Published on : Dec 9, 2022
Despite the global recession, India is emerging as a beacon of hope, according to a CXO survey by Benori Knowledge, a new-age provider of custom research and analytics solutions. Indian CXOs are overwhelmingly confident about the state of the national economy in 2023.
Industry leaders optimistic of growth in 2023 with automotive & industrial manufacturing and pharmaceuticals sectors being most optimistic
84% of CXOs confirm their optimism towards growth with leaders from the automotive and industrial manufacturing (77%) and pharmaceuticals (85%) industries being the most hopeful. This aligns with the growth the automotive and manufacturing industry has experienced in 2022, driven by multiple factors like increasing FDI inflow (hit US$21.34 billion mark in FY 2022), EV growth, lower labour costs and improving infrastructure and government initiatives, among others. Increasing interest from foreign entities to outsource the production of medication in India has the pharma industry poised to achieve significant growth going forward.
A focus on digital transformation, talent management and ESG to define the playbook for India Inc. in 2023
Leaders from India Inc. say that despite the impending global recession, they intend to scale their digital transformation budgets in the upcoming year, with 42% of leaders highlighting integration of emerging technologies as one of the major themes for 2023.
Regarding talent management, finding the right talent represents the biggest challenge (62%) and leaders expect skill gaps in the workforce to widen in 2023. Moonlighting, which has recently been highlighted as a concern for remote and hybrid businesses, was only seen as a worrying phenomenon by 20% of leaders.
Business leaders perceive ESG integration in the company business operations to become a core strategy to deliver long-term value. Notably, ~65% of leaders cite integration of ESG will impact their financial performance.
Almost all organisations plan to increase their digital spending in 2023; ~43% plan to increase their spending by more than 20%
Digital transformation spends will continue to increase as companies recognise the importance of investing in emerging technologies to remain competitive. However 50% of the business leaders say they will need to solve challenges such as measuring ROI, securing stakeholder buy-in, along with finding expert tech talent for new tech integrations.
The leading technologies that attracted the most investments in 2022 were cloud computing, where almost 80% of companies report either advancing the level of implementation or having fully leveraged the potential of the technology within the organisation.
After cloud computing, AI & Machine Learning (61%) are well established technologies within most Indian companies. The technology and telecommunication sector has the highest adoption (92%) of cloud computing and AI/ML (42%) in its practices.
Lack of employees with niche skills the most challenging aspect of talent management
More than 60% of business leaders cite skill gaps as a major challenge for the upcoming year. To address the challenge of acquiring talent with the relevant skills, leaders intend to focus on upskilling and reskilling (79%) initiatives to increase the capabilities of their existing workforce. Close to 50% of all CXOs report high attrition rate, keeping employees engaged, and managing hybrid/remote models as other challenges related to talent.
Investors and shareholders providing the most pressure to deliver ESG strategies
Going forward, CXOs are prioritising ESG in business strategy. 65% of the leaders of India Inc. report financial performance as a key motivator to the integration of ESG, with around a third of respondents citing investors and shareholders as the primary drivers of implementing it within their organisations.
More than 60% of CXOs say they are highly confident about their organisations' capabilities in complying with the Indian government's business responsibility and sustainability (BRS) reporting framework. 74% of large companies (revenues above INR 3,000 crore) report being completely ready to comply with the BRS framework. Initiatives to improve energy efficiency emerges as the most popular (77%) sustainability practice, followed by improvements in waste management (64%) and reduction of carbon footprint (53%).
However, 65% say that difficulties with actually tracking and measuring the impact of ESG posed the biggest challenge to implementing an ESG strategy. A limited talent pool with knowledge in the areas of ESG/sustainability which is not growing at the same rate as the industry demand, is hampering the successful measurement and deployment of an ESG framework.
Geopolitical conflict and climate change pose the least risk to the growth of the Indian economy
Although optimism is at a high, the country's business community is not completely resistant to the threats faced by their global counterparts. Talent acquisition and retention (52%) was ranked as the top risk factor followed by supply chain bottlenecks (48%), followed by technology disruption and cyber risks (41%).
Interestingly, on the subject of global conflict and environmental crises, the leaders of India Inc. cited geopolitical turmoil (6.8%) and climate change (3.4%) as posing the least risk to their businesses and do not affect growth plans.
Key strategies for managing risk and improving performance
According to the Benori survey, to mitigate these risk factors, the leaders of India Inc. view strategic alliances (26%), geographical expansion (26%) and investment in new businesses as the most critical strategies to build endurance for times of uncertainty. To drive growth over in 2023, leaders look at leveraging digital technologies, focusing on customer centricity, adopting strategies for shifting talent models/the future of work and building supply chain resiliency.
Ashish Gupta, Co-Founder and CEO, Benori Knowledge, said, "Though global economic growth is currently experiencing a decline, India and other emerging economies are poised to remain resilient in the face of macroeconomic pressures. The economic uncertainty, combined with evolving customer needs, has led enterprises to double down on their efforts — with a renewed focus on operational efficiency, productivity, and resilience, generating a positive sentiment in India Inc. This optimistic outlook is further driven by the advancement of digital infrastructure, offshore investments in manufacturing, as well as the country's target to meet 50% of its energy requirements via renewable sources by 2030. "
Benori conducted interviews with 150 business leaders of medium and large enterprises across industries to compile these findings.