CXOs Much Wanted; Demand Likely to Exceed Supply in ’24

Corporations Hiring More Chief Experience Officers (CXOs)

Analysis for Layman

The article reports that major Indian corporations across sectors plan to hire 20-25% more Chief Experience Officers (CXOs) – high ranking corporate executives like Chief Executive Officers (CEOs) and Chief Financial Officers (CFOs) – in 2024 amidst confidence in economic growth. Demand is outstripping supply of qualified candidates.

Corporate optimism and expansion planning is driving executive job searches despite recent hiring pullbacks for lower job levels. Industrial, digital, consumer, healthcare, manufacturing, and renewable energy sectors are particularly hungry for senior talent even after some recent downsizing. Independent board director searches are also up.

The hiring concentration on upper management comes after over-recruitment for entry and middle levels in 2021, as companies now right-size those positions. But corporations need CXO leaders to guide strategy for their next stages of growth. The momentum has built over recent months as executives with multiple job offers can be selective.

Underlying this is renewed faith in India’s economic trajectory and global competitiveness, coined a rise in the “country confidence index.” This comes despite some global instability. The growth ahead is expected to be inclusive of smaller cities and rural areas – “India 2” or “Bharat” – with more domestic investments building local manufacturing and service capacities.

Impact on Retail Investors

For retail investors, the intense competition among major corporations to hire proven CXO leadership provides useful signals around optimistic business outlooks and growth planning, despite recent hiring cutbacks elsewhere.

It points to corporate bets on pending economic expansions, which if realized can drive gains across stocks. The ability to attract top tier global executive talent also showcases India’s rising stature as a priority growth market. That spotlights additional post-pandemic stability not reliant only on export demand.

As such, equity investors may wish to evaluate stocks within the noted high-CXO-demand sectors like industrials, healthcare, manufacturing, and renewable energy. Some names to analyze include Larsen & Toubro, Sun Pharma, Bharat Forge, and Greenko Energy. The hiring also underscores domestic economic momentum for 2024, which favors stocks geared to Indian consumer growth including Asian Paints, Pidilite Industries, or Dabur.

However, the difficulty meeting CXO talent demand suggests that the limited executive supply could increase salary costs as companies compete. This may pressure profit margins in the nearer term. And if global instability later impacts India’s optimism, expensive executive team expansion could become an excess cost burden. So the hiring spikes alone should not trigger hurried buying decisions.

Impact on Industries

The industries expecting strongest CXO talent demand for 2024 span conventional sectors like industrial, manufacturing, and healthcare to emerging digital and renewable energy fields.

For industrial firms including engineering giants Larsen & Toubro, executive hiring aims to lead higher infrastructure building aligned to government programs and urbanization. Renewed industrial CAPEX cycles also require management for new factories and facilities expansion. Healthcare players like Sun Pharma and medical equipment makers similarly need CXOs to guide fresh investments and navigate policy impacts from expanding Ayushman Bharat health coverage.

Meanwhile, India’s pursuit of electric mobility and net-zero aligned businesses is driving major renewable energy hiring. Solar and wind firms like ReNew Power or Greenko Energy require CXO leadership to scale capacities but also steer entry into emerging areas like green hydrogen and energy storage.

Likewise, domestic digitalization pushes by government and startups focused on financial services, retail e-commerce, agritech and other IT-led areas is spurring CXO demand. Proven executive teams are vital for digital adoption strategy and execution.

Long Term Benefits

The broader confidence fueling major corporate CXO hiring initiatives signals optimism for India ascending as a priority global growth market long term. CXO supply shortages may pose some wage inflation. But the talent attraction still showcases market maturity, and their leadership should better enable domestic investment cycles.

If economic growth projections are realized, newly hired executive teams will play a key role guiding corporate strategy, governance and operational excellence to unlock value across sectors. Their input can elevate capital efficiency, drive localization and technological innovations, and spearhead M&A. Renewables hiring specifically shows India positioning for energy security and the climate change transition.

Spans of robust growth following past hiring surges also showcase the potential. For example, India added over 200 new unicorns since 2021 amidst rapid digital adoption. With 80% less penetration than the US, the headroom remains substantial. Many of those unicorns attracted top Silicon Valley executive talent back to India.

The incoming CXO cohorts can enable similar leaps across infrastructure, manufacturing, automation and sustainability. Their leadership should also boost output quality. New factories shepherded by proven CXOs can positively impact made in India branding.

While near term margin pressures from talent competition exists, the CXO influx on balance signals optimism in multi-year growth runways. It validates the promise global investors see in domestic potential from India’s demographics, consumer base, and rising international ambitions across sectors.

Short Term Benefits

In the nearer term horizon into 2024, the intense executive demand redoubles optimistic business outlooks centered on India, despite some global instability. As corporations expedite CXO hiring, it further motivates domestic investment planning and growth mandates.

