Industry COOs Expect A Better Year: Survey

? Sixty percent of financial services COOs are more focused on long-term business strategies, compared to 47 percent of all industries surveyed.

? Sixty-three percent offinancial services COOs surveyed are concerned about the economy in their respective countries.

? Fifty-five percent of financial services COOs say the economy has worsened in the last 12 months, and 55 percent believe it will remain the same in the next 12 months.

? Thirty-four percent of financial services COOs said outsourcing will play a major role in achieving their business goals, compared to 28 percent of all COOs surveyed. Over two-thirds of these financial services COOs plan to use outsourcing primarily for back-office functions.

Deloitte said the survey contacted more than 600 chief operating officers across a range of industries in 16 countries worldwide.

In the overall survey, 62 percent of COOs said they expect their companies to record improved business results in 2004. Compared with other regions of the world, U.S. COOs are most optimistic, with four-out-of-five (79 percent) anticipating the overall economy to advance over the next year.

The poll also found that COOs, generally the number two post in most corporations, consider generating revenues to be as critical to success as trimming costs has been for the past four years.

Additionally, less than 10 percent said they expect their companies' results to worsen next year, and 30 percent foresee little change in performance.

When asked about their country's economy, COOs in the United States and the United Kingdom were generally much more optimistic about the business outlook in 2004 than the state of the economy when they were surveyed.

"The survey certainly suggests that most COOs are confident about the future," said James H. Quigley, U.S. chief executive officer of Deloitte. "It looks as if the days of persistent layoffs may be ebbing as revenue expansion again becomes a top priority in corporate America."

Executives polled listed shareholder return lowest as a key objective, while customer loyalty ranked highest. And from a business perspective, mergers and acquisitions ranked lowest as the best means of increasing revenues.

"However, our analysis shows that better-performing companies in the United States and the United Kingdom are more likely to rate shareholder returns as an important objective for their firm," noted Mr. Quigley. "We, at Deloitte, have observed often that the diversity and complexity of operational initiatives has led some companies to lose focus on the ultimate goal of generating shareholder value."

The survey also found that two-thirds of COOs think that corporate governance has changed for the better in the past year as U.S. lawmakers and regulators have moved to deal with the recent global business scandals. Only 26 percent of the COOs think it has been more difficult to manage their businesses post-Enron.

COOs said they will continue to outsource, and more than half reported that outsourcing has played a major role in helping their organizations achieve their goals. Meanwhile, nearly half of executives said a significant portion of their firm's outsourcing represents market-facing activities in addition to the more traditional back-office activities.

When asked if they see "entry into new geographic markets" as a great source of revenue growth in the next two years, 46 percent of U.S. executives answered positive, compared to 60 percent of COOs in Europe.

The survey respondents, Deloitte said, represent a broad range of industries, including financial services, retail, manufacturing, health care/pharmaceutical, energy/utilities and telecommunications.

Thirty percent of the executives represent companies with annual revenues of more than $1 billion.

Research International conducted the survey this summer on behalf of Deloitte.

Among industries, financial-services COOs were found to worry more about the economy than their counterparts in other industries, according to Deloitte.

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