Middle Market SMEs Brace for Growth: AI, Cybersecurity, and Workforce Retention Take Center Stage

The UHY 2025 Middle Market Survey ( US Market) captures insights from over 275 middle-market businesses spanning industries such as automotive, construction, healthcare, technology, and more. These businesses represent a diverse range, with revenues from several million to over $500 million and workforce sizes between 20 and 1,000 employees. Conducted in 2024, the survey provides a comprehensive view of the performance, priorities, and challenges of U.S.-based businesses as they navigate a dynamic economic environment.

Middle Market Businesses Eye Growth Amid Emerging Challenges

UHY’s 2025 Middle Market Survey offers a deep dive into the evolving landscape of small and medium-sized enterprises (SMEs). Drawing insights from over 275 middle-market business owners across industries such as automotive, construction, energy, healthcare, real estate, and technology, the survey provides a detailed snapshot of their strategies, challenges, and expectations for the future. Participants represented businesses generating revenues from several million to over $500 million and employing 20 to more than 1,000 people across the United States. Data collection was conducted throughout 2024, highlighting performance trends, strategic priorities, and the adoption of cutting-edge technologies like artificial intelligence (AI).

Economic Outlook Reflects Optimism

Despite economic uncertainties, 81% of respondents expressed confidence in an improved economic landscape for 2025, particularly in sectors such as real estate, automotive, and healthcare. While optimism is high across most industries, staffing and financial services showed a more tempered outlook.

Growth Expectations Climb Higher

The survey reveals that 88% of businesses anticipate similar or higher growth in 2025 compared to 2024. Over half (51%) of respondents expect significant growth, while 37% foresee stable performance. These findings underscore the resilience and adaptability of middle-market businesses navigating shifting economic dynamics.

Interest Rates and Economic Policy

Monetary policy continues to be a focal point, with 42% of business leaders anticipating Federal Reserve interest rate cuts by late 2024. A further 25% expect these cuts by the third quarter of 2024, reflecting hopes for relief in borrowing costs. However, 21% believe rate adjustments may extend into 2025, while 11% foresee possible hikes.

Cybersecurity: A Growing Concern

Cybersecurity has emerged as a significant concern, with 51% of respondents reporting cyberattacks or attempted breaches. To address these risks, 79% of businesses plan to increase their cybersecurity investments in 2025, with 26% committing to a significant boost of over 20%.

AI Integration on the Rise

The survey highlights the growing influence of artificial intelligence (AI) across industries. Approximately 62% of respondents view AI as the most impactful technology for their operations, with 61% already utilizing AI tools in areas like customer service (32%) and operational efficiency (26%). However, challenges such as employee understanding (32%) and security concerns (28%) are slowing broader adoption.

Strategic Priorities for 2025

Businesses are focusing on expansion into new markets, cost efficiency, talent retention, product and service innovation, and mergers and acquisitions. Talent retention, in particular, has gained prominence, with companies prioritizing compensation adjustments and enhanced benefits to maintain their workforce.

Workforce Challenges and External Pressures

Talent retention (29%), shortages (23%), and employee productivity (28%) are the top workforce challenges. Meanwhile, external factors such as economic uncertainty (50%), international conflicts (25%), and supply chain disruptions (14%) remain significant concerns.

UHY’s 2025 Middle Market Survey paints a picture of cautious optimism among SMEs, underscored by challenges in cybersecurity, workforce development, and economic uncertainty. The adoption of AI and strategic focus on growth and efficiency signal a forward-looking approach as middle-market businesses navigate a rapidly evolving global landscape. By leveraging technological advancements and addressing workforce concerns, these businesses are well-positioned to thrive in 2025 and beyond.