Amid rising geopolitical risks, a vast majority of Indian CEOs have indicated in a survey that they are reducing or planning to reduce operating costs, even as they are more upbeat than their global peers on their country's economic prospects.
However, most of the companies do not plan to cut their headcount or salaries, found the annual Global CEO Survey released by consultancy giant PwC in Davos on the first day of the World Economic Forum (WEF) meeting on January 16.
Global economy faces tougher year in 2023, warns IMF’s Georgieva
The survey also found that about four in ten CEOs (40% of global and 41% of Indian respondents) do not expect their companies to be economically viable in 10 years if they continue on their current path.
Also, about 78% of India CEOs, 73% of global CEOs and 69% of Asia Pacific CEOs believe that global economic growth will decline over the next 12 months. But the survey also indicated that despite the gloomy global outlook, India CEOs are hopeful about the country's economic growth. More than five in ten CEOs (57%) express optimism about India's economy over the next 12 months.
In comparison, only 37% of Asia Pacific CEOs and 29% of global CEOs expect economic growth to improve in their countries or regions over the next 12 months.
PwC further said geopolitical flash points have prompted CEOs to factor in disruptions in their scheme of things. Responding to a question on what actions, if any, their company is considering for the next 12 months because of the conflict in Europe, 67% of India CEOs said they are adjusting supply chains.
Europe to be hit hardest in global slowdown, says OECD
Besides, 59% highlighted they are diversifying products and services; 50% emphasised they are increasing investments in cyber security and data privacy, and 48% talked about adjusting their presence in current markets and/or expanding into new markets.
"In response to the current environment, 93% of India CEOs (as against 85% of global CEOs and 81% of Asia Pacific CEOs) say that they are reducing or planning to reduce operating costs," the survey report said.
The survey was conducted among 4,410 CEOs from 105 countries and territories, including 68 CEOs from India, between October and November 2022.
Key threats identified by Indian CEOs in the next 12 months included inflation, macroeconomic volatility, climate change and geopolitical conflict. Nearly 60% from India said they are currently innovating new, climate-friendly products or processes.
Cost cuts are high on the priority list everywhere, with about 93% of India CEOs saying they are cutting, have cut or are considering cutting operating costs and spurring revenue growth to mitigate economic challenges and volatility.
About 85%, however, stressed they will not reduce the size of their workforce, and 96% stated they do not plan to reduce compensation – demonstrating their resolve to retain talent.
What is the current global economic situation? | In Focus podcast
Despite evidence of a global economic slowdown, continuing high inflation and repercussions across the world of the conflict in Europe, the prognosis for India's economic growth has largely been positive.
According to the World Bank, while India's economy might show lower growth in 2022–23 compared to that in 2021–22, it will remain one of the fastest-growing major economies in the world because of its robust domestic demand.
The World Bank has also revised its 2022–23 GDP forecast for India upward to 6.9% from 6.5% (in October 2022), while the Reserve Bank of India, in its latest report, lowered its projection marginally to 6.8% for the current fiscal, attributing the same to a global slowdown.
