India has been tagged as the geography with the greatest growth potential in a KPMG survey of nearly 1,300 CEOs from the world’s top companies, located in some 28 countries including the world’s largest economies.
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India at 38% is ahead of China at 34% and the United States at 33% in the KPMG’s 2016 Global CEO Outlook, rising from number five in 2015. The three countries are followed by Australia at 25% and Western Europe at 25%.
Interestingly, the regions showing the largest decrease in interest are the oil economies of the Middle East (21%) and Russia (21%). The report says that geopolitical risks in the Middle East region further add to the concerns while Japan for the next three years will be a test of whether Abenomics can put the country on a growth path.
The key reasons for the bullishness behind India is a combination of traditional - the demographic dividend of a young population and the fastest growing large economy in GDP percentage terms - and one critical emerging area; a rapidly growing digital infrastructure.
“With more than 1 billion biometric signatures, India boasts the world’s largest biometric database. The spread of technology is palpable; Indian Railways sells about 70% of its tickets online, making it one of the world’s largest e-commerce websites,” said Richard Rekhy, Chairman of KPMG in India.
Its equally about navigating the hurdles and finding the ability to innovate disruptively in challenging environments. “While steps to improve ease of doing business have been initiated, a significant improvement is vital,” said Rekhy.
Biocon Chairman Kiran Mazumdar-Shaw said her company’s product pipeline illustrates her appetite for disruptive innovation. She has brought in renewed focus on new drug programs through a dedicated research team, unlike in the past, where some of these programs were being developed by the company’s scientists in their `spare time’”
There are other significant findings in this survey as well, relevant to managers and business leaders.
Some 41% of CEOs anticipate that their company will be significantly transformed over the next three years. That number was 29% in 2015. Some 72% of CEOs have gone so far as to say that the next three years will be more critical for their industry than the last 50 years.
This could be worrying for companies and managers, particularly in highly competitive industries. It also portends dramatic change, in roles, skills and thrust areas as companies gear themselves up to take on the unknown.
But the biggest risk is cyber.
Cyber security has climbed the list in the KPMG survey to become the top risk over the next three years (30%). Most CEOs admit there is work to be done to protect their organisations and a frightening 72% are not feeling fully prepared for a cyber event.
The reason cyber has become big is this: this is age of the Internet of Things, machine learning, cognitive computing and artificial intelligence.
All of this increases security risks sharply.
Companies need mainstream cyber capabilities, the report argues: people in all parts of the organization who understand cyber issues. “Each major decision needs to be looked at through the cyber security lens.”
And there are newer, more difficult to quantify threats.
For example, 85% of CEOs are concerned about having to consider the integration of basic automated business processes with artificial intelligence and cognitive processes.
CEOs also acknowledge that the lines between industries are blurring. Some 65% of CEOs are concerned that new entrants are disrupting their business models and more than 53% expressed their frustration that their company was not disrupting their industry’s business models enough.
Equally, CEOs have spoken of the speed of change saying it will be exponential and fueled by technology. In another revealing admission, 77% have said they are concerned about whether their organization is keeping up with new technologies adding that data & analytics will be a top area of investment in the next three years.
Customers unite most CEOs though.
A total of 88% of CEOs are concerned about the loyalty of their customers and 82% about the relevance of their products and services. Almost 45% felt they could better leverage digital means to connect with consumers.
Interestingly, some 50% of CEOs said there were skill gaps in key business functions. This will likely create challenges for the 96% of CEOs who plan to increase the headcount over the next three years. This number, according to the KPMG survey, is up 78% from last year’s survey.