Tech

Technology is ‘biggest disruptor’ for regional CEOs this year

January 27, 2023, 9:09 AM

Technology is believed to be the No1 disruptor this year

CEOs prepare for “further and faster” digital change, says PwC
84% of survey respondents to invest in automation processes
Majority of Middle East CEOs upbeat about regional economic growth

Two-thirds of chief executives in the Middle East view technology as having the biggest potential to disrupt their businesses in 2023 and beyond, above supply chain, regulations, energy and other issues.

For its latest annual CEO Survey, PwC asked 4,410 chief executives across 64 countries the extent to which a range of potential disruptions would impact their industry’s profitability over the next 10 years.

Technology was the biggest issue for 66 percent of respondents compared with just under half of global CEOs. Regional bosses are preparing for “further and faster digital transformation” in the years ahead to cope.

The vast majority (84 percent) said they plan to invest in automation processes and systems, while 74 percent said they expect to put resources into reskilling their workforce to be able to better handle such technological change.

Two-thirds expect to deploy cloud technology, artificial intelligence and other advanced tech in their operations, the survey said.

Other technologies that are catching regional CEOs’ attention include the metaverse – an emerging iteration of the internet where virtual and augmented reality, cloud computing, blockchain and other innovations create an immersive virtual world that can be commercialised.

Only a relatively small number – just over one in 10 – of regional CEOs said they imagine this will be part of their technology investment this year, but PwC said it expects to see the number “increase significantly in the coming years”.

In July, the UAE unveiled a metaverse strategy that aims to create 40,000 jobs and add $4 billion to the economy within the next five years.

Supply chain disruption is said to be the biggest issue in the coming years for 63 percent of respondents, while for 61 percent it was regulatory changes; another 61 percent said it was changes in consumer demand; for 50 percent it was labour shortages; for 42 percent it was new market entrants, and for 39 percent it was the ongoing transition to new energy sources.

More than half of regional CEOs said they were diversifying their own products and services to cope with future market shifts, and around half said they were taking action to mitigate against climate change.

In its 26th year, the survey showed that the majority of Middle East respondents were optimistic about the region’s economic growth prospects for the year ahead, with 61 percent saying they are “very confident” that it will improve in 2023, and 63 percent saying this will lift their own company’s revenue growth prospects.

Middle East CEOs were much more confident in regional growth than in global growth, following a year of economic and geopolitical shocks in 2022, PwC noted.

Some 82 percent of respondents said they anticipated a decline in global growth this year, compared with the same percentage that were expecting improvements a year ago.

“In last year’s survey, CEOs in the region were optimistic about their near-term economic prospects,” Hani Ashkar, PwC’s Middle East senior partner, said.

“Today, macroeconomic volatility and geopolitical tensions are undoubtedly impacting the confidence of global CEOs’ outlook for the year ahead.

“However, responses from Middle East leaders paint an encouraging picture for 2023.”

PwC’s Middle East Economy Watch 2023 report, published this week alongside the Global CEO Survey, noted that the GCC “seems increasingly like an island of calm in this storm, as it looks set to buck the trends of the IMF-forecasted global recession likely to hit at least a third of the world’s economies in 2023″.

The region saw some of the strongest gross domestic product growth globally in 2022, helped by enhanced public spending and liquidity from higher oil revenues, as well as the ongoing recovery from the pandemic.

There are also indications from 2022 and 2023 budgets that Gulf states are being “much more fiscally disciplined during the current oil boom compared with the two previous ones this century”, PwC said. Credit rating agencies are now raising their assessments of Gulf sovereigns after years of downgrades, the report added.