A survey of Fortune 500 CEOs recently has many insights that are a reflection for all businesses, big or small. There is a universal acceptance that the effects of this situation will take till 2022 if not 2023 to stabilize. The economic impact is felt by every business whether in India or America. Indian companies just like the Fortune 500 companies believe that they must invest in technological transformation to get over the crisis.
“If you had told me in January that 95% of my employees would be working from home and the firm would be running as well as it is, I would never have believed it.” Now that we recognize what’s possible, that paradigm shift is going to stay with us”.
– Chuck Robbins, CEO, Cisco
What the Fortune 500 Survey says
1. Economic recovery will be a long road
CEOs are prepared to see their revenue not meet their fiscal goals and don’t see a recovery anytime in the coming months. In fact, 58% responded that they see the economy returning to prepandemic level only in the first quarter of 2022. Surprisingly, these same companies were more optimistic for their personal performance – 58.3% saying they will show profitable margins by 2021.
2. Back to office might not be the new normal
Many companies expect a large part of their workforce to continue to work from home. The social distancing guidelines in America and other countries has made WFH the new normal. Before the crisis, only 13% of employees were working remotely but even after the lockdown has eased, 73% of Americans continue to work from home with no loss in efficiency. There is the added advantage of cost-saving with more of the workforce operating from home. This will save the high overheads of leasing office space and all other additional costs. This has got CEOs the world over considering allowing more of their staff the option to work from home
3. Business travel spend will never be the same again
Zoom meetings and Google meets and other video conference tools have become the preferred method of business meetings. The huge spend on business travel will now see a downward spiral with 52.4% of companies saying that they will never travel as much as they did before the pandemic.
4. Digital transformation will be on the rise
77% of CEOs say they have accelerated their digital and technological transformation. There is a 40% increase in spend on technology and IT infrastructure and this is not surprising. With more staff working remotely, cyber threats and cyber disruptions are a security risk that must be tackled. Any breach would result in employee down time and data threat that could be a drag on growth.
Artificial Intelligence (AI), Internet of Things (IoT), virtual reality and related technology investments are considered as a necessity to fuel growth as they will cut costs as well as generate revenue.
CII survey of Indian CEOs
In India, Confederation of Indian Industries (CII) conducted a snap poll of 300 Indian CEOs across different industry sectors. Almost two-thirds of the respondents were MSMEs.
The key results:
- Only 15%of Indian CEOs expect to see revenue growth in this financial year
- 7%of the industry leaders believe that it will take more than a year for the economy to recover from the pandemic and lockdown impact.
- A majority of those surveyed expect that domestic demand consumption will be back to normal within 6-12 months.
The lockdown since March 23rd has brought economic activity to a sharp decline for all industries. The manufacturing sector will see an upswing if we can capture the opportunity of manufacture moving out of China. India enjoys the advantage of low cost labor, highly skilled work force and a stable democracy. This could see big opportunities for job creation in the manufacturing industry that could have a domino effect on all industry sectors.
