Foreword

2024 foregrounded artificial intelligence (AI) that can work magic in the boardroom as well as the living room, on the shopfloor as well as the dancefloor. Love it or hate it, organisations can no longer afford to ignore this non-sentient agent which is creating new value pools and compelling businesses to either shape up or ship out. It is no more about ‘playing catchup’, but rather about remaining economically viable in the face of current operational and long-term strategic challenges. 

And then there is the threat of climate change – with 2024 being declared the hottest year on record,¹ unseating 2023 with temperatures that were a notch higher. In PwC’s 28th Annual Global CEO Survey: India perspective, CEOs weighed in on these two defining megatrends - technological disruption and climate change - whose impact goes beyond the realms of business.

The survey conducted in October and early November 2024 polled 4,701 CEOs across 109 countries, of which 76 were from India.

The magnitude of impact of these external forces on businesses is unprecedented. Furthermore, if climate change – which has been a recurring theme over the past few years – is to be addressed, AI has to be technically, organisationally and operationally scaled up, and at speed. This underlines the need for businesses to reinvent intelligently and unlock new sources of value to address the interconnected forces of climate change and AI.

As the survey indicates, CEOs are cognisant of the fact that their organisations are being pushed to the edge. The report, therefore, examines in detail how these two megatrends are poised to shape the future of business and society, and fuel intelligent reinvention for business viability in the decade to come. Like every year, it also provides insightful data on other macro and micro issues that influence business and organisational dynamics. 

India CEOs, for instance, called out technological disruption as the top threat they were highly exposed to, followed by macroeconomic volatility and inflation. Global CEOs, however, indicated they were highly exposed to macroeconomic volatility, inflation and cyber risks, and not so much to technological disruption.

As in 2023, India CEOs, compared to their global peers, were yet again more optimistic about their country's economic growth and their companies' revenue growth. They were also emphatic about correct strategic choices being the most important determinant of their companies’ economic viability for more than 10 years. Those strategic choices have, in some instances, resulted in creating new value in motion by leveraging AI as a value driver and climate change action as a value pool.

Moreover, with technological disruption being a major concern for India CEOs, they are keen to embed the value in motion principle across products and services they design, engineer and deliver. Our report substantiates this point. Product and service innovation is the top reinvention action taken to a large/very large extent by India CEOs over the last five years, followed by targeting new routes to market and a new customer base.

Interestingly, over the last five years, four in ten India CEOs – similar to their global counterparts – have already ventured into other industries, generating 1–20% of their revenue from sectors such as consumer, industrial manufacturing, and aerospace and defence. Given India’s vibrant consumer market with its range of demands, segments and requirements, government initiatives such as Make in India and Production-Linked Incentive (PLI) schemes, the country’s allure as a key player in the global supply chain, and trade agreements, the choice of industries by India CEOs comes as no surprise.

The job market too seems favourable, as 68% of India CEOs (as against 57% last year) are likely to increase their headcount in the next 12 months. Disruptive technology, therefore, appears to have spelt out the need for a larger talent pool with relevant skills, even though Generative AI (GenAI) has resulted in productivity gains over the last one year.

In view of these findings, the report sheds light on how businesses can operate in this dynamic environment through a ‘sensing-seizing’ opportunity loop – identifying issues (sensing) and orchestrating resources to maintain and create new sources of value (seizing). It further outlines five reinvention actions that CEOs could take to build the future today and enable the nation to develop its growth narrative while navigating global crests and troughs. 

We hope you find the report engaging and are able to derive actionable insights from it.

