A recent PwC survey has revealed that 62% of organizations are taking cost-containment measures owing to the coronavirus pandemic.
PwC conducted a survey of 50 U.S. and Mexico finance executives between March 9-11 and asked how companies are handling the COVID-19 outbreak. The survey said that 62% of companies are undertaking cost-containment measures due to the outbreak. It also inquired about weighing the business and economic impacts in the upcoming weeks and months.
As per the survey, six in ten finance executives expect a direct slump in revenue due to the coronavirus outbreak; however, 40% of them said it is not easy to assess the impact as of now. About 80% of finance executives list a potential global recession as one of their top-three concerns amid the COVID-19 outbreak. The survey mentions that four in ten executives are also concerned with workforce impacts and less productivity.
The PwC survey reveals that the C-suite and boards are not focusing more on 2020 earnings, instead, they are working towards positioning companies for the coming years. Organizations could need to pause long-term projects as part of cost containment measures, found the survey. In the middle of a market contraction, the focus would shift from capital-expenditure intensive projects; however, decreasing spending on technology would affect them in the longer run.
If a full-fledged recession hits and the U.S. and other major economies fail to recover, there are a 50% probability global tech markets will decline by 2% or more this year. According to IDC, IT spending will be reduced while there is a growth projection of 1% year-over-year in 2020, down from pre-pandemic projections of 4% growth.
With a decrease in revenue projections, the key effort for CIOs is to evaluate strategic cost optimization. Costs need to be structured in a way that business stakeholders can understand and it ensures that the C-suite and board are mindful of the implications of their decisions. If executives are confident in their spending, performance, and utilization data, they can shift and optimize resources when required.
Even in times of global uncertainty, enterprises can maintain operations due to advanced digital technologies. While businesses focus on enabling continuity, companies will continue to keep looking at long-term spending, particularly as they interact with customers and enable safe and productive work. As technology investment becomes an issue for senior executives and boards, CIOs have become even more relevant in scenario planning around technology.