While over three-quarters of chief financial officers in the Middle East see that work flexibility will make their organisations better in the long run, only a third (and just a quarter in the UAE), are planning to make remote working a permanent option.
According to the third Middle East edition of the biweekly COVID-19 CFO Pulse Survey by PwC, 54% of regional CFOs remain focused on accelerating automation and new ways of working as a priority.
In terms of innovation, digital transformation is set to accelerate as 47% of the respondents said that technology investments they are making will make their company better and 39% are looking to use automation to improve the speed and accuracy of decision making with regards to their supply chain strategy.
Just 6% of finance executives reported that they are considering deferring or cancelling investments into digital transformation – down from 19% during the previous survey two weeks ago – while no CFOs indicated that they were considering cutting investments into cybersecurity.
CFOs are also protecting investments in both digital transformation and cybersecurity to both secure remote working and to support the transformation to the ‘new normal’.
Stephen Anderson, Middle East Markets and Strategy Leader, said that it’s reassuring to see that almost a half of the executives surveyed in the region are very confident in their company’s ability to build skills for the future – those in the UAE are even more confident at 64%, far above the global average of 48%. “This aligns with the increased likelihood of companies adopting workplace automation, new ways of working and preparing employees for a digital tomorrow,” he said.
According to research firm International Data Corporation (IDC), the contribution of “digital coworkers” will increase by 35% as more tasks are automated and augmented by technology.
IDC also predicts that, by 2024, enterprises with intelligent and collaborative work environments will see 30% lower staff turnover, 30% higher productivity, and 30% higher revenue per employee than their peers.
Connectivity is common denominator
“Connectivity is the common denominator in how people, things, and processes interact today. As digital interactions increase during this current period, it is becoming clear that connectivity is not yet seamless, or pervasive. For consumers and organsations alike, the increased reliance on being digitally engaged requires ubiquitous, reliable, and robust connectivity,” Jyoti Lalchandani, Group Vice-President and Regional Managing Director for the Middle East, said.
Ranjit Rajan, Associate Vice-President and Head of Research at IDC, said that digital transformation has become a “key priority” for leading organisations around the world. Digitally transformed organisations are exerting a greater impact on the global economy today than ever before. We estimated that digitally transformed organisations contribution to the global GDP was about 17% in 2018 and expect this percentage to grow to about 52% in 2023,” he said.
These digitally transformed organisations, he said are able to leverage technology to redesign customer experiences, to build new digitally augmented products and services and create new digital business models to create new revenue streams.
The PwC survey showed that 76% of regional CFOs confirmed that their companies are planning on implementing workplace safety measures such as wearing masks and testing, especially in the UAE with 85% of CFOs confirming that but only 64% of CFOs in the UAE will be promoting physical distancing at work sites.
Over the last four weeks, Middle East CFOs have gradually pushed out their recovery expectations as 66% of CFOs, up from 44%, now expect the recovery timeline to return to business as usual to take three months or more.
“Naturally, this will impact revenue and profits, with 70% now expecting to see a decrease of 10% or more. Interestingly, we see further pessimism in the region with nearly one in five Middle East CFOs expecting to see a decrease in revenue or profits of over 50%,” Anderson said.
While the reopening of economies will be welcomed by organisations, there is no doubt that Covid-19 will leave behind some economic scarring.
PwC expects that 33% of Middle East CFOs are more likely to reduce their real estate footprint through the partial opening of offices or retail locations, 10% higher than the global average.
Moreover, over half of the Middle East CFOs looking to cut investment are targeting their workforce (51%) – broadly in line with the global average of 49%.
The region is also one of the most likely globally to see changes in staffing (43% Middle East vs. 37% globally) or layoffs (40% of Middle East vs. 29% globally).
“Regardless of the challenging circumstances and the severity of the global situation we find ourselves in today, it is comforting to see that community spirit remains strong – we’ve found that 38% of CFOs in the Middle East have increased their company’s community-focused efforts and three-quarters of all CFOs in the region are providing some level of social support to those in need in response to Covid-19,” Anderson said.