The incoming CXOs themselves may drive some incremental stock gains if announced as new executive appointments. Their selection signals managers’ confidence meeting growth targets, which can lift investor sentiment.

Moreover, the new CXO cohort overall combines rare executive experience both guiding western firms and enterprises across India’s uniqueness. They understand how to tailor global best practices locally. That rare blend can enable quicker growth execution and risk mitigation.

An influx of proven CXOs also brings coveted experience managing previous market cycles and uncertainties. Their crisis leadership can prove vital if global headwinds later impact India.

Short term downside risks span potential wage inflation from scarce executive talent supply, plus any optimism curbing should global instability hit domestic outlooks. As profit margin pressures build from leadership salary spikes, stock corrections could follow.

And if India’s growth pace fails to meet corporate assumptions underpinning CXO investments, excess executive bloat could require rebalancing. But on balance, the CXO demand surge signals conviction that Indian economic expansions forthcoming can support the leadership talent attraction.

Potential Gains and Losses from CXO Demand Surge in 2024

Based on the provided information, here’s an analysis of companies that could gain or lose from the anticipated increase in CXO demand in 2024:

Indian Companies Gaining:

1. Executive Search Firms:
   • Companies like Adecco India, Quintec, and TeamLease Services could see a significant boost in revenue due to increased demand for their CXO placement services.
   • Market sentiment is likely to be positive, potentially driving share price increases.
2. Leadership Training & Development Companies:
   • Firms like NIIT Ltd., AON Hewitt, and People Matters will have increased opportunities to train and upskill existing executives for CXO roles, impacting their top lines.
   • Positive market sentiment towards such companies is expected.
3. Companies in High-Demand Sectors:
   • Businesses in renewable energy (Tata Power, Adani Green Energy), green hydrogen (Reliance Industries, Adani Green Hydrogen), pharma (Cipla, Dr. Reddy’s), and electronic manufacturing (Dixon Technologies, Salcomp) will benefit from the need for experienced leadership due to their rapid growth.
   • Increased investor interest and potential share price appreciation is likely.
4. Manufacturing and Services Companies in Tier 2 and 3 Cities:
   • With increased focus on “India 2,” companies like Godrej Agrovet (Maharashtra), MRF Ltd. (Tamil Nadu), and Infosys (Pune) could benefit from attracting CXO talent for expansion.
   • Positive sentiment towards these regionally focused companies is anticipated.
5. Independent Directors:
   • Individuals with relevant expertise and experience will see heightened demand on boards, potentially benefiting prominent independent directors like Ajay Piramal, Kiran Mazumdar-Shaw, and Naina Lal Kidwai.
   • Increased visibility and potential board appointments could positively impact their personal brand value.

Indian Companies Potentially Losing:

1. Tech Services Companies:
   • With demand already saturated in this sector, companies like Infosys, TCS, and Wipro might face competition for senior talent from other industries, potentially impacting their recruitment efforts.
   • Investor concerns about talent retention and slower growth could lead to market sentiment adjustments.
2. Entry-Level and Mid-Level Recruiters:
   • Companies focused on these segments, like Naukri.com and Monster India, might see slower growth due to the focus on CXO hiring.
   • Market sentiment might reflect concerns about their business outlook.
3. Companies with Recent Downsizing:
   • Firms that underwent retrenchment might struggle to attract top CXO talent due to reputational concerns, impacting their ability to achieve growth targets.
   • Investor skepticism about their leadership decisions could negatively impact market sentiment.

Global Companies Gaining:

1. Multinational Corporations in India:
   • Foreign companies like Nestle, Samsung, and Unilever operating in India might benefit from the availability of experienced CXO talent for their local operations.
   • Positive sentiment towards their potential growth in the Indian market is likely.
2. Global Executive Search Firms:
   • Companies like Russell Reynolds Associates and Spencer Stuart with Indian operations could see increased demand for their CXO expertise.
   • Positive market sentiment is expected as they capitalize on this trend.
3. Global Consulting Firms:
   • Firms like McKinsey & Company and Boston Consulting Group might see increased demand for their leadership advisory and CXO coaching services.
   • Positive market sentiment towards their expertise in navigating organizational growth is expected.

Global Companies Potentially Losing:

1. Global Companies with Limited India Presence:
   • Firms with minimal operations in India might struggle to compete for top CXO talent against established local players.
   • Investor concerns about their ability to attract skilled leadership could negatively impact market sentiment.
2. Global CXO Search Firms Not Focused on India:
   • Companies without dedicated India expertise might miss out on this lucrative market opportunity.
   • Investor concerns about their regional focus could negatively impact market sentiment.

Please note: This analysis is based on the provided information and market trends. Actual outcomes may differ due to unforeseen circumstances and individual company performance.

I hope this analysis provides a clear and concise overview of potential gains and losses for different companies due to the anticipated CXO demand surge in 2024.

Citation: ET Bureau. “CXOs Much Wanted; Demand Likely to Exceed Supply in ’24.” The Economic Times, 23 Dec.