Amidst lingering economic and geopolitical uncertainty, finance chiefs in the United States have prioritized cost-cutting measures, elevating it to their top concern, as revealed by a recent survey conducted by U.S. Bank. This survey, encompassing responses from 2,030 senior finance leaders, highlighted that minimizing expenses within the finance function and throughout the organization are the primary areas of focus for CFOs.
The impetus behind this shift in priorities stems from the challenging environment CFOs navigate, characterized by elevated inflation, rising interest rates, political volatility both domestically and internationally, unpredictable short-term economic conditions, and the immense pressure to make strategic technology investments to maintain competitiveness. In the face of these headwinds, reducing costs has emerged as the paramount objective.
CFOs are cognizant of the risks associated with technology advancements, with nearly half of respondents emphasizing the prioritization of technology investments over workforce reductions as the primary expense-cutting solution. Artificial intelligence (AI) and data analytics have emerged as the top investment priorities within the finance function, trailing only data analytics in terms of importance. Layoffs are generally regarded as a last resort when it comes to expense reduction.
A separate Coupa survey conducted earlier this month revealed that although 45% of CFOs intend to invest in AI to drive growth in the current year, 89% harbor doubts about their organization’s ability to effectively implement an AI strategy. A substantial proportion of CFOs, two in five, identified keeping pace with AI advancements as their most pressing challenge, given the rapid pace of innovation that outstrips human capabilities and conventional process efficiency, according to Coupa’s Strategic CFO survey.
In a letter to shareholders, Amazon CEO Andy Jassy emphasized the e-commerce behemoth’s focus on cost-cutting initiatives while extolling the potential of AI, stating that the company has identified numerous areas where it believes further cost reductions can be achieved while enhancing customer service. Within the technology industry, Meta Platforms signaled that it would remain in an investment cycle for the foreseeable future as the AI race intensifies. While such a strategy is anticipated to inflate costs in the short term, Wall Street analysts believe that AI spending could yield substantial long-term benefits. Andrew Boone of JMP Securities expressed optimism that Meta is well-positioned to capitalize on AI’s potential for increased engagement and advertising effectiveness.
In the financial sector, several global banks, including Deutsche Bank, Morgan Stanley, HSBC Holdings, and UBS Group, have implemented headcount reductions in Asia-based wealth management divisions due to diminished dealmaking activity and sluggish market conditions in China, which have hindered business prospects.
