CEOs in India continue to be confident of their growth prospects, although their enthusiasm is muted in comparison with earlier years. According to the 17th Annual Global CEO Survey (India report), 49% CEOs continue to be confident of their growth prospects in the short term (12 months) and 70% very confident of revenue growth over the next three years.
However, interestingly, this time CEOs in a number of countries are more confident than CEOs in India about revenue growth for next year. These include CEOs from Korea, Taiwan, the Middle East, Russia and Africa. Ten years ago, CEOs from India were the most confident of all CEOs and this trend continued till last year.
It was observed that over-regulation is a common threat for Indian as well as global CEOs, while exchange rate volatility and the availability of key skills are concerns specific to India. Additionally, inadequate basic infrastructure has emerged as a top threat today, which it wasn’t 10 years ago.
CEOs believe that global trends will impact and shape their businesses even more in the long term. They have identified three mega trends, namely technological advances (79%), demographic shifts (71%) and shifts in global economic power (51%) that will drive business transformation. This is identical to the views of global CEOs.
Deepak Kapoor, Chairman PwC India network of entities said, “For CEOs in India, radical changes are underway. The interplay between the megatrends will yield opportunity as well as challenge. CEOs will have to harness technology in order to create value in totally new ways, capitalise on demographic shifts to develop tomorrow’s workforce, and understand how to serve increasingly demanding and diverse consumers across the new landscape.”
The CEO’s confidence is based on a belief in both, domestic demand as well as their ability to deliver profitable growth in India and abroad. The middle class and the ‘emerging middle’, which lies just below, are forecast to grow. In India, the segment is expected to cross the 1 trillion USD threshold by 2021. Another clear theme is that CEOs in India have started looking at new markets to grow revenues as well as to improve their competitive position. These new markets include venturing across borders as well as tapping new pockets of opportunities within India driven by rapid urbanisation and rising incomes in rural and semi-rural regions.
Top CEO concerns
The top cause for unease for the India CEO is inadequate infrastructure (82%), along with the long-term issues which have plagued us for years–over-regulation at 82% and fiscal deficit at 79% are as high as they have ever been. On the other hand, increased competition which was the biggest threat 10 years ago has dropped.
CEOs and organisations will have to find the right balance and alternate growth paths to address these needs.
India figures in the plans of global companies
Several countries consider India important for overall growth. On asking CEOs of the Middle East and Africa, their responses showed that the country still ranks among the top three.
What will transform businesses?
India CEOs recognise three megatrends that will transform their business over the next five years. Companies who recognise these trends, and come up with innovative solutions will win and gain more trust as seen from the data.
What are CEOs changing to make their organisations fit for the future?
The priority for CEOs in India is different from their global counterparts. While corporate governance, customer growth and retention strategies and management of data and data analytics remain common, global CEOs are more concerned with organisation structure and technology investments. CEOs in India know that the megatrends provide opportunity as well as challenge. They are therefore creating new capabilities to deal with them.
Developing workforce and serving new consumers
The UN’s 2011 Revision of the World Urbanisation Prospects report expects India to add another 497 million to its urban population between 2010 and 2050. India still faces a significant challenge in finding talent. Availability of key skills, considered a potential business threat by 81% of the CEOs in India last year, remains a consistent threat to growth.
This year, 79% of the CEOs are planning ‘a significant’ or ‘some increase in investment’ over the next three years to foster a skilled workforce, whereas, 88% of the companies are planning or implementing a change in their talent strategies to find skilled workforce.
Technological and demographic trends are causing massive economic shifts in the profile of consumers and an increase in the per capita GDP in India. The number of middle-class consumers is projected to rise dramatically over the next 15 years. With urbanisation, this affluence is also becoming more geographically concentrated. By 2025, New Delhi’s GDP could rival that of New Zealand.
On the business-to-business front, the shift in the balance of global economic power is also bringing in new competitors for India and creating new demand for world-class products and services.