Horváth: The workforce will grow in Eastern Europe over the next five years

• Job growth will be seen in North America and Asia, remaining steady in Western Europe, except for Germany – where a decline is expected.
• While companies in the manufacturing industry aim to achieve “China speed”, a rapidity similar to Chinese firms in implementing product innovations, in the field of services they are counting on a “speed increase” at the level of operations, sales and support functions.

Around 60% of executives leading leading companies around the world expect employment growth in Eastern Europe to be moderate (48%) or strong (12%) over the next five years, according to the – the fifth edition of the “CxO Priorities 2024” study, carried out by the global management consulting firm, Horváth.

Similar increases will occur in North America and Asia, while jobs will remain flat in Western and Southern Europe, but fall in Germany. Germany’s situation is explained by the fact that the capital investments (CAPEX) of companies in this country will go to foreign markets in proportion to 61%, most of which to North America (16%), China (11%), Europe Western (10%), Eastern Europe (9%).

But according to the Horváth study – “Rebalance your Organization towards a Digital, Deglobalized and Dynamic World” (Rebalance your organization for a digital, deglobalized and dynamic world) – the concerns of German companies are also shared by those in the rest of the world. After, from 2020 onwards, the business environment has been subjected to several successive or overlapping crises, companies see 2024 as a “transitional” year, during which revenue growth will be based mainly not on price increases, but on increasing the volumes sold, consider 66.5% of the executives in the manufacturing industry and 55.7% of those in charge of companies in the service industry.

Improving the cost and profit structure has become the top management priority for manufacturing companies in 2024 amid rising raw material prices, rising inventories and supply chain disruptions.

In order to achieve their growth objectives, attracting new customers by increasing the current market share represents the most important solution (47% and 32%) that companies turn to, followed by the development of new products and services for existing customers (48% respectively 28%), respectively entering new markets (20% respectively 22%).

In terms of cost optimization, the Horváth study revealed the top four approaches used by executives:

• reducing direct production costs (including energy);
• reducing general and administrative costs;
• reducing material costs;
• reconfiguring the product and/or service portfolio.

To increase competitiveness, executives find it very important

• to focus on the needs of clients (client centricity) – 61%;
• operational excellence – 54%; and
• speed and agility – 40%.

Regarding the speed of implementation of optimizations in different business areas, the Horváth team identified a clear differentiation between the manufacturing and service industries. In the case of the first one, executives aim to reach “China speed” – a speed similar to that of Chinese companies in Research and Development (R&D) processes. At the same time, service companies are looking to get “up to speed” in operations, sales and support functions.

“The 2024 edition of the Horváth study shows that the business environment is navigating a complex economic landscape, where the ability to manage costs and increase profitability is essential. By focusing on structural adjustments and operational efficiencies, companies can better meet current challenges and position themselves for future growth, but cost reduction is not enough to increase competitiveness. There is a need for the development of structures that allow regional entities to act more autonomously, and for more decentralized, agile and collaborative cooperation, less hierarchical and controlled from the headquarters, in order to make the most of the opportunities brought by each individual market” , said Maria Boldor, Managing Director, Horváth Romania.

The “CxO Priorities 2024” study was carried out by surveying over 770 executives (of which over 40% at CEO level), from 29 countries on all continents, representing a total of 14 industries, manufacturing (defense, car production , construction, energy, FMCG, mining and others) or from the sphere of services (insurance and financial services, banks, telecommunications, transport and logistics, etc.).

A summary of the study “CxO Priorities 2024: Rebalance your Organization towards a Digital, Deglobalized and Dynamic World” is available at this link.