While AI and climate change may have started laying the foundation for new value enablers and value pools, it is important to take a step back and develop a holistic view of how AI can play an integral role in driving climate action by enabling more efficient resource management, renewable energy forecasting, and optimisation of energy usage, and by improving the accuracy of climate models. Thereafter comes execution: a clear set of reinvention priorities determined by these forces, powered by strategic choices and informed decision making.

a. Sensing-seizing opportunity loop: AI

Unlike inflation, which is a recurrent challenge that businesses have historically and persistently navigated through pricing strategies and cost and resource management, technological disruption is largely unpredictable and could render business models obsolete. As against 20% of global CEOs, 28% of India CEOs list technological disruption as a key threat their companies are extremely/highly exposed to in the next 12 months. There is reason for this concern. In customer service, AI-driven chatbots and virtual assistants have begun to replace human representatives in support roles for handling routine inquiries and resolving simple issues in sectors such as banking, telecom and retail.

28% of India CEOs list technological disruption as a key threat they are highly exposed to in the next 12 months. This is followed by macroeconomic volatility and inflation

Q: How exposed do you believe your company will be to the following key threats in the next 12 months?​

So, while technological disruption could translate either into a challenge or an opportunity depending on how it is capitalised, it will have far-reaching implications for organisations, governments and the workforce. Businesses that are unable to digitally transform and speed up their execution may fail, while those that leverage the full power of technology are likely to maintain competitive differentiation and create value for society at large.¹¹

AI, most CEOs agree, can empower organisations at scale and accelerate transformation. And in view of the India government’s announcement to launch the IndiaAI Mission and its investment in building a robust AI ecosystem, it is time for businesses to seize the moment to harness the potential of this technology. Those that are early adopters are already transitioning to a different spectrum of productivity. Combining the power of intelligence and insights, AI can ensure that every employee gets an opportunity to achieve more. That explains why more India CEOs – 59% and 51% as against 47% and 41% of global CEOs – predict, to a large/very large extent, AI’s systematic integration into technology platforms and business processes and workflows in the next three years.

More than half of India CEOs – as against 47% and 41% global CEOs respectively – report plans to integrate AI into technology platforms and business processes and workflows

Q: To what extent, if at all, do you predict AI (including GenAI) will be systematically integrated into the following areas in your company in the next three years?

Generative AI, on its part, is perhaps the first technology that is consumer-led rather than business-led – and whose power lies in its ability to democratise access to sophisticated tools and skills.

GenAI increased profitability for 34% of India CEOs, the same as global CEOs, and revenue for 36% of India CEOs as against 32% of global CEOs in the last 12 months

Q: To what extent did generative AI increase or decrease the following in your company in the last 12 months?

Companies worldwide are adopting GenAI at scale and seeing promising results, as PwC’s survey indicates:

• More than half of the CEOs in India as well as globally said that GenAI increased efficiencies in how employees and they themselves manage their time over the last one year. Importantly, around one-third of India CEOs report increased revenue and profitability arising from this technology.
• One year on, expectations about GenAI’s impact on profitability are slightly higher than a year ago: 51% of India CEOs and 49% of global CEOs emphasise that GenAI will increase company profitability over the next 12 months.
• In terms of the impact on jobs, although over one in ten India CEOs said they reduced their headcount over the last 12 months because of GenAI, one in five reported an increased headcount.

The findings are consistent with earlier PwC research. In PwC’s Global Investor Survey 2024, two-thirds of investors and analysts said that they expected the companies in which they invested to achieve productivity gains from GenAI in the year ahead.¹² Another recent survey by PwC India found that 40% of companies across the technology, media and telecommunications (TMT) sector are already seeing the impact of their implemented GenAI use cases and are on track to achieve the desired return on investment. In fact, 21% of them expect GenAI use cases to yield the desired return on investment (ROI) in just a year.¹³

Banking on GenAI’s transformative potential, PwC India too has announced a collaboration with Meta to expand and scale its open-source AI solutions to enterprises and citizen services on Meta’s Llama models. It also plans to develop innovative solutions powered by GenAI, further accelerating the country’s digital transformation journey. 

