Fast technological change is a double-edged sword for technology, media and telecoms CEOs as concerns over skills and cyber security risks dampen optimism

27th March 2016

A shortage of tech-savvy skilled workers who can keep up with the accelerating pace of technological change and new market entrants are two of the top threats to innovation and future revenue growth for CEOs across the TMT industry.

 

 

 

According to PwC’s 19th Annual Global CEO Survey, the rising demand for new technology is driving optimism about future revenue growth across the sectors, however there are major concerns about being able to keep up with the rapid changes in technology and having a workforce with the right skills to drive transformation and meet growth targets. 

Technology

While tech CEOs are significantly more optimistic about growth opportunities than those in other industries, 80% say the availability of key skills is their top challenge, rising sharply from 58% in 2010. Despite the concerns about finding the talent they need, two-thirds (67%) plan to hire this year – up 12% and the highest number in the last six years.

The worldwide survey found more technology leaders are concerned they won’t keep up with the increasing pace of technological change, rising to 66% from 54% last year. Almost 70% are also anxious about competition from new market entrants amid the growing traction of tech start-ups.  

Tech CEOs also view cyber security as more of a threat than other industries (average 61%). Cyber has jumped from sixth to second place in the list of top threats for 76% of tech leaders, rising from 65% of CEOs a year ago.  

While bullish on their future sales prospects - 90% of tech leaders expect to increase sales in the next 12 months - they are less confident about global economic growth in 2016. Fewer CEOs (78%) believe global growth will improve or remain the same, declining 4% since last year.

Almost 60% of CEOs are planning strategic alliances and joint ventures to achieve growth goals, with the US, China and the UK ranked as the most important markets for growth in the next 12 months.

Telecoms (Communications)

CEOs in the telecoms sector see both big opportunities and threats to their growth agendas as they work towards becoming disrupters, transforming their identity towards innovative digital telcos.

As they look to a new kind of workforce with new skills that have not been historically nurtured in the sector, the survey found 81% of CEOs are concerned about the availability of key skills. This is higher than the global average of 72%.

More than 80% of telecoms leaders are concerned about overregulation and also far more anxious about unemployment than CEOs in other sectors (59% vs 46%).

However, CEOs in telecoms are some of the most confident about future revenue with 81% expecting growth in the next year. 93% say they are confident about their company’s revenue growth prospects in the next three years.

Almost 60% of communications CEOs say they plan to enter into new strategic alliances or joint ventures this year, compared with 49% of all leaders. It reflects the trend seen in technology and media industries to leverage relationships and tools to help them stay competitive.

Just over 40% say the coming year’s growth will also be driven by domestic M&A, continuing the trend for communications companies involved in major mergers, and helping to facilitate integration of new in-demand capabilities and technologies.

Entertainment and Media

Geopolitical uncertainty, the availability of talent and the speed of technological change are the top concerns for entertainment and media leaders.

76% of E&M CEOs believe there are more threats to their company’s growth prospects compared to three years ago, as consumer behaviours and distribution channels have evolved so dramatically. That is an increase from 67% a year ago and higher than most other sectors.

Like their peers in tech and telecoms, E&M leaders are concerned about new market entrants - 74% say they may threaten growth prospects – while more rate cyber security as a threat (66%) compared to previous years (2015:60%; 2014: 43%).  

Fewer CEOs in the E&M sector (22%) believe global economic growth will improve in the next year, down from 34% in 2015. The US and China are seen as having the best growth prospects while the UK is also now in the top three, overtaking Germany in the rankings, revealing a greater confidence in the future of the local market.

The survey findings reflect a growing shift away from a globalised world to a multipolar one with 72% of E&M CEOs expecting increased regionalisation in trade. More than 80% also predict differing fundamental belief systems will underpin societies, highlighting the need to respond to consumer expectations and local demand.

Almost 70% of CEOs say their company will enter into a new strategic alliance or joint venture over the next 12 months, while around a third are looking to streamline operations through outsourcing business processes. This is higher than in technology (23%) or telecoms (24%).

Commenting on the findings, PwC’s UK and EMEA TMT Leader, Jass Sarai, said:

“Never before have CEOs across these sectors experienced such complex challenges as they navigate the positives and negatives from the vast changes that technology has produced. They must manage their own digital transformations while pursuing innovation for the rest of the market.

“While the growth prospects across technology, communications and entertainment and media are huge, it is clear that a skilled and adaptable workforce is now more crucial than ever."

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