CEO Survey 2019 reveals cautious optimism among Irish business leaders

19 February, 2019

PwC Ireland's CEO Survey for 2019 reveals that despite external uncertainties, nearly six out of ten (57%) Irish CEOs are positive about the growth prospects for Ireland’s economy in the year ahead. When it comes to their own businesses, they are more confident: 84% anticipate revenue growth in the year ahead, and 35% expect this growth to be strong, the highest level of ‘strong growth’ sentiment in the 13-year history of the survey.

The survey was carried out in Autumn 2018, with 235 business leaders in Ireland across all industry sectors submitting their opinions. The Irish insights presented in the report forms part of the PwC 22nd annual Global CEO survey, which canvassed 1,378 CEOs in 91 countries.

Businesspeople discuss in a bright meeting room.

Speaking at the survey launch, Feargal O’Rourke, Managing Partner, PwC Ireland, said: “Despite a dampening mood on the future outlook for our economy compared to two years ago, the survey shows that many Irish CEOs are cautiously optimistic about the future growth potential for their businesses. They continue to focus on having sustainable growth strategies to ensure they remain fit for growth while managing the downside risks.

“The survey highlights that the skills challenge is at an all-time high in the history of the survey. Having a pipeline of relevant skills for a digital world is one of the greatest priorities for businesses. Businesses also need to think beyond today to fully grasp the opportunities that emerging technologies, such as artificial intelligence, can deliver.”

“Clearly, as reflected in the high concerns about geopolitical risks, Brexit is a key disruptor. With the ongoing developments in the UK, businesses still lack clarity on Brexit and the risk of a disorderly exit on 29 March has increased. Irish businesses need to intensify their no-deal contingency planning.”

CEOs concerned about threats

Despite almost 60% being positive about Ireland's growth prospects, a quarter were unfavourable about the prospects for the Irish economy, up from 17% in 2017.

Similarly, when it comes to the threats holding back growth, the top challenges are key business issues rather than economic or policy issues outside the control of the business leaders. For example, the availability of key skills (84%)—at an all-time high in the 13-year history of the survey—and cyberthreats (79%) are the top concerns, even surpassing geopolitical risks (76%) and uncertain economic growth (67%). Irish CEOs are also more concerned about real estate costs, inadequate basic infrastructure and the future of the Eurozone than their global counterparts.

Looking inside-out for growth

Faced with new realities, the survey highlights that Irish business leaders, like their global counterparts, are focusing on the areas under their control to drive growth. For example, organic growth (70%) is the premier driver of growth, followed by the development of new products/services (58%) and operational efficiencies (54%). Just 16% of Irish respondents stated that they plan to collaborate with entrepreneurs or start-ups (versus 32% globally) and just one in five will seek a new merger or acquisition (against 37% globally). 63% expect to increase headcount, up from 49% two years ago. 96% of multinational CEOs based in Ireland surveyed stated that they will increase or maintain their investment in Ireland, up from 91% in 2017.

In order to achieve that organic growth, businesses need to be prepared to look at all aspects of their organisation and make difficult decisions to make sure they are fit for growth.

Amy Ball, Finance Transformation Leader, PwC Ireland said: "Being fit for growth means finding ways to sustain profitability, irrespective of the climate. In practical terms, that means focusing on the things that set them apart from their competitors and having a lean operating model that can expand and contract, depending on the circumstance."

Significant information gap

While CEOs are unequivocal in their belief that data about financial projections, customer and client preferences, business risks, brand and reputation and employee needs is critical for long-term success, they are struggling with the adequacy of the data they receive. For example, on average, just 19% of Irish CEOs confirmed that the information they receive for business decision making is adequate (Global: 23%).

Darren O'Neill, Data and Analytics Consulting Leader, PwC Ireland, said: “While CEOs are turning inside their businesses to what they can control to achieve growth, they confront cracks in their own capabilities. Despite significant investments in IT infrastructure in the last decade, the survey highlights that they don’t have the data they need to make decisions about the long term success of their businesses. With the volume of data having expanded exponentially over the last decade, they are unable to corral the data into useable and actionable intelligence. Business leaders need to ensure that they are fully leveraging emerging technologies and extracting maximum value from their data for key decisions including about customers, people, market and competitors.”

More investment needed in AI

The survey highlights that Artificial Intelligence (AI) is the next key game changer for business. Nearly half (46%) of Irish respondents are of the view that AI will have a larger impact on the world than the internet revolution, but global CEOs feel stronger (62%). The majority (64%) agree that AI will significantly change the way they will do business in the next five years, global CEOs also feel stronger (85%). However, only half (49%) of Irish respondents have plans to pursue AI initiatives at present, compared to 77% globally. At the same time, over three quarters (78%) of Irish respondents stated that Government should develop a national strategy and policies for AI (Global: 76%).  

David Lee, Technology Consulting Leader, PwC Ireland, commented: “Global CEOs are anticipating the AI revolution more so than Irish CEOs. The survey suggests that Irish business leaders need to invest more in AI to keep up with global competitors and to fully leverage competitive advantage. They need to understand how AI can be applied in their businesses and ensure their organisations have the right talent, data and technology to fully exploit AI opportunities.”

Hiring people more difficult in Ireland than around the world

The skills challenge has become more acute in Ireland and may be driving wage inflation. For example, 70% of Irish CEO respondents stated that the deficit in supply of skilled workers is prompting higher people costs (Global: 52%). At the same time, three-quarters (75%) of respondents confirmed that hiring people is becoming more difficult (Global: 62%).

Gerard McDonough, People and Organisation Leader, PwC Ireland, said: "When closing the skills gap in their organisations, CEOs agree there is no quick fix. Around a third (30%) see significant training and upskilling as the answer with around a quarter hiring from competitors and establishing a strong pipeline from education as the way to go. As technological changes continue to disrupt the business world, people with strong data and digital skills are in even higher demand and increasingly hard to find. The need for soft skills is also critical, and businesses, educational institutions and Government need to work together to address the demands of the evolving workforce.”

ENDS

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