South African CEOs zone in on automation, tech at forefront

South African chief executives in the tech, telecoms and healthcare sectors are most confident about growth in the medium-term, echoing the sentiments of global CEOs.

This is mainly because these are the industries that benefited from the new ways of living and working adopted in the last 12 months, says Dion Shango, Africa senior partner and CEO of PwC Africa.

Shango was unpacking the South African results from the 24 edition of the PwC Global CEO Survey during a media briefing yesterday.

This year’s survey polled 5 050 CEOs in 100 countries and territories. Unlike in the past when it was undertaken in the third quarter of the previous year, the 2021 survey was conducted over January and February.

The survey findings are based on the economic outlook at the time, the level three lockdown period, issues arising from the rollout of vaccinations and load-shedding.

Shango points out that telecommunication and data usage increased due to the many people working from home.

“Video platforms such Teams and Zoom, Cisco’s [Webex] and Google Meets have seen extensive use and upsurge in usage by virtue of people working from home, as opposed to other industries such as hospitality and travel, particularly air travel that has virtually come to a standstill as a result of COVID-19.”

He added that many companies will be reinventing their workspaces as the vaccine rollout continues, with flexible working models becoming a permanent fixture for a range of roles, including sales, finance and technology. “We expect to see much more of a hybrid model of working and people spending a mixture of time at home and time at the office in how they do their work.

“We don’t believe that people will work permanently and exclusively from home because we still do see a strong need for that human contact, particularly for the benefits of collaboration. There should be a hybrid or some use of commercial property space.”

Overall, 76% of the surveyed CEOs predict economic growth will improve in 2021. In SA, 57% of CEOs believe global economic growth will improve over the next 12 months.

Following the uncertainty of 2020, Shango said CEOs are more optimistic about the global economic outlook than they've ever been and are bullish about a global economic comeback.

This, he stated, will be enabled by a continuation of companies' pandemic-induced digital acceleration, as well as other forms of transformation that companies have to undergo, as ICT decision-makers strive to ensure their organisations remain relevant and their business models are future-proof.

“The pandemic has laid bare the fundamental deficiencies in our global systems, our weaknesses in business operating models and challenges that will shape our world moving forward. It's also unleashed energy and creativity as leaders seek out joint solutions to the problems that face their businesses every single day.

“The pandemic has also had a dual role of being an accelerator of transformation and amplifier of disruptive forces, which is a thread that runs through this 24th annual global CEO survey.”

On a South African front, he states: “South African CEOs’ confidence in their own companies’ revenue growth prospects has rebounded; they are mostly anxious about unemployment and the impact that will have on their businesses, the continued slow progress in basic infrastructure in the country, the impact of the pandemic, etc.”

Besides the levels of confidence in economic and revenue growth, the intentions of CEOs regarding talent headcount reveal a much grimmer outlook, Shango stated.

He revealed that 51% of South African CEOs, compared to 37% globally, report they have reduced staff in the last 12 months. Another 40%, compared to 21% globally, plan to reduce headcount in the year ahead.

Furthermore, only 16% of local businesses, compared to 42% in 2020, expect to increase their headcount over the next 12 months. Forty-three percent of organisations, compared to 35% globally, expect their headcount to remain the same.

The PwC CEO explained that the proportion of South African CEOs expecting to reduce staff has for the first time exceeded those expecting to increase it, which is unprecedented in the history of the survey.

“From a South African perspective, this is extremely concerning, as we already sit with an unemployment rate that is amongst the highest in the world, and the pandemic has only served to exacerbate this challenge.

“For a country like ours sitting with a very young population, this is the worst thing that our economy and our country needed. The pandemic has really dealt a severe blow to our chances of increasing employment in our country.”

On the upside, Shango stated that companies are adopting new ways of working and turning to investments in technology and automation to be more efficient.

South Africa’s CEOs are prioritising productivity through automation and upskilling, with 49% making this a priority, compared to 36% globally.

“Upskilling or reskilling employees to enable their full participation in the workforce means creating more inclusive and sustainable economies and societies that pull people along and catalyse deeper connections between humanity and the economic marketplace,” says Shirley Machaba, CEO of PwC Southern Africa.

An intensified worry for CEOs is the rise of cyber threats and the spread of misinformation − so-called fake news.

South African CEOs are also concerned about inadequate basic infrastructure, uncertain economic growth and volatile energy costs.

The survey states: “Rising digitisation is increasing the risks posed by cyber threats. This, coupled with the significant increase in cyber security incidents in 2020, including ransomware attacks, has resulted in cyber threats leaping up the list to become the number two concern, with the level of concern jumping from 33% to 47% globally, and from 22% to 49% in South Africa.

“Cyber threats are a concern particularly for CEOs in North America and Western Europe, where they are considered a greater threat than the pandemic.”

Around the world, misinformation also rose rapidly, with 16% in 2020 and 28% of CEOs in 2021 being extremely concerned, likely due in part to the impact of misinformation on elections, reputations and public health.

“When asked which threats are explicitly factored into their strategic risk management activities, South African CEOs are significantly more responsive than their global peers about managing threats – most notably around skills shortages, cyber threats, the pandemic and health situation.”

According to the survey, nearly half of CEOs (49%) project increases of 10% or more for digital transformation spending.

“Despite the rising level of concern CEOs are voicing about cyber attacks, this has not translated into definitive actions. Less than half of the CEOs planning for heightened digital investment are also planning to boost their spending on cyber security and data privacy by 10% or more.

“More than half of South African CEOs (59%) plan to pursue greater cost-efficiencies and increase their rate of digital investment by 10% or more.”