Pandemic-related challenges persist
Global GDP is expected to lift 4.2% in 2021, according to OEDC, boosted by COVID-19 vaccination campaigns, concerted health policies and government financial support. However, Accenture’s survey of 4,050 C-level executives in large companies worldwide reveals concern over the pace of the economic recovery.
Indeed, while APAC respondents anticipate a relatively quick rebound, executives in Europe and North America foresee a U-curve recovery that may take up to 18 months. They expressed mixed levels of confidence in their ability to meet growth targets.
In Europe, only four industries anticipate being back on their pre-COVID-19 profitable growth trend within 12 months: Health, Pharmaceuticals, Software & Platforms and Communication, Media & Entertainment. Further, many European C-levels believe their organisations lost ground against their APAC peers between May 2020 and November 2020.
Performance trajectories diverge; clear winners emerge
The COVID-19 crisis has resulted in a divergence in growth and expected growth: Some companies saw their revenues plummet and don't expect a return to growth even in 12 months’ time, while others expect to sustain and build.
Just a third (32%) of European respondents expect to deliver profitable growth in the next phase of recovery, on pace with North America but behind APAC (41%). These companies are “Tomorrow’s Leaders.”1 Some gained an advantage as a result of their industry—an “industry boost”—but we found companies positioned to be leaders in all sectors.
At the opposite end of the spectrum, 19% of European companies in our study are currently “Falling Angels,” struggling to recover from damage to their business suffered as a result of the crisis. Of the three regions, Europe has the largest share of Falling Angels.
Companies with the strongest potential for profitable future growth are the ones that have been able to maintain agility over the course of the pandemic, even improving in some dimensions, such as speed of decision-making.
European businesses are perfectly positioned
Businesses across Europe are well-positioned to join the ranks of the Twin Transformers, leading the way by linking digital and sustainable evolutions:
- European companies already prioritise sustainability and tech in their strategies for short-term rebound and mid-term competitiveness.
- Approaches to technology and sustainability are top of mind for both European executives and investors. In 2020, 47% of European companies within the 2,000 largest companies worldwide discussed sustainability-related topics in earnings calls, up from 27% in 2018. In the same year, 53% of those companies also discussed technology-related topics in earnings calls.
- On sustainability, European companies have been ahead of the curve in taking action to implement energy efficiency measures, including in the IT space and applying sustainability criteria to sourcing.
- On technology adoption, Europe has lagged behind, but is closing the gap. Today we see that close to 40% of European respondents are making large investments in AI and Cloud technologies.