b. Sensing-seizing opportunity loop: Climate change

India has been playing a key leadership role in the global fight against climate change with its push for green hydrogen and Mission LiFE of Lifestyle for Environment, demonstrating a firm commitment to a growth trajectory that balances economic advancement with ecological responsibility. India’s role in launching the International Solar Alliance that has 120 signatory countries, the Coalition for Disaster Resilient Infrastructure, and a global grid for renewables underlines this commitment. In fact, the International Solar Alliance was conceived as a joint effort by India and France to mobilise efforts against climate change through the deployment of solar energy solutions. Also, India’s National Hydrogen Mission aims to make the country a hub for the production and export of green hydrogen. The International Energy Agency believes¹⁴ India could become a global leader in renewable batteries and green hydrogen, fetching the country potential revenues of USD 80 billion.

In 2019, few India CEOs were concerned about using data on the impact of climate change on business to make decisions around long-term success and durability of their businesses, nor did they consider climate change as a threat to their organisation’s growth prospects. Five years on, the needle has moved considerably as organisations in India are now making investments to address climate change. Many companies, however, are yet to convert climate-friendly investments – which include transitioning to energy-efficient operations, developing greener products and services, and implementing emission-reducing technologies – into additional revenues. Be that as it may, sustainability is being increasingly built into the fabric of businesses across geographies, not only as a stakeholder management issue, but also as a vector of investment.

More than half of global CEOs (56%) said their personal incentive compensation was linked to sustainability metrics. In India, the percentage of CEOs who said that a certain proportion of their personal incentive was determined by sustainability metrics was slightly higher at 58%. The higher the percentage of CEO compensation at stake, the higher is the revenue likely to be generated from climate-friendly investments.

Indian companies are actively bridging the gap between intent and action when it comes to sustainability, combining profit with purpose. This is corroborated by another 2024 PwC India report, Decoding the Fifth Industrial Revolution, in which 93% of senior executives across six industries in India said they would like to be known for their sustainability initiatives, and yet achieve 2x to 3x profitable growth over the next three to five years.¹⁵ More than half of the executives in this PwC India study had emphasised that they were prioritising investments this year towards building mechanisms to facilitate adoption of renewable energy sources, implement energy-efficient practices, reduce waste generation, and manage water usage responsibly through digital and other technologies.¹⁶

The commitment to climate-friendly investments holds firm for a few companies even when it means accepting lower rates of return, as is evident in PwC’s 28th Global Annual CEO Survey:India perspective. A fifth of India CEOs, as against a fourth of global CEOs, pointed out that their company had accepted rates of return for climate-friendly investments that were lower than its minimum acceptable rate of return for other investments.

In the last 12 months, a fifth of India CEOs as against a fourth of global CEOs said their companies had accepted lower rates of return for climate-friendly investments

Q: In the last 12 months, has your company accepted rates of return for climate-friendly investments that were lower than the minimum acceptable rate of return your company uses for other investments?

When global CEOs took stock of the financial impact of climate-friendly investments over the last five years, these moves were revealed to be six times more likely to have resulted in increased revenue than decreased revenue. In addition, two-thirds of global CEOs reported that climate-friendly investments had either reduced costs or had no significant impact. 

In India, on the other hand, 38% of CEOs underlined that climate-friendly investments initiated by their companies in the last five years had increased revenue, while 33% of them said that such investments had increased costs. Notably, 23% of CEOs in India reported cost reduction due to climate-friendly investments.

38% of India CEOs said that climate-friendly investments initiated by their companies in the last five years had increased revenue from products/services sales. 33% underlined that such investments had increased costs in the last five years

Q: To what extent have climate-friendly investments initiated by your company in the last five years caused increases or decreases in the following?

Shifting consumer preferences and the inter-connected forces of AI and climate change, as noted, are radically transforming how companies create, deliver, and capture value. A 2024 PwC India study revealed that nearly 50% of senior executives, on an average, across industries in India are prioritising investments into building capabilities towards driving rapid value reinvention.¹⁷ They are integrating advanced technologies and human expertise to rapidly reconfigure and incorporate changes in product design as per customer requirements.

