The road to recovery

Mark Dixon, global CEO for workspace provider Regus, provides his projections for when the world will re-emerge from its current economic stupor.

Tags: DownturnRegusUnited Arab Emirates
  • E-Mail
The road to recovery DIXON: Firms that remain too passive risk being left behind by bolder competitors.
By  Mark Dixon Published  April 5, 2010 Arabian Computer News Logo

In the wake of a global economic crisis that has destroyed thousands of companies, business people around the world are asking the same question: when can we expect a recovery?

Indeed, signs of life have already begun to emerge in some countries, as consumer spending slowly returns to normal and investment markets ascend from the ashes. But while academics and politicians continue to debate the timing and substance of a recovery, perhaps the most reliable predictions might come from companies themselves. After all, the leaders on the front lines of business are in the best position to estimate when their own profits will return and growth will take hold.

This is the thinking behind Regus’ first BusinessTracker study, a survey of more than 11,000 business leaders in 13 countries. The study measures the expectations of businesses of all sizes for the upcoming year, throughout many of the world’s largest economies. The results reveal some important economic indicators that could help companies make shrewd business decisions in 2010.

At a high level, the survey results reflect what much of the world is likely feeling as the shocking headlines of the financial crisis become history. That is, the world economy is on its way to recovery, but still has far to go.

The general outlook for 2010 is largely positive. 65% of all respondents, regardless of their 2009 performance, are expecting their revenues to increase in the coming year. Smaller companies were generally more optimistic about their growth potential than large firms, which might underscore the importance of SMEs to the global recovery, and the need for governments to provide additional support in this sector.

As for exactly when an economic recovery would gain traction in their home countries, most respondents collectively predicted somewhere between June and August of 2010. On the positive end of the spectrum, Indian business expect a strong recovery as early as March. Notably, 85% of Indian companies with 1-49 employees expect their revenues to rise next year, which is 20% ahead of the international average. India’s optimism bodes well on an international level, as its overwhelming body of service-based industries involve off-shoring services to other geographies.

India’s bright sense of optimism notwithstanding, the survey results suggest that most firms worldwide aren’t expecting major economic improvements until mid-2010.

Generally, it appears that most firms would be well advised to step cautiously into the New Year, taking time to adjust to the new business realities spawned by the economic crisis. For example, tight credit conditions continue to restrict new spending, suggesting that an economic recovery will be based on actual profits improving, not leveraged growth.

This may take some time. And companies that invest too heavily in projects could meet with disappointment. Realistically, it seems the first half of 2010 will be devoted to rebuilding and running pilot exercises to test the waters of the new economy, before diving in completely later in the year.

On the other hand, firms that remain too passive risk being left behind by bolder competitors. As the balance of economic power in the world shifts east to India and China (which expects enormous GDP growth of 8% in 2010), companies everywhere must be prepared to act as opportunity ripples westward.

To be certain, this balancing act of remaining cautious but poised for action will be a significant challenge to companies still reeling from the shockwaves of 2008. And, as the survey confirmed, creating a more flexible, more agile organisation will be a common goal among most firms.

Specifically, reducing property management and workspace costs were a major point of emphasis for survey respondents. The majority believed that small and large businesses will be looking for flexible methods of virtual working over the next three years. Driven by ever-improving technology, the decentralised, distributed workforce model has been proven to lower real estate costs and improve productivity.

If a silver lining can be found in the dark cloud of the economic crisis, it could be that companies will enter the next decade leaner and prepared to weather the next storm.

Add a Comment

Your display name This field is mandatory

Your e-mail address This field is mandatory (Your e-mail address won't be published)

Security code