Economic woes are driving down tech budgets, as 50% of boardroom leaders saying that they have slashed their tech budgets due to economic headwinds such as inflation and undulating interest rates.

The new figure comes from The IN Group, which surveyed 700 tech and non-tech boardroom executives in the UK, US, Germany, and the Netherlands for its Tech and the Boardroom report.

Half of respondents revealed that their tech department had faced budget pressures driven by economic turbulence.

In the UK, 51% of boardroom leaders said that their technology budgets had been reduced as a result.

Despite overall budgets being cut, however, 81% said that their company had increased tech investment over the last year. This could reflect an eye to the future, with companies placing their stakes on AI to improve overall efficiency.

“It’s essential for the boardroom to invest in technology to drive digital transformation and to stay ahead of the game, especially in the face of economic turbulence,” Nick Baxter, CEO of The IN Group, said.

“Technology evolution isn’t slowing down for anyone, so those who continue to align their business and technology strategies, fuelled by investment, will be best placed for growth when the economy picks up.

“Overall, it’s the responsibility of the entire C-suite to understand the power that tech such as AI and automation can bring, being the driving force for operational efficiency.”

The positive outlook on tech investment could reflect an eye to the future, with companies placing their stakes on AI to improve overall efficiency.

This coincides with the nearly four in five (78%) of boardroom leaders looking to prioritise investment in automation in order to cut costs and boost efficiencies for the year ahead.

And, while budgets may have been slashed, 81% are positive about increasing their technology investment in the year ahead.

Overall, 80% of UK respondents felt that technology was successfully driving transformation across their business, with 76% saying that their technology and business strategies were in alignment.

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69% of all respondents said that their main priority was value creation, beating out value optimisation, amid uncertain economic roads ahead.

“A critical takeaway from the survey is the emphasis on technology as a key driver of economic growth and operational efficiency,” Professor Alexeis Garcia Perez, of Aston University, said.

“Despite reported cuts in tech department budgets, overall tech spend has increased, underscoring a shift towards investing in transformative technologies and capital expenditures outside traditional IT departments.

“This indicates a broader recognition of the role of technologies in enhancing business capabilities and the competitive positioning of the firm.”