More Than One in Five U.S. Finance Executives
Plan to Increase Spending Investment by 10% or More
Senior finance executives remain optimistic about the economy,
the outlook for their companies and their investments for the
future, despite economic and political uncertainty, according to
the 2019 Global Business & Spending Outlook, a survey released
today by American Express (NYSE: AXP) and Institutional Investor
Thought Leadership Studio. Worldwide headcount is estimated to grow
by 9.18% in 2019, and the vast majority of respondents (96%) expect
to raise total compensation to employees. Nearly two-thirds (65%)
of companies worldwide surveyed report higher or much higher
revenue in the last 12 months, compared to 54% last year. In the
U.S., 63% of respondents report higher revenues, up significantly
from 36% last year.
Global finance executives are optimistic, but not as optimistic
as they were a year ago. Fewer respondents anticipate substantial
or modest economic expansion in their country in 2019 (71%, down
from 85% in 2018). Economic expansion expectations remain highest
in the Asia/Australia region (79%, down from 94% last year) and
lowest in Latin America (43%, down from 52% last year). In the
U.S., three-quarters (75%) anticipate expansion, down from 98% last
year, but among those anticipating expansion, 22% expect
substantial expansion compared to 1% in 2018.
The cross-industry findings in the joint American Express and
Institutional Investor study are based on a survey of 901 CFOs and
other senior finance executives of firms with annual revenues of
$500 million or more, located in North America, Europe, Latin
America, Asia, and Australia. The study was fielded in late
November and December 2018. Now in its twelfth year, the survey
this year includes the addition of Bahrain to the Middle East
region.
“Despite operating in unsettled times, senior finance executives
at large, global companies are concentrating on their day-to-day
business but keeping an eye on the future,” said Antonio Gagliardi,
Vice President of Strategy, M&A and Alliances, Global
Commercial Services, American Express. “While they balance spending
to drive topline growth with profitability, they’re pressing ahead
with expansion plans, which include pursuing foreign trade
opportunities, hiring and investing in next-generation
technology.”
HIRING AMID A TIGHT POOL FOR TALENT
While headcount is expected to grow by 9.18% globally, survey
respondents are more likely to have difficulty hiring and retaining
talent but plan to hire aggressively to sustain growth. Aggressive
hiring to increase their workforce by 10% or more is expected at
27% of companies in this year’s study, up from 17% last year. The
proportion of respondents in this most aggressive hiring segment
rises in all regions except Asia, where it falls to 23% this year,
down from 30% last year. In the U.S., the proportion of respondents
anticipating employee growth of 10% or more has risen significantly
to 31% this year, up from 2% last year.
Queried on their companies’ most pressing hiring needs,
respondents reveal a tight labor market, expressing particular
difficulty finding and keeping production and operating staff (68%,
vs. 41% last year), admin and support staff (64%, up from 45% last
year), IT staff (63%, compared to 40% in 2018), and sales and
marketing staff (62%, up from 40% in 2018).
While total compensation to employees is expected to rise by an
estimated 5.22% this year, to attract and retain talent in the
coming year, respondents will seek to improve the day-to-day work
environment (58%), provide career development for their employees
(51%) and to expand their health and retirement benefits (48%).
As a way to meet near-term staffing requirements in the coming
year, companies in all regions will make greater use of temporary
and contract workers (71%). Respondents also confirm their
longer-term commitment to using contractors, freelancers, and
temporary employees in this year’s study. Seventy-five percent cite
the use of these workers as central or important to their company’s
employment practices two years from now, up from 43% in 2018.
CUSTOMERS REMAIN TOP PRIORITY, AND BUSINESSES WILL SPEND TO
BOOST TOPLINE GROWTH
According to the survey, companies this year are most likely to
spend moderately to support topline growth without placing profits
at risk. Spending is estimated to grow by 8.15% across the entire
response base. More than one in five (22%) U.S. finance executives
will increase spending by 10% or greater (significantly up from 3%
last year).
