homeeconomy NewsIndian CFOs plan to increase spend to support topline growth in 2019, shows survey

Indian CFOs plan to increase spend to support topline growth in 2019, shows survey

Senior finance executives remain optimistic about the economy, the outlook for their companies and their investments for the future, according to the 2019 Global Business and Spending Outlook, a survey released by American Express and Institutional Investor Thought Leadership Studio.

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By CNBCTV18.COMJul 17, 2019 4:19:03 PM IST (Published)

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Indian CFOs plan to increase spend to support topline growth in 2019, shows survey
Senior finance executives across the globe remain optimistic about the economy, the outlook for their companies and their investments for the future, an international study has shown.

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The 2019 Global Business and Spending Outlook was released by American Express and Institutional Investor Thought Leadership Studio (IITLS), The study is based on a survey of 901 senior finance executives from companies around the world with annual revenues of $500 million or more. In total, 180 CFOs and other senior finance executives from Asia and 30 from companies in India participated. All survey responses were gathered in late November and December 2018. IITLS estimates the margin of error for the survey to be approximately +/-3.2 percent at a 95 percent level of confidence.
Optimism in the air
The optimism of the top executives can be seen in their spending outlook.
  • As many as 83 percent CFOs are looking at moderate to aggressive increase in spending and investment this year to support topline growth.
  • Thirty-three percent CFOs expect their company's spending and investment worldwide to change by 10 percent or more this year.
  • Ninety percent of Indian CFOs believe that improving cash and working-capital management will be more important this year as compared to last,
  • Sixty-seven percent of Indian CFOs expect improved use of credit to yield a substantial financial benefit.
  • As many as 57 percent of Indian CFOs are likely to increase their investments in improving administrative process efficiency this year. The focus on efficiently managing bottom-line spending is evident in the increase from 40 percent voting it as an investment priority last year.
  • Ninety-six percent of CFOs plan to spend more or the same amount this year on financial reporting and compliance services.
  • Travel and entertainment (T&E) continues to be a sizeable part of companies’ spending, with 77 percent Indian finance executives planning to increase their spend or invest the same amount on T&E this year.
  • Compared to five years ago, 57 percent of Indian CFOs find the information received on T&E spending more informative and transparent.
  • “Indian firms are gearing up to efficiently manage their spending and investment this year with a keen eye on the future,” said Manoj Adlakha, CEO of American Express India. “While they balance spending to drive top-line growth with profitability, they’re pressing ahead with plans to take advantage of demographic and economic changes to stay relevant and competitive in the next 5-10 years," he noted.
    Companies on growth track
    Indian companies continue to grow; 87 percent of companies surveyed in India report higher or much higher revenue in the last 12 months, as compared to 43 percent last year. This number is notably higher than the worldwide (65 percent) and Asia average (63 percent) for this year.
    The study has listed the top priorities of Indian CFOs as they seek to ‘future-proof’ their businesses.
    • CFOs in India and worldwide continue to prioritise the business goal of ‘better meeting customer needs’, with 57 percent of Indian CFOs voting it as among their top business priorities.
    • ‘Improving financial returns to owners or shareholders’ is equally important for Indian CFOs, with 57 percent voting it as among their most important business goal with a significant increase from 27 percent last year.
    • ‘Remaining competitive with other companies’ (43 percent) and ‘pursuing business transformation and innovation’ (40 percent) and ‘entering new markets’ (27 percent) are the other important priorities on their radar.
    • Upbeat on external environment
      Outlook on the external environment also remains extremely positive.
      • In terms of their confidence in the nation’s economy, 80 percent of Indian respondents expect a substantial or modest economic expansion in the year ahead, substantially higher than their global peers at 71 percent.
      • Economic expansion expectations remain highest in the Asia/Australia region (79 percent, down from 94 percent last year) and lowest in Latin America (43 percent, down from 52 percent last year)
      • Indian CFOs continue having a positive outlook towards global trade policy, with 63 percent of Indian CFOs expecting global trade policy to strengthen their company's growth prospects.
      • “I feel CFOs today play a critical role in the long-term strategic planning and health of the company. In fact, one of the findings in the survey is that 73 percent of Indian CFOs collaborate most closely with the board of directors. This is testimony to the increasingly important and strategic role CFOs play, as they navigate organisational spending in line with economic drivers and influences,” Adlakha pointed out.

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