News: Over 50% of Indian CEOs bullish on country’s economic growth: Survey

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Over 50% of Indian CEOs bullish on country’s economic growth: Survey

According to PwC’s 26th Annual Global CEO Survey, which polled 4,410 CEOs in 105 countries and territories, inflation (35%) followed by macroeconomic volatility (28%), geopolitical conflict (25%) and climate change (24%) are the top threats.
Over 50% of Indian CEOs bullish on country’s economic growth: Survey

Around 57% of Indian CEOs believe that the country’s economic growth will improve over the next 12 months. In comparison, only 37% of Asia Pacific CEOs and 29% of global CEOs expect economic growth to improve in their countries or regions over the next 12 months.

On the other hand, around three-quarters (78%) of Indian CEOs believe global economic growth will decline over the next 12 months.

According to PwC’s 26th Annual Global CEO Survey, which polled 4,410 CEOs in 105 countries and territories, including 68 from India between October and November 2022, 41% of CEOs believe their organisations will not be economically viable in 10 years if they do not transform.

Inflation (35%) followed by macroeconomic volatility (28%), geopolitical conflict (25%) and climate change (24%) are the top threats, as cyber and health risks fall from a year ago.

No job cuts and salary reduction

While cost cuts are high on the priority list for CEOs globally, 85% Indian CEOs do not plan to reduce headcount, and 96% do not plan to reduce compensation – demonstrating their resolve to retain talent.

India CEOs joined leaders in the US, Brazil and China in being more optimistic about domestic growth than global growth, compared to those in France, Germany and the UK.

Biggest challenges to long-term industry profitability

Changing customer demands, regulation and tech disruption are seen as the biggest challenges to long-term industry profitability by CEOs.

They also see climate risk impacting their cost profiles and supply chains over the next 12 months. To reduce emissions and mitigate climate risks, 43% are developing data-driven enterprise-level strategies for reducing.

Top concerns for CEOs

In addition to a challenging environment, 41% of CEOs think their organisations will not be economically viable in a decade if they continue on their current path. 62% of India CEOs, in particular, believe that changing customer demand will impact profitability in their industry over the next ten years to a large or very large extent, while 54% are concerned about changes in regulations.

Globally, business confidence around economic growth varies starkly, with G7 economies – all weighed down by an ongoing energy crisis – more pessimistic about their domestic growth prospects than they are about global growth: France (70% vs 63%), Germany (94% vs 82%) and the UK (84% vs 71%).

Inflation, macroeconomic volatility, climate change and geopolitical conflict are top concerns for CEOs.

While cyber and health risks were the top concerns a year ago, the impact of the economic downturn is top of mind for India CEOs this year, with inflation (35%) and macroeconomic volatility (28%) leading the risks weighing on CEOs’ minds in the short term – the next 12 months – and over the next five years. Climate change is close behind (24%), followed by financial exposure to geopolitical conflict risks (22%) and cyber risks (18%).

The conflict in Ukraine and growing concerns about geopolitical flashpoints in other parts of the world have caused India CEOs to rethink aspects of their business models, with almost half of the respondents that are exposed to geopolitical conflict integrating a wider range of disruptions into scenario planning and corporate operating models either by increasing investments in cybersecurity or data privacy 50% (48% global), adjusting supply chains 67% (46%- global), re-evaluating market presence or expanding into new markets 48% (46% global), or diversifying their product/service offering 59% (41% global).

Cost cutting on the priority list, not job or compensation

While cost cuts are high on the priority list globally, 85% of India CEOs do not plan to reduce headcount, and 96% do not plan to reduce compensation – demonstrating their resolve to retain talent.

Managing climate risk a growing priority

Climate change gains prominence as a cause of concern for India CEOs over the next five years, with 31% voicing that they believe their companies will be extremely/highly exposed to it. They also see climate risk impacting their cost profiles and supply chains over the next 12 months. Indian companies are therefore trying to innovate, decarbonise and craft their climate strategy.

Many companies are embarking on the journey to address climate risks and decarbonisation without the information provided by an internal pricing mechanism for carbon. In India, 34% of companies (more than 50% globally, which includes 38% of the biggest companies globally) say that they have no plans to apply an internal carbon price to decision making. This could be a strong lever to account for considerations such as taxes and incentives, and leverage strategic trade-offs. 72% (60% global) have implemented or are implementing initiatives to reduce their company’s emissions and 60% (61% global) are innovating new, climate-friendly products and processes.

The continued importance of trust and transformation in generating long-term value

Indian CEOs noted the need to collaborate with a wide range of stakeholders to build trust and deliver sustained outcomes if they are to generate long-term societal value. 73% (54% global) of them collaborate with non-business entities to address sustainable development. While 57% of Indian CEO as compared to 49% global, collaborate on education. 31% of Indian companies are more likely to collaborate with industry consortia to create new sources of value, while only 22% work with industry consortia to address societal issues.

However, many CEOs question whether critical preconditions for organisational empowerment and entrepreneurship – such as alignment to company values and leaders’ encouragement of dissent and debate – are present in their companies to tackle the increasingly complex risks organisations face. Twenty-two per cent (23% global) of India CEOs say leaders in their company often/usually make strategic decisions for their function without consulting the CEO. Only 51% (46% global) of India CEOs say leaders in their company tolerate small-scale failures often/usually. However, more optimistically, nearly 93% (85% global) of respondents say the behaviours of employees are often or usually aligned with their companies’ values and direction.

The survey highlights the need for CEOs and their leadership teams to drive change and business reinvention from top to down in the years ahead.

“Despite signs of a global economic slowdown, continuing high inflation and the ripple effects of the conflict in Europe, there is optimism among India CEOs about the country’s economic growth. To survive over the next few years, CEOs will need to manage external risks and drive profitability. In the long term they will also need to reimagine, reinvent and reconfigure their businesses and work culture to thrive. Importantly, they need to act on both now, and simultaneously,” said Sanjeev Krishan, Chairperson, PwC in India.

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Topics: Business

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