Majority identified “lack of skills and capabilities in IT” as the most significant challenges in the COVID-19 impacted world
This article was first published on Money Control.
Company chiefs in India are realigning their strategies to focus on key emerging trends related to digital transformation; supply chain; environmental, social and governance (ESG) programmes; and new work realities amid the COVID-19 pandemic, a survey conducted by KPMG for its 2020 India CEO Outlook report found.
“The significant shift in CEOs priorities that we have witnessed over the last six months reflect the agility with which CEOs had to deal with the challenges of the pandemic,” Arun M Kumar, Chairman and CEO, KPMG in India, said.
In terms of outlook, only one-third of the CEOs expressed confidence in the country’s economic growth. Among concerns, most listed supply chain risk and digital disruption are top worries.
“Similar to their global counterparts, CEOs in India are less confident about global and domestic economic growth than they were at the onset of the year. Their earnings outlook is clearly challenged,” Kumar added.
Some other key findings were that 62 percent of CEOs have altered their own compensation, as part of the broader objective of cost optimisation and cost management due to the pandemic. Also, CEOs have accelerated digital progress and are likely to prioritise investments in new technologies to become future ready.
Majority identified “lack of skills and capabilities in IT” as the most significant challenges in the COVID-19 impacted world. CEOs are also examining “wider societal contributions and company purpose,” it found.
“The crisis is redefining the standards for corporate leadership. Societal impact is high on the agenda; ESG has come into focus. In the context of the pandemic, CEOs in India have recognised the importance of accelerated transition to digital business models. They believe that digital technologies are imperative to maintain customer trust and keep remote work forces connected. Consequently, they are prioritising investments in new technologies to pave the way for a more sustainable and resilient future,” Kumar added.
Three key themes or findings that emerged from the survey are – ‘propelled by purpose’, ‘realignment of strategies’ and ‘accelerated digital transformation’.
> Propelled by purpose: Only 33 percent CEOs in India are confident of the growth in their domestic economy and only 42 percent are optimistic about growth prospects of their company vis-à-vis 78 percent and 84 percent at the beginning of the year, respectively.
This weakened view on the growth prospects is in line with that of CEOs globally.
CEOs in India are also less confident of their companies’ earnings. About 19 percent CEOs in India expect the earnings of their companies to either remain flat or decline.
However, CEOs in India seemed to be better positioned than their global counterparts in terms of growth prospects of their companies’ earnings, with 23 percent CEOs globally foreseeing their companies’ earnings to stagnate or decline.
CEOs globally feel a greater need to re-evaluate their purpose amidst COVID-19 than CEOs in India. About 79 percent of CEOs globally have had to re-evaluate their purpose, as compared to only 37 percent of CEOs in India, highlighting the confidence that CEOs in India are placing on their current leadership approach and purpose.
> Realignment of strategies: In India, COVID-19 has led to a dramatic shift in how business leaders are assessing potential risks now, compared to the pre-pandemic times. CEOs in India, while ensuring short-term survival of their companies, are likely to delve deeper into the impact of this crisis to realign strategies for long-term growth.
One-third CEOs in India highlight digital disruption as an imminent risk – a three-fold increase since January. CEOs in India also view supply chain risk as a major threat. The number of CEOs highlighting this as a critical risk rose five-fold since the onset of the pandemic.
Around 89 percent CEOs in India would continue to build on use of digital collaboration and communication tools. With remote working becoming the norm, 77 percent CEOs in India believe they have access to wider talent pools and 48 percent will consider downsizing their office spaces.
Also 67 percent CEOs in India want to realise climate change gains made during the pandemic.
> Accelerated transformation: CEOs have invested heavily in technology during the lockdown period and they are betting on major dimensions of digital transformation to make their companies more operationally resilient, agile and customer-focused. CEOs in India strongly believe that digital transformation will continue to be a central pillar in defining their company’s future prospects. As a result, companies are likely to strengthen their digital channels to enhance customer outreach.
Given the pressing need to adopt technology across business functions, tackling threats such as cyber security and data privacy will be inevitable.
Due to learnings from the pandemic period, companies are likely to be “leaner, meaner and significantly more profitable when growth returns,” feels Vikram Hosangady, Partner and Head, Clients and Markets, KPMG in India.
As part of the ‘special edition report’, KPMG conducted two surveys – first in January-February (125 participants and before significant impact in India) and a follow-up in August-September (100 participants) — to understand and measure how the coronavirus crisis has changed CEOs priorities and concerns.
Image via Money Control