At a glance
- Despite the pandemic environment, investment in the technology sector has continued to set records in all categories.
- Cloud-based software demand is growing, led by finance and enterprise resource planning tools, as well as customer relationship management, human resources and security platforms.
Read more articles from our spring 2022 technology, media and telecom industry outlook
Capital market and deal activity continued strong pace through the end of 2021
In a year filled with pandemic challenges that included labor constraints and global supply chain issues, the technology ecosystem achieved new records in all categories of investment, including venture capital, private equity and initial public offerings, with both IPOs and special purpose acquisition company transactions hitting new highs. Venture capital: In 2021, a year filled with uncertainty, U.S. VC firms continued their strong momentum from a record 2020 and again completed a historic number of deals, investing nearly double the amount of capital compared to the prior year. An early look at 2021 deal volume and deal values shows more than 15,000 deals were completed and nearly $330 billion of capital was deployed into venture-backed companies. It should come as no surprise that TMT companies attracted the majority of those deals and capital. Statistics compiled by PitchBook show TMT companies commanded more than 86% of deal values and 82% of total completed deals, or $285 billion of the overall invested capital and more than 12,000 total deals in the United States alone.

Enterprise demand for cloud-based software will continue strong growth
The TMT industry continues to entrench itself in the core of every business regardless of size, industry or location, and now provides the infrastructure and backbone of businesses globally as they transform from the inside out to meet the needs of today’s digital economy. After quickly adopting a mix of collaboration, communication and connectivity tools in response to entire workforces working from home, enterprises globally will continue to adopt and upgrade their information technology equipment and digital infrastructure at a rapid pace for years to come. Enterprise software spending on e-commerce, human capital, finance, customer relationship, cloud infrastructure and other solutions is anticipated to be a bright spot this year and beyond. A growing focus for enterprises will be moving finance and enterprise resource planning tools to the cloud in response to the pandemic’s emphasis on the need for and importance of cloud-based solutions and the capabilities they can provide. We expect strong growth in the adoption of cloud-based ERP tools—which currently lag behind other tools located in the cloud—over this year and the next few years as enterprises adjust IT budgets to connect and empower the finance and executive teams. Global spending on ERP is expected to grow from $30 billion in 2021 to $49 billion by the end of 2025, according to International Data Corp., representing a compound annual growth rate, or CAGR, of more than 13%. Additionally, strong adoption of cloud-based human resources and payroll-related tools is expected as the hybrid workforce and labor challenges faced by many organizations require more capable, connected, and collaborative tools and today’s advanced cloud-based platforms provide powerful solutions. Globally, the growth of spending on cloud-based HR and payroll-related solutions is estimated to increase from $21 billion in 2021 to $32 billion—a CAGR of 11%. Another pandemic tailwind-driving opportunity for TMT companies is a growing need for businesses to better understand their customers and the life cycle of those relationships, as well as the ever-changing landscape related to cybersecurity. IDC estimates that growth will be strong for cloud-based customer relationship management and security solutions, with spending on both expected to grow at an average annual rate of 11% from the end of 2021 through 2025. Total spending on CRM is projected to increase to $83 billion from $55 billion and security spending to $29 billion from $18 billion. The dispersed nature of the workforce, a growing number of endpoints, and an expanding customer base with a longer life cycle common to the subscription-based services provided by tech companies are drivers of the increased demand for these products and services.