Indian CEOs Embrace AI to Navigate Economic Challenges and Drive Growth

Amid global economic uncertainty and geopolitical tensions, Indian CEOs are intensifying their focus on technology transformation, with a particular emphasis on artificial intelligence (AI) to enhance productivity and fuel business growth, according to the latest insights from the EY CEO Outlook Pulse Survey specific to India.

A striking 80% of Indian CEOs surveyed are optimistic about their companies’ revenue prospects, with an even higher 88% expressing confidence in profitability. This positive outlook is also reflected in the mergers and acquisitions (M&A) landscape, where an overwhelming 96% of respondents are actively considering transactions in the upcoming year, primarily through initial public offerings (IPOs).

The survey identified the primary strategic drivers for acquisitions as acquiring technology and innovative startups (44%), expanding market share (36%), adapting to changing customer behavior (32%), and securing supply chains (32%).

Amit Khandelwal, Managing Partner of Strategy and Transactions at EY India, noted that there is strong enthusiasm among CEOs and investors in the M&A arena. They are particularly motivated by technology acquisition, market expansion, changing consumer behaviors, and securing supply chains. However, Khandelwal also pointed out persistent challenges related to shareholder engagement and alternative deal structures.

Indian CEOs are prioritizing technology investments, especially in AI, while remaining cautious about data security issues. The survey found that 70% of CEOs are directing funds towards technology, including AI, to boost growth and productivity over the next year—a figure significantly higher than the global average of 47%. At the same time, strengthening data management and cybersecurity (56%) and optimizing costs (50%) are also key strategic priorities. Acquiring technology and innovative startups (44%) remains a top driver for M&A activities.

Despite growing recognition of sustainability’s importance, with 60% of CEOs acknowledging its increasing relevance, sustainability is slipping down the priority list for about 16% of CEOs due to financial constraints and shifting boardroom focus. This trend is more pronounced among global CEOs, with 26% deprioritizing sustainability. The survey revealed a dichotomy: while 44% of CEOs see sustainability impacting their supply chains, 40% engage in ‘Green hushing’ to avoid accusations of ‘Greenwashing.’ Additionally, 42% find it challenging to present a strong financial case for sustainability investments.

Mahesh Makhija, EY India’s Technology Consulting Leader, emphasized that the commitment to tech investments is a strategic move towards future readiness. He highlighted that a majority of CEOs are aligning their organizations with an AI-focused strategy for innovation and productivity. However, they must balance this with efforts to enhance data integrity and cybersecurity.

To advance the sustainability agenda, corporate India advocates for technology incentives, including AI, as well as subsidies and tax breaks for green technology investments, supported by government initiatives for sustainable infrastructure projects.

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