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African CEOs plan to reduce headcount in automation push

By , ITWeb senior news journalist.
Africa , 10 Jun 2021
Dion Shango, CEO of PwC Africa.
Dion Shango, CEO of PwC Africa.

Around 34% of surveyed CEOs from Africa admit they plan to decrease their organisations' headcount within the next 12 months, as they significantly increase investments in digital transformation initiatives amid economic uncertainty.

This is one of the key findings of the 8th edition of PwC’s Africa Business Agenda 2021 research report.

The Africa Business Agenda draws on the results of PwC’s 24th Annual Global CEO Survey of 1 779 interviews in 100 countries, including 50 CEOs from 14 African countries, including SA.

According to the findings, most African business leaders are more optimistic about the strength of the global economy and their organisations’ ability to grow revenues over the next 12 months than they were a year ago; their confidence in their own companies' revenue prospects has rebounded.

While the COVID-19 pandemic has accelerated changes that many businesses were already starting to make in areas such as digital transformation and talent management, the overwhelming majority also reported they are anxious, with certain issues, including policy uncertainty, tax policy, cyber threats and over-regulation, keeping them awake at night.

Just over half of surveyed CEOs in Africa (52% compared to 49% of global CEOs) plan to significantly increase their long-term investments in digital transformation. This is followed by initiatives to realise cost-efficiencies (Africa: 48%; global: 32%), leadership and talent development (Africa: 46%; global: 24%), and cyber security and data privacy (Africa: 32%; global: 31%).

Those planning to reduce headcount in the next 12 months have increased to 34% – the largest percentage seen in the past eight years of the survey. This follows on the heels of the 46% of African CEOs who report they have already reduced their headcount during the past year.

One important factor contributing to the planned staff reduction, according to the report, is the extent to which CEOs are changing their workforce strategy to focus on productivity through automation and technology – 78% of CEOs in Africa are seeking operational efficiencies and 24% say they are changing their workforce strategy.

Commenting on the survey findings this morning, Dion Shango, CEO of PwC Africa, said there is a direct co-relation between the reduction in headcount and organisations shifting their focus towards ramping up their digital transformation initiatives.

“Many CEOs do see a direct co-relation between reducing headcounts and taking advantage of new digital tools and digital skills, as well as new ways of working. This is something that was also reflected in the 2020 survey, which really spoke to the significant investment in digital which companies were making in order to adopt a digital way of doing things, repurposing their business models in such a way that would leverage and embrace a new way of doing things in preparation for a much more digital economy,” explained Shango.

In light of the increase in inequality and the employment challenges on the African continent, plans to reduce staff members are disappointing and disheartening, added Shango.

Anticipated rebound

The most recent figures from Statistics SA’s Quarterly Labour Force Survey show the rate of unemployment in SA increased from 32.5% in the fourth quarter of 2020 to 32.6% in the first quarter of 2021 – its highest level in over a decade.

According to Shango, in Africa, economic and policy uncertainty, among other issues, have cast some doubt upon business leaders’ hopes for their own companies’ immediate growth prospects.

“Notwithstanding the level of growth they expect in the economy and in their revenues over the next 12 months, unfortunately African CEOs’ intentions regarding reducing headcounts reveal much more about their expectations over the next 12 months,” he continued.

“As we’ve seen last week with SA’s unemployment rate continuing to increase, this is clearly a concerning trend. The prospects of employment, particularly considering Africa has the youngest population in the world, and our ability to create work for this population is important.”

As business leaders adapt to the current circumstances and prepare for the anticipated rebound, a critical question will be: which management approaches should businesses retain from the rapid response mode most of them embraced during the COVID-19 crisis in 2020, he noted.

Taking a closer look at the impact of the pandemic across the various industries, PwC says organisations in the technology, healthcare and telecommunications industries were most confident about short-term growth.

Those in transportation, hospitality and leisure and the chemical industry indicated the least confidence, it adds.

“Despite the current uncertainty, many African business leaders have found that the COVID-19 pandemic has also unleashed extraordinary energy, creativity and resourcefulness within their organisations.

“We can expect to see a continuation of accelerated digitalisation brought to the fore by the pandemic, which promises productivity, data-driven insights and other business benefits, but at the same time increases the threat of cyber attacks and the spread of misinformation,” commented Shango.

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