So, while manufacturing has been at the forefront of reinvention, largely fuelled by shifting customer preferences, other industries are beginning to follow suit, and with good reason. The findings of our CEO survey establish a clear link between reinvention and profitability. CEOs who have taken more reinvention actions in the last five years have reported higher profit margins in the last 12 months.

This year, India CEOs reported having taken at least one major action to reinvent their business model, with the top three actions being:

• developing innovative products/services (43%), including the digitisation of analogue products
• targeting new routes to markets (39%)
• targeting a new customer base (38%) – for instance, selling to companies in new industries or consumers in new markets.

For more than 40% of India CEOs, product and service innovation is the most common reinvention action in the last five years

Q: To what extent has your company taken the following actions in the last five years?

Reinvention entails a sensing-seizing opportunity loop, and that demands focus and a determined effort. Leading indicators that can often foretell that the industry is ripe for reinvention include:

• new market entrants
• increase in venture capital investment
• redistribution of market share among incumbents.

This in turn necessitates resource reallocation from lower priority projects to build an at-scale new business rapidly. As business model reinvention clearly changes how a company operates, delivers value, and interacts with customers, it necessitates new skills and ways of working. But companies often lack agility when it comes to moving financial investments and people between business units and projects – although reinvention and dynamic resource reallocation go hand in hand with a strong link between higher levels of financial and human resource reallocation and the revenue generated from distinct new businesses.

In our earlier CEO survey, lack of skills in the company’s workforce was among the top three barriers to reinvention reported by India CEOs.¹⁸ The concerns persist in the 28th Annual Global CEO survey: India perspective, with 61% of India CEOs underlining lower availability of workers with key skills as a significant threat their companies were moderately and extremely exposed to.

Therefore, any discussion of reinvention is incomplete without considering the critical need for workforce transformation. In fact, this is an area where disruptive technologies could be leveraged to upskill the workforce. Forward-thinking organisations are already using GenAI, augmented reality (AR), and virtual reality (VR) to provide interesting and customised skilling mechanisms to the workforce.¹⁹

Irrespective of the leg of reinvention journey each company is in, the following are some other actions that can provide business opportunities for growth and differentiation, factoring in the two forces of AI and climate change:

India CEOs, as discussed earlier, have good reason to be optimistic about the country’s growth. India’s fast-growing economy, technological prowess, strong infrastructure, and improved EoDB have reinforced the nation’s position among the top five investment destinations.

Much of the optimism displayed by business leaders, however, is tempered by the challenges posed by technological disruption, macroeconomic volatility and inflation. Therefore, it is critical to focus on continual reinvention, all the while remaining acutely aware of the interplay between macroeconomic conditions, geopolitical reconfigurations, and other external and internal threats that could derail progress. To maintain focus, a few key questions that CEOs could ask themselves are: 

• Am I moving fast enough and with discipline to build AI (especially GenAI) into workflows and processes, and simultaneously prioritising Responsible AI practices to safeguard stakeholder trust?
• What untapped opportunities can I avail of to drive revenue growth and profitability? What climate-friendly products and services can I add to the business portfolio? Am I investing enough in process improvements to improve the quality of our decisions?
• Do I have a clear view on the potential for my industry’s structure and boundaries to shift? How do I align my company’s operations, capabilities, and business model to the new value propositions and value pools being created because of these shifts?

New domains of growth that cut across sectors and improve the economic viability of businesses can only be created through intelligent reinvention measures around climate change, AI, and other megatrends such as a fracturing world, social and demographic instability, and strategically working around the company’s vision and mission.

Staying the course on the reinvention track is therefore key to responsible business viability. As the research indicates, some CEOs have already commenced the reinvention journey, while others are beginning to understand its need. The time is now to convert that understanding into bold, decisive actions.