CEOs in India are more optimistic about prospects for the global economy than last year, and are significantly more confident than their global peers about growth prospects in the short term, reveals the PwC 16th Annual Global CEO Survey.
Thirty-eight per cent of the CEOs interviewed from India think that the global economy will improve in the next 12 months, as opposed to 24 per cent in 2012. Only 18 per cent of the global CEOs share this view, marginally up from 15 per cent last year.
The survey reveals three common themes. CEOs are targeting select pockets of opportunity. They are focused on understanding the changing consumer, improving operational efficiencies, and cutting costs without cutting value.
In all, 1,330 CEOs from 58 countries participated in the global survey, which included 73 CEOs from India. A report based on the view from India, which compares the responses of the Indian CEOs with the findings from China, and the global survey, was released at a PwC-Business Standard CEO Summit in New Delhi on March 18. (Indian CEO Survey: Key takeaways)
The top three concerns of global CEOs are uncertain and volatile economic growth (81 per cent of global CEOs identified this as their biggest concern), government response to fiscal deficit (71 per cent) and over-regulation (69 per cent). This differed widely with the top three concerns of the Indian CEOs, who were worried about protectionist tendencies of national governments (77 per cent of the Indian CEOs said this is their big concern), bribery and corruption (74 per cent) and exchange rate volatility (71 per cent).
''Our view is that we are living in an era of anti-globalisation. In an era of low global growth, courtiers are becoming more and more protectionist,'' said Harsh Chitale, CEO, HCL Infosystems, participating in the PwC-BS CEO Summit, which discussed the key findings of the 16th PwC Annual Global CEO Survey and the view from India. ''The US is promoting buy-US; India has its own preferential manufacturing access kind of policy for telecom equipment,'' Chitale said, citing a few instances.
Faced with uncertainty, the Indian CEO has reverted to the relatively safer domain of organic growth. Forty-one per cent are pinning their hopes on organic growth in their existing domestic and foreign markets. Ninety per cent of the Indian CEOs said that customers and clients have the most influence on their business strategies. Eighty per cent said they anticipate a change in customer growth, retention and loyalty strategies. Hence, 89 per cent of CEOs are trying to strengthen their engagement with customers.
This is because they feel that shifts in customer buying patterns have become sudden and more frequent, and CEOs see the changes as a potential threat to future growth.
Cost-cutting continues to be high on the agenda. But only 60 per cent of the Indian CEOs have undertaken cost-saving initiatives in the last 12 months, a focus area for 77 per cent of the global CEOs. Two years back (2010), 85 per cent of the Indian CEOs had undertaken cost-cutting. ''More than reducing costs in absolute terms, it is about ensuring that your costs don't go up more than your profits. That's the name of the game,'' said Rajeev Chopra, CEO, Philips Electronics India, at the panel discussion. Only 53 per cent of the Indian CEOs are planning to cut costs in the next 12 months.
In cutting costs, they are not trying to wield the knife indiscriminately - they are wary about inadvertently cutting value. This explains why 41 per cent of them have increased their company's headcount in the last 12 months, while 51 per cent of them expect to do so in the next 12 months. Investing to create and foster a skilled workforce over the next three years is a priority for 74 per cent of the CEOs in India; they feel this should also be the government's priority.
Despite low R&D spends in India, the innovation culture is gaining ground. According to Government of India data, patent registrations by Indian applicants increased by 14 per cent in 2010-11, as compared to the previous year. Indians also registered 1,234 patents in the US for invention in 2011, substantially up from 131 in the year 2000. In a recent study, Nesta, the UK's innovation foundation, recognised frugal innovation as a distinctive speciality of the Indian system.
At the same time, CEOs are trying to strengthen the bridge between business and society. In tandem with their global peers, 75 per cent of Indian CEOs are planning to increase their engagement with local communities, 72 per cent with the media and 59 per cent with NGOs.