Skills gap a top concern for 60% of businesses: Capgemini report

Business leaders are starting 2024 with an increased level of optimism about their organization’s future growth compared to 12 months ago.

Scarcity of talent with the right skills ranks among the top business risks across the world for nearly six in 10 organisations (up from a third last year), according to a report by IT major Capgemini.

The Capgemini Research Institute’s ‘Embracing a brighter future: Investment Priorities for 2024’ report, explored the investment plans of 2,000 business leaders globally for the next 12-18 months and found that as organizations plan and implement their “return-to-office” policies, a quarter also plan to increase investments in office space, up from only four percent last year.

However, organizations also believe that flexible and hybrid work engagements are here to stay.

Business leaders are starting 2024 with an increased level of optimism about their organization’s future growth compared to 12 months ago. Fifty six percent of business leaders retain confidence in their organisation’s future growth despite current macroeconomic headwinds, up from 42 percent, 12 months ago. However, less than a third of them are optimistic about the global operating environment.

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As business leaders increasingly realise the power of artificial intelligence (AI) and generative AI to drive innovation and unlock revenue growth, 88 percent plan to focus on that technology. Business leaders expect that critical decision-making will be assisted by AI five years from now. The life sciences industry appears to be leading the way, with nearly half of critica decision-making expected to be supported by AI in five years.

However, a majority of business leaders across sectors also emphasise that human judgement is more critical than ever in an AI-driven world.

Meanwhile, 61 percent of business leaders now consider cybersecurity threats a leading risk to business growth – up considerably from 39 percent in 2023.

As the business case for sustainability becomes clear, most organizations now plan to increase investment. Nearly half of global business leaders expect climate change to be the biggest driver of operational disruption over the next decade. With this in mind, business leaders say that a lack of sustainable practices and processes will pose a long-term existential risk for their organisations.

The report said that 57 percent of business leaders said that they intend to increase their investment in clean tech in the US over the next 2-3 years due to the Inflation Reduction Act (IRA). The same proportion plans to increase their investment in EU cleantech as a direct result of the Green Deal Industrial Plan.

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Whilst business leaders are optimistic as to their organization’s future growth prospects, this comes with an increasing realization of the challenges brought about by environmental constraints. Two-thirds of business leaders say that the relentless pursuit of growth is incompatible with addressing the climate and ecological crisis.

On a more macroeconomic level, 38 percent of them acknowledge that we are likely to enter an era where there will be no growth due to the need for humanity to stay within planetary boundaries.

The impact of COVID-19 and the subsequent economic lockdowns raised awareness of the vulnerability of the global supply chains that international business has long relied upon. In the last year, business leaders have looked to rehaul and redesign the complexion of their global supply chains, aimed at minimizing the risk of major disruption.

The learnings taken from COVID lockdowns have driven an increase in nearshoring and friend-shoring solutions for procurement, reducing exposure to macroeconomic and logistical turbulence. Just under half (45 percent) of business leaders say that a significant proportion of their procurement will be friend-shored in the future, and 49 percent state that they are investing in other emerging economies to reduce reliance on China.

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“It is good news that business leaders are increasing investments in a wide array of critical business areas from customer experience and innovation to talent and supply chains, and perhaps even more importantly sustainability. We have only scratched the surface of what digital tools and technologies, in particular AI, can achieve to reach these business objectives,” said Aiman Ezzat, Chief Executive Officer at Capgemini.

For this report, the Capgemini Research Institute surveyed 2,000 respondents from firms with more than $1 billion in annual revenue across 10 industries and 15 countries (US, UK, France, Germany, China, Japan, Netherlands, Italy, Canada, Brazil, Spain, India, Australia, Sweden and Singapore) in November 2023. The respondents were at the director level or above, spanning various functional areas, including General Management, Finance and Risk, IT/ Technology, Supply Chain, Sustainability, Operations, and Human Resources.

The executives who participated in the survey were responsible for/highly aware of their organisations' investment plans and priorities across all functional areas.