As they prioritize their business goals, global finance
executives are most likely to rate “better meeting customer needs”
(71%, unchanged from last year) as a top priority, followed by new
market entry (45%), business transformation initiatives (38%) and
defensive maneuvers such as remaining competitive against peer
firms and protecting current market share (each, 37%). In the U.S.,
respondents will focus on better meeting the needs of customers
(68%, down from 82% last year), remaining competitive with other
companies (48%, up from 12% in 2018), and protecting share in
current countries (42%, vs. 15% last year).
Companies’ spending in pursuit of these objectives are most
likely to focus on expanding production capacity (62%) and
developing new products and services (58%). Notable increases in
the proportion of respondents expecting to boost spending are
expected in several categories, including hardware and IT
infrastructure (59%, up from 32%), transportation and logistics
(42%, up from 28%) and labor/headcount (36%, up from 24%).
When asked about the number-one technology spending priority,
respondents say they are most likely to boost spending on data
collection, warehousing and reporting. Nearly one-in-five (19%)
cite this as their top spending priority, up from only 5% last
year, followed closely by business intelligence and data analysis
capabilities (18%, up from 6% last year).
Notably, senior finance executives are more likely to spend
aggressively on training or hiring for the next generation of
technology rather than on training or hiring focused on their
current technology and systems. More than 40% anticipate spending
aggressively for training their current staff on transformative
technology. An identical proportion will go to the external labor
market for expertise in next-gen IT to transform respondents’
businesses and operating activity.
NEXT-GEN TECHNOLOGY EXPECTED TO HAVE GREATEST IMPACT ON
INDUSTRY DYNAMICS OVER THE NEXT 5 YEARS
This year’s study reveals growing concern for the dramatic
impact of next-generation technology on competitive dynamics within
industries (31%, up from 23% last year). Expectations for major
disruption on company operations and performance (16%, compared to
18% last year) or on countries have waned (14%, down from 21% last
year). Among those industries surveyed, the media entertainment/
travel (43%), wholesale/retail (41%) and construction (38%)
industries are most likely to anticipate major disruption to their
industry’s competitive dynamics. Latin America is more likely to
foresee dramatic disruption to industry dynamics than any other
region (44%, vs. only 10% last year).
Queried on the greatest technology challenge to their industry,
senior finance executives in this year’s study cite the use of
artificial intelligence (52%) and the Internet of Things (IoT),
which includes embedded sensors and ubiquitous, internet connected
devices (48%). The U.S. is as likely to express concern for
blockchain as artificial intelligence and IoT (each, 42%).
In line with their concerns and speculation about emerging
technology, respondents are most likely to report having begun
investment in artificial intelligence (62%), but they affirm the
investment in robotics and automation (64%) has yielded the
greatest benefit to their company.
Respondents from Europe are by far the most affected by the
General Data Protection Regulation (GDPR), as 70% of respondents
from the region, compared to 37% overall, see GDPR disrupting their
systems, processes and decision-making abilities.
Charts and figures available by request.
METHODOLOGY
The 2019 Global Business & Spending Outlook was conducted by
Institutional Investor Thought Leadership Studio (IITLS) and is
based on a survey of 901 senior finance executives from companies
around the world with annual revenues of $500 million or more. 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% at a 95% level of confidence.
ABOUT AMERICAN EXPRESS
American Express is a globally integrated payments company,
providing customers with access to products, insights and
experiences that enrich lives and build business success. Learn
more at americanexpress.com and connect with us on
facebook.com/americanexpress, instagram.com/americanexpress,
linkedin.com/company/american-express, twitter.com/americanexpress,
and youtube.com/americanexpress.
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version on businesswire.com: https://www.businesswire.com/news/home/20190410005022/en/
AMERICAN EXPRESSRosa
Alfonso-McGoldrickrosa.m.alfonso@aexp.com212-640-1712
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