Generative AI Takes Center Stage for CEOs Amid Cautious Optimism, KPMG International’s annual CEO Outlook Survey Finds

Despite economic uncertainties, both Australian and global CEOs are increasingly prioritizing investments in generative AI (Gen AI), according to KPMG International’s annual CEO Outlook survey. The survey, which gathered insights from 1,325 CEOs across 11 major economies, found that 58% of Australian CEOs and 64% of global CEOs view Gen AI as a critical area for investment.

The report highlights that CEOs maintain confidence in their companies’ growth over the next three years, even in the face of broader economic concerns. Among Australian CEOs, 86% expressed optimism about their growth potential, with some predicting business expansions of up to 20%. However, 64% reported feeling heightened pressure compared to last year to ensure long-term success.

KPMG Australia’s CEO, Andrew Yates, underscored this commitment to AI, noting that most CEOs expect to see returns on their Gen AI investments within three to five years. Increased efficiency and productivity through task automation were cited as key benefits.

However, despite the enthusiasm for AI, only 42% of Australian CEOs and 35% of global CEOs feel their organizations’ data infrastructure is adequately prepared for the safe and effective integration of Gen AI. Additionally, ethical concerns remain prominent, with 60% of Australian and 63% of global CEOs expressing worries about the potential implications of AI implementation.

Interestingly, the survey found that CEOs do not foresee job losses as a result of Gen AI adoption. Instead, 72% of Australian and 76% of global CEOs expect the technology to enhance productivity without reducing staff numbers. Still, only 40% of Australian CEOs believe their employees currently possess the necessary skills to fully leverage Gen AI, prompting many to reconsider workforce training and development strategies.

Economic confidence remains robust, with 88% of Australian CEOs optimistic about the national economy—slightly higher than the 78% of global leaders who are confident in their own countries’ economic conditions. This positive sentiment extends to industry sectors as well, with 78% of Australian and 74% of global CEOs expressing optimism about their industries.

Workplace trends are also evolving. A significant 82% of Australian CEOs expect white-collar employees to return to traditional office settings within the next three years, up from 66% in the previous year. Only 27% anticipate hybrid roles, and none foresee a fully remote workforce. Furthermore, 78% of Australian CEOs are likely to reward employees who consistently work from the office.

Environmental, social, and governance (ESG) issues continue to gain importance, with 82% of Australian CEOs indicating they would be willing to divest profitable business segments if they risked damaging the company’s reputation—a significant jump from 54% the previous year. Additionally, 26% of Australian CEOs expressed concern that failure to meet ESG expectations could jeopardize their own job security.

In terms of sustainability, 70% of Australian CEOs are confident their companies will reach net zero emissions by 2030. However, challenges remain, particularly in decarbonizing supply chains and addressing the skills gap needed for implementation.

On the social responsibility front, 62% of Australian CEOs agreed that businesses are increasingly expected to lead on issues of inclusion, diversity, and equity as public trust in government declines. Many CEOs also see the development of local community skills as essential to ensuring a future talent pipeline.

In summary, the 2024 KPMG Global CEO Outlook paints a picture of cautious optimism. CEOs are balancing significant investments in technology, particularly Gen AI, with a strong focus on ESG and workforce development. While they face complex challenges, they remain hopeful about future growth and the broader economic landscape.

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