costs. “It’s interesting,” said one respondent, “but certainly not looking to replace our people with AI.”

Most of the commentary our poll received is in light with the idea that while the technology is promising, there’s still a lot to figure out, including real-value business uses and unintended risks. “It is still hyped up, and it will take time to figure out a process which is beneficial,” Singh commented.

“We already use ChatGPT in small ways, but nothing significant. We won’t replace people with it, at least not in the short term,” said the director of technology at a large construction company.

“The technology has potential,” said the CISO of a large healthcare network. “However, the security side is not in line with our corporate policies and therefore we will need to proceed with caution, if at all.”

Still, 93 percent said interest in AI/Machine learning is likely to increase now that these capabilities have been developed—with 55 percent of them saying interest will increase “significantly.” A sign, perhaps, is that 67 percent of CIOs polled now say they plan to increase their automation investments in 2023—up from only 53 percent in Q4 of last year. 

About the CIO Confidence Index

The CIO Confidence Index is a pulse survey of CIOs and technology chiefs on their perspective of how current events are affecting their companies and strategies. Every quarter, StrategicCIO360 surveys CIOs across America, at organizations of all types and sizes, to compile our CIO Confidence Index data (1Q23 poll had 70 participants). The Index tracks confidence in current and future business environments, as well as their forecast for their company’s revenue, profit, cyber and tech investments, and IT staffing for the year ahead. Learn more at 

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