Indian CEOs see a difficult year but most say they won’t go for job or salary cuts: PwC survey

• Over three quarters or 78% of Indian CEOs say that global economic growth will decline in the next 12 months.
  
  
• After the economic downturn, CEOs are also worried about inflation and macroeconomic volatility in the short-term (12 months) and over the next five years.
  
  
• As much as 85% of India CEO’s said they do not plan to reduce headcount, and 96% said they do not plan to reduce compensation either.
  

Indian CEOs are the most pessimistic they’ve ever been in the last 12 years, according to a PricewaterhouseCoopers (PwC) annual CEO survey. Over three quarters or 78% of them believe that the global economic growth will decline in the next 12 months.

This is a significant departure from the optimistic outlooks seen in 2021 and 2022, the survey said. However, 57% of CEOs also expressed optimism about the Indian economy.

“Despite signs of a global economic slowdown, continuing high inflation and the ripple effects of the conflict in Europe, there is optimism among India CEOs about the country’s economic growth. To survive over the next few years, CEOs will need to manage external risks and drive profitability,” said Sanjeev Krishan, chairperson of PwC in India.

India CEOs have faced more headwinds than tailwinds in the last couple of years but have nonetheless managed to stay the course, the report says. PwC’s 26th Annual Global CEO Survey polled 4,410 CEOs in 105 countries and territories, including 68 from India.

Even in difficult times when most global CEOs are prioritising cost-cutting, Indian CEOs are keen on retaining talent. As much as 85% of them said they do not plan to reduce headcount, and 96% said they do not plan to reduce compensation either.

Economic downturn on top of mind

A year ago, most CEOs were worried about cyber or health risks, but this year, the impact of the economic downturn is top of mind.

Inflation and macroeconomic volatility are also stressing them the most as they identify these as a risk both in the short-term (12 months) and over the next five years. Climate change comes next, followed by financial exposure to geopolitical conflict risks and cyber risks.

“The conflict in Ukraine and growing concerns about geopolitical flashpoints in other parts of the world have caused India CEOs to rethink aspects of their business models, with almost half of the respondents that are exposed to geopolitical conflict integrating a wider range of disruptions into scenario planning and corporate operating models,” the report said.

Those holding the top jobs at companies are trying to mitigate risks by increasing investments in cybersecurity or data privacy, said half of those polled. But the most common change that they are making is adjusting supply chains, as 67% claim to be doing that. The rest are re-evaluating market presence or expanding into new markets or diversifying their product/service offering.

A different new world

Indian CEOs are also weighed down by long-term worries, as 41% of CEOs believe that they do not expect their companies to be economically viable in ten years if they continue on their current path. They also see multiple challenges to profitability within their industries, as they believe they would be operating in a much different scenario than they are used to.

“To survive over the next few years, CEOs will need to manage external risks and drive profitability. In the long term they will also need to reimagine, reinvent and reconfigure their businesses and work culture to thrive. Importantly, they need to act on both now, and simultaneously,” said Krishan.

Around 62% of India CEOs believe that changing customer demand will impact profitability in their respective industries over the next ten years to a large or very large extent. This is followed by 54% who are concerned about changes in regulations.

The next most common worry is disruption that will be caused by advanced tech, AI, metaverse, blockchain etc. Around 49% of them said that supply chain disruptions will also worry them in the next ten years.

“Certain sectors such as pharmaceuticals, automotive, consumer electronics and chemicals have significant dependence on materials imported from countries such as China, Taiwan and Japan. These factors cause India CEOs to worry about supply chain disruption, uncertain lead times, heightened freight rates and commodity prices,” the report said.

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