Best CEOs: Opportunities and challenges in India

The union budget 2023-24 outlined the Top 7 growth-oriented priorities—inclusive development, reaching the last mile, infrastructure and investment, unleashing the potential, green growth, youth power, and financial inclusion—driven by digital and technological innovations. Amid the disruptions across the world, a 30 per cent-plus increase in capital expenditure over the past year with a sharp focus on infrastructure, logistics, regional connectivity along with ease of doing business and certain tax reliefs, was reassuring.

A fractured world characterised by social instability, climate change, technological disruption, rapid urbanisation and shifts in global economic power and demographics is a cause of concern for global CEOs as evidenced by PwC’s 26th Annual Global CEO Survey results. Between October and November 2022, 4,410 CEOs were polled across 105 countries, of which 68 were from India.

The dual imperative—of overcoming near-term obstacles while reinventing businesses for the future—is visible through much of the survey. Nearly 73 per cent CEOs worldwide predict a decline in global economic growth, marking a significant departure from their optimistic outlook in 2021 and 2022. Inflation, macroeconomic volatility, geopolitical conflict and climate change rank as the top threats, ahead of cyber and health risks.

The picture is a little different in India, with CEOs here exuding an air of relative optimism, further accentuated by Budget 2023-24, which in some ways reflects the way business has been evolving in India. About 57 per cent of CEOs in India believe that the country’s economic growth will improve over the next year. Nearly 25 per cent of the CEOs indicated that they would like to focus on evolving their business and its strategy to meet future demands rather than drive operating performance.

In line with that, mentoring and developing employees has taken precedence alongside technology- and reinvention-oriented investments. Around 85 per cent of the surveyed CEOs in India contend that they are investing in upskilling their workforce in priority areas, 82 per cent in automating processes and 81 per cent in deploying tech—such as cloud and AI—over the next 12 months.

The private sector and the untapped potential of natural resources continue to be perceived as major drivers of India’s future growth, further buoyed by significant domestic demand. Apart from these, favourable demographics, abundant labour and larger contributions from the services and infrastructure sectors augur well for the Indian economy and may be the most hopeful aspects of business in the country today.

Supply chain is an area of concern. Around 67 per cent of CEOs in India are adjusting supply chains to mitigate exposure to geopolitical conflict, 60 per cent have started innovating new, climate-friendly products and processes, and 59 per cent are reducing or have already reduced operating costs. Another notable sentiment shared by 41 per cent of the CEOs in India is that their respective companies will not be economically viable in 10 years if they do not transform. Accordingly, CEOs are looking to reinvent their firms over the next five years with the required investments in tech and people. This dual imperative is spurring them to do the following:

Reinvent the supply chain: The survey indicated that CEOs in India are underscoring the need to include the impact of possible disruptions in scenario planning and corporate operating models. Supply chains that used to rely on siloed functions, limited data availability, manual decision-making and unconnected planning with limited options for customisation in the past, are now in for an overhaul by factoring in the following:

• Customisation to cater to specific expectations of service levels/product availability/pack sizes
• Automation using AI and ML to handle daily supply chain scenarios, allowing leaders to focus only on managing exceptions or extremely critical scenarios
• Integration through a supply chain control tower to provide an end-to-end integrated view across plan, source, make and deliver

Innovate climate-friendly products and processes: Many firms are embarking on a journey to address climate risks and decarbonisation. Building on the supportive policy environment around energy and environment that has been further reinforced in the Budget, corporates have begun to leverage various decarbonisation levers to achieve India’s nationally determined contribution targets—45 per cent reduction in carbon intensity in gross domestic product (GDP) over the 2005 baseline and 50 per cent non-fossil energy in the energy mix by 2030. To accomplish this, it is essential to:

• Have a detailed corporate understanding of the risks and opportunities related to climate change
• Accelerate and enhance firms’ execution planning, monitoring and reporting of sustainability risks
• Chalk out an investment plan and road map

Balance profitability with operational costs: Cost cuts are high on the priority list everywhere, with about 93 per cent of CEOs in India saying that they are cutting, have cut or are considering cutting operating costs. Further, 62 per cent CEOs are conscious of the fact that changing customer demand or preferences will impact profitability. Therefore, it is important to:

• Understand the dynamic needs of customers to continuously deliver enhanced value
• Service the shift in consumer expectations across new channel models—such as direct to consumer (D2C)—that offer a wide product range, pricing and product reliability, along with a good delivery experience
• Recalibrate the skills of the workforce to propel a future-fit transformation in anticipation of tomorrow’s demands

Differentiate the people experience: The future of work will eventually be governed by the workforce of the future. The past couple of years have shown that employees prefer companies that have taken eco-friendly measures and place a premium on organisational trust, values and innovation, besides focussing on a flexible and hybrid way of working. Therefore, to enable a sustainable transformation over the next decade, companies would need to:

• Democratise the workplace concept to focus on a ‘workplace of the people’ model
• Incorporate environmental, social and governance (ESG) components to mitigate climate risks to retain, upskill and motivate the workforce
• Provide opportunities to be authentic at work

The responses noted in this survey may result in the CEOs drawing up alliances with industry consortia and nimble new-age start-ups to tap fresh business opportunities, with responsible and sustainable growth as the primary objective. At the same time, it would be imperative for them to partner with non-business entities—governments, academic institutions and NGOs—to ensure that the whole of society is factored into individual and collective growth. That is the way forward to make India a developed economy by the time it reaches its 100th year of independence. 

Reference: PwC’s 26th Annual Global CEO Survey: India perspective. Views are personal