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 News
13 December 2017 | ITSM
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Global Economic Alignment Drives Growth and Optimism Among Private Companies
Eighty-nine percent of global private companies are confident in their business success over the next two years, despite increased uncertainty...

As global economies grow in sync for the first time in a decade, optimism surpasses uncertainty among private companies when it comes to their expectations and investment plans. In its inaugural report, “Global perspectives for private companies: Plans, priorities, and expectations,” Deloitte reveals that two-thirds of private company executives across the globe believe their revenue will rise in the year ahead.

Surveying almost 1,900 executives in 30 countries, the majority of respondents expect revenue, profits, productivity, and capital investments to increase in the year ahead. Additionally, 45 percent expect to hire more full-time employees. Despite these expectations, 53 percent of respondents perceive a greater level of uncertainty around their future business prospects.

“The optimism of private companies worldwide reflects an economic alignment taking hold for the first time in years,” said Mark Whitmore, Deloitte Private Global leader, Deloitte Canada. “In the face of increased uncertainty, private companies seem to be leveraging their inherent agility to gain a competitive edge.”

Overcoming region-specific risks

While private companies are similarly optimistic across the globe, reflecting current levels of global interconnectivity, the survey revealed some differences in top risks to growth across different regions. For instance, respondents in the Americas expressed concern about the uncertain economic outlook in their home countries, while respondents in the EMEA region (Europe, Middle East and Africa) point to hiring as a top challenge, and Asia Pacific respondents identified raw material costs as a barrier to growth.

Executives worldwide consistently cited geopolitical uncertainty as a top risk to growth, however. Furthermore, respondents from each region identified market disruptors, foreign exchange fluctuations, weaker domestic market demand, increased regulatory requirements, and technology costs as principal threats.

To counter these risks, 35 percent of respondents are focused on increased productivity, while 33 percent of respondents are aiming to develop new products and services and grow existing markets, respectively.

“Private companies are stacking the deck against uncertainty with nimble growth strategies,” said Roger Nanney, vice chairman, Deloitte LLP, and Deloitte Private US leader. “Consistent with their critical role as a growth engine of the global economy, private companies are taking incisive action to grow and invest in their businesses.”

Private companies bank on global markets

Seventy-nine percent of private companies say they rely on international markets for some portion of revenue, and almost half (43 percent) rely on international markets for more than a quarter of their revenue. In fact, over the next year, only 10 percent expect a decrease in the proportion of their company’s revenue that will come from outside their country.

Sentiments on supply chains also point to increasing global economic integration and a shared sense of optimism. Eighty-four percent say that global trade is important to their supply chain.

Countering disruption with technology

Against the backdrop of rapid technological development, private companies are embracing digital disruption for competitive gains. Two-thirds of respondents associate tech advances with new opportunities and positive outcomes.

Emerging technologies are integral to private companies’ playbooks, accelerating innovation and driving business results. Among the primary objectives for deployment, 62 percent of companies aim to increase efficiency, 46 percent are using technology to improve customer engagement, 45 percent strive to facilitate growth, and 37 percent are using emerging technologies for research and development. Others cite data analytics/business intelligence and automation of business processes to realize growth ambitions.

While many view disruption through an optimistic lens, there are some negative impacts that come with it as well. Changes in customer expectations (31 percent), macroeconomic market changes (38 percent), and shifts in regulations (39 percent) are all cited as negative disruptors. Almost half of respondents believe disruption from nontraditional competitors is likely in the next few years.

Increased appetite for mergers and acquisitions growth

Despite limited mergers and acquisitions activity in the last year, the survey signals a potential bounce back for M&A as a tool for strategic growth.

Sixty-eight percent of respondents expect to be a part of M&A activity over the next year. Specifically, 42 percent anticipate they are likely or very likely to acquire targets in the next year. The reasons for this vary, however, 33 percent cite the opportunity to enter new global markets and 32 percent point to the opportunity to expand and diversify their client base.

Game-changing talent investments

As technology streamlines processes and frees up employees’ capacity, private companies are sharpening their focus on talent investment. To overcome constant talent acquisition challenges, meet their growing workforce needs, and boost retention, 46 percent of private companies plan to invest in training their employees and 33 percent are investing in leadership development programs.

Training programs are being reimagined as continuous learning opportunities for employees to spur further innovation. Furthermore, 16 percent of respondents identify strengthening their management team as a top growth strategy as private companies stock their talent pipelines with a view to sustained growth in the future.

For additional information on “Global perspectives for private companies: Plans, priorities, and expectations” click on the link https://goo.gl/m4jwcv.


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