74 percent CEOs in India intend to actively disrupt the sector they operate in to stay ahead of competitors, says a KPMG report
CEOs of some of the largest businesses in India are confident and ready for a recovery that is digitally driven and purpose-led to build better and stronger than ever before. Having identified operational risk as the biggest threat to organisational growth they are ready with aggressive growth strategies while also focusing on building digital resilience along with agility. The ‘KPMG 2021 India CEO Outlook: Towards a digitally-driven and purpose-led recovery’, gathers viewpoints on the future from 125 CEOs in the country.
82 percent CEOs in India have confidence in the growth prospects for their company. This number is marginally lower compared to where it stood in March 2021 this year at 92 percent (Basis the March 2021 Pulse survey) and much higher than 42 percent, last year in (August 2020). Despite this, they are ready to combat all kinds of risks and disruptions to recover better.
The survey found that leading CEOs in India are looking to sharpen their digital edge further. Having focused on accelerating digital transformation for the last 18 months, CEOs in India are now focusing on building digital resilience along with agility. About two-thirds of CEOs in India (64 percent) are ready with a plan to address a ransomware attack if faced with one.
Further the results of the survey also show that the path to recovery is guided by purpose. Even though ESG (Environmental, Social and Governance) continues to be a business priority for CEOs in India, the focus towards the social component of their ESG program has decreased significantly after the second wave of COVID-19.
Key Highlights of the KPMG Report
A solid roadmap to recovery
- 82 per cent CEOs in India as compared to 87 per cent globally have confidence in the growth prospects for their company. The number for India is marginally lower compared to where it stood in March 2021 earlier this year at 92 per cent (Basis the March 2021 Pulse survey)
- 55 per cent CEOs in India showed greater confidence in the prospects for the global economy and expressed readiness to combat risks and disruptions to make progress faster
- Furthermore, 9 out of 10 CEOs in India are slightly more optimistic that the headcount of their organization will increase over the next three years, and hence are investing more in developing their workforce’s skills and capabilities. Interestingly CEOs globally (60 per cent) are more focused on buying new technology
- 35 per cent CEOs in India believe that organic methods such as innovation, Research and Development (R&D) and capital investments will be crucial for organizational growth objectives for the next three years
- At the same time, the survey found high M&A appetite, with 55 per cent CEOs in the country stating they are likely to undertake acquisitions which will have a significant impact on the overall organisation (higher than CEOs globally at 50 per cent)
- Despite a solid roadmap to recovery, pandemic-related issues are still a cause for concern for CEOs in India. While supply chain, cyber security, regulatory and environment continue to be risks to organisational growth, 19 per cent CEOs in India (up from 6 per cent in March 2021 and 11 per cent this time last year in August 2020 perceive the most threat from operational risks
- Whereas the risks perceived by CEOs in India in the areas of cyber security (14 per cent), regulatory (13 per cent), supply chain (10 per cent), reputational risk -including misalignment with customer/public sentiment (10 per cent) and climate change (6 per cent) has either declined or remained similar to findings from March 2021 this year.
- A sectoral view on risks in India reveals that at 32 per cent, operational risk is highest for the manufacturing sector, compared to only 9 per cent for the infrastructure sector and 17 per cent for energy sector.
- By focusing on building digital resilience along with agility, 48 per cent of CEOs in India compared to 42 per cent globally say they want to establish a strong digital and cyber risk culture in their organization championed by senior leaders
- 64 per cent CEOs in India compared to 65 per cent globally are prepared for a ransomware attack if faced with one
- 68 per cent of CEOs in India perceive technological disruption caused by the pandemic as more of an opportunity than a threat
- 74 per cent of CEOs in the country say that they are actively looking to disrupt the sector they operate in, rather than waiting to be disrupted by competitors
- With regards to the workforce, while downsizing has seen a decline, 42 per cent of CEOs in India have enabled the option for their employees to work remotely, which is slightly higher than CEOs globally at 37 per cent
- Additionally, compared to their global counterparts, CEOs in India have indicated a higher focus towards investing in digital tools and preparedness for a hybrid work environment.
Guided by purpose
- 78 per cent CEOs in India stated that it is their response to the pandemic’s second wave that caused their focus to shift towards the social component of their ESG program. This is significantly down from 96 per cent in March 2021 and much lower compared to CEOs globally at 81 per cent in August 2021
- However, their focus on creating a net-zero future stands strong with 79 per cent of CEOs in India asserting that government stimulus is required to turbo charge climate investments being made by the business community
- 42 per cent CEOs in the country are seeing demand from stakeholders – such as investors, regulators and customers – for increased reporting and transparency on ESG issues today
- 50 per cent CEOs in India have said that they are struggling to articulate a compelling ESG story
- 90 per cent CEOs in India see their corporate purpose having its greatest impact on building brand reputation
- And now as CEOs in India perceive the influence of purpose on decision making more than ever, 66 per cent say that their principal objective is to embed purpose into everything they do to create long-term value for their stakeholders, including customers, employees, investors, and communities.
Arun M Kumar, chairman and CEO, KPMG in India said: “While the global crisis has led to a significant decline in confidence in organisational and sectoral growth, CEOs in India much like their global counterparts, are quite optimistic about the prospects for the global economy. Living through an unprecedented crisis, they had to constantly reassess their strategies for business continuity and growth.”
“With the threat of new variants and advent of a third wave in India expected anytime now, we may not be back to business as usual just yet. But what is heartening to note is that CEOs in India are ready to strategize and combat operational risks, despite the demanding times. Over a year later we now have the opportunity, to build a stronger, more sustainable future only if we work together, and most importantly, build back better.”