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March 24, 2016updated 04 Sep 2016 11:13pm

CEOs failing to keep up with pace of tech innovation as skills shortage threatens revenues

News: Execs see more threats to their business today than three years ago.

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Technology, media and telecoms (TMT) CEOs are being set back in terms innovation and future revenue growth due to the widening shortage of tech-savvy skilled workers.

A global survey has found that today, two of the main threats to companies in the digital transformation era is the lack of employees that can keep up with the accelerating pace of technological change and new market entrants.

According to PwC’s 19th Annual Global CEO Survey, CEOs across TMT are concerned at the availability of key skills and not being able to keep up with emerging technologies.

This despite the rising demand for new technology driving optimism about future revenue growth across the sectors.

The survey took into account the views of 1,322 CEOs in 77 countries during Q4 2014.

Ninety percent of interviewees said they are changing how they use technology to deliver on wider stakeholder expectations. Yet, 74% said they are also concerned about geopolitical uncertainty.

Seventy-six percent of CEOs said they define business success by more than financial profit.

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In the technology space, the survey has found that business leaders understand all too well how technology is transforming their relationship with customers as well as other stakeholders.

When asked about how they are using technology to assess and deliver on wider stakeholders expectations, 51% of CEOs said they are making significant changes.

However, nearly a quarter of CEOs (24%) feel they do not have enough information about what
customers or other stakeholders want.

In the technology field, CEOs also showed the highest rate of concern (61%) regarding cyber security issues when compared to other sectors.

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.

Yet, tech CEOs are "significantly more optimistic about growth opportunities than those in other industries". 80% of respondents said the availability of key skills is their top challenge, up from 58% in 2010.

Sixty-seven percent of tech CEOs said that they plan to hire new staff in 2016 despite the challenges mentioned.

The survey has also found more technology leaders are concerned they will not 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.

Nevertheless, 90% of tech leaders expect to increase sales in the next 12 months, despite having less confidence 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.

Elsewhere, in the telecoms sector 81% of CEOs are concerned about the availability of key skills, a figure that 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%).

Yet, 81% of telco CEOs said they expect revenue growth this year, with 93% showing confidence that their company will keep growing in the next three years.

As for the entertainment and media (E&M) sectors, 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.

Seventy-four percent of execs said that new market entrants could pose a threat to company growth. Cybersecurity has been rated by 66% of E&M CEOs as a threat. A figure that has grown from 60% in 2015 and 43% in 2014.

CEOs in the E&M sector are more pessimistic regarding the global economy, with only 22% expecting it to improve next year.

Seventy-two percent of E&M CEOs are 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%).

Jass Sarai, PwC‘s UK and EMEA TMT leader, 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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