Talent acquisition a bigger business risk than recession

The threat of a recession isn't one of the top problems facing businesses. They are talent acquisition, retention and cybersecurity.

Though 60% of the 722 U.S. executives PwC surveyed earlier this month said a recession is likely, only 30% see it as a serious risk.

But this upbeat economic outlook finding has dark clouds.

About 50% of respondents are reducing overall head count. Businesses are turning to automation and digitalization of business processes, and creating a talent acquisition strategy to find people with skills to automate and digitize business processes. Employers seek people with a "combination of deep functional knowledge and technology know-how," PwC said.

But even though half of the survey respondents are planning head count reductions, 83% said they "are focusing the business strategy on growth" -- except for office space. The shift to hybrid and remote work reduces the need for real estate.

The PwC findings seem at odds with U.S. Labor Department data, which reported a payroll growth of 528,000 jobs in July and a falling unemployment rate at 3.5%. Some 10 million job openings also make talent acquisition difficult for many businesses.

While hiring remains strong, some businesses are laying off employees or freezing hiring.

PwC officials acknowledge a "dichotomy" in the labor market data and PwC's survey. But the response to the labor market imbalances, such as the high number of job openings, is helping to prompt businesses to redesign work and supply processes, for instance, around automation and self-service, said Bhushan Sethi, joint global leader of people and organization at PwC.

"That talent is going to help them implement new cloud technology, driving more automation," Sethi said.

More than half of the executives who responded to the PwC survey believe "that digital transformation is one of the areas that they're looking to increase their investments," said Kathryn Kaminsky, vice chair and trust solutions co-leader at PwC. "And that's around getting the right talent to do that."

PwC surveyed CFOs, chief HR officers, risk managers, CIOs and chief information security officers, among others, 63% of whom are at Fortune 1000 companies.

Talent acquisition and retention, in this survey, was almost tied with the top concern, cybersecurity.

Sean Joyce, global cybersecurity and privacy leader at PwC, said cybersecurity concerns center on geopolitical issues -- namely the Russian war on Ukraine and growing U.S. tensions with China.

"It is the first time we have seen overt cyberwarfare," Joyce said about the Russian cyber attacks. It is also the first time cybersecurity was ranked first in this PwC survey series.

About half of the survey respondents plan to increase cybersecurity investments over the next year, PwC reported.