Family businesses proved resilient amidst the pandemic, with majority feeling their family values helped the business during this time
New Delhi, 28 April, 2021: According to PwC’s 10th Global Family Business Survey, Indian family businesses (FBs) have proved resilient, despite the ongoing pandemic. While the survey reveals that 52% of Indian FBs saw a decline in profits in the last year, only 30% had a need for additional capital during the year. Majority of FBs were optimistic on recovery with 88% expecting growth by 2022, although it is unclear whether the current environment and ongoing second COVID wave in India may dampen such optimism.
Looking ahead, key priorities for Indian FBs over the next two years include improving digital capabilities, expanding into new markets/client segments, introducing new products/services and rethinking/changing/adapting the business model.
The survey reveals that most Indian FBs feel they currently lack the requisite digital expertise and tools to maintain a competitive edge; only 26% claim to have strong digital capabilities, as against the global average of 38%. Additionally, only 15% of Indian FBs feel they have completed their digital journey, indicating that the vast majority still have a long way to go.
Issues relating to sustainability are lower down the priority order for India FBs, with only 42% having a developed and communicated sustainability strategy in place. This is surprising, given the strong CSR focus of Indian FBs and their contributions to local communities. Looking ahead, 68% of Indian FBs believe there is an opportunity to lead the way in sustainable business practices, as against 55% globally.
The survey also explores family cohesion and trust among Indian FBs. Majority of Indian FBs felt their family values helped the business during the COVID-19 pandemic, with the survey finding that Indian FBs tended to provide more staff, supplier and community support than the global average and also more likely to make some form of financial sacrifice. Yet, while the majority of Indian FBs are positive about the strength of leadership within the business and on levels of trust, communication and transparency, only 67% say there is family alignment in company direction. On governance, Indian FBs significantly trail behind global peers, with 55% having some form of governance in place and only 20% with a robust and documented succession plan (as against 79% and 30% respectively for global FBs).
NV Sivakumar, Partner and Leader, Entrepreneurial and Private Business, PwC India said: “While digital adoption has taken centerstage, more so during the COVID pandemic, most Indian family businesses still have a long way to go in their digital journey. Achieving strong digital capabilities is critical for these businesses to gain more agility, higher profitability and become fit for future. We are also seeing a lot of traction around ESG and sustainability. However, here too Indian family businesses have much to do. With their strong family values, as well as the trust and goodwill enjoyed in their communities, family businesses should reprioritise and take the lead in driving sustainable practices to make a more positive impact.”
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