Dec 2019 Interview with Mr. Dimitris Koutsopoulos, CEO, Deloitte Greece
One year on from Greece’s exit of the bailout program, full capital controls have been lifted, the economy continues to gain momentum and confidence is returning. How would you describe the current macro-economic climate in Greece? Is Greece fully back on its feet?
Following the political change and the immediate business and investment friendly measures that have been taken, the overall local economic climate has notably changed to the better and the new government seems determined to expedite the much delayed privatization program and started relaxing the draconian (for honest tax payers) and business hostile taxation regime. However, there are several fundamental and painful structural reforms that have to be delivered in order for Greece to fully develop to an investment attractive destination.
How has the perception of Greece as investment destination by the international business community evolved since the election of the new Government? What further reforms and changes are needed to restore confidence and accelerate investment in the country? Insights into Deloitte’s‘investment acceleration toolkit’.
As explained above the new government has demonstrated a business friendly policy intention that has improved the economic climate. However, structural reforms still pending involve the fundamental restructuring of the public administration at large including all types of governmental agencies and state controlled entities and, therefrom, the drastic reduction of bureaucracy, the stabilization of a competitive investment friendly taxation system, the critical improvement of the judicial system, the deep reform in the educational system, the opening of closed markets and professions, the increase of public spending in innovation, technology and digitalization, the further liberation of the labor system, the restoration of the struggling banking system to be able to provide credit in the market etc.
Deloitte’s‘investment acceleration toolkit’: investment reforms targeting bureaucracy, administrative disputes resolution, facilities licensing, taxation encouraging investments, innovation and collaborative schemes, special reforms leveraging digital transformation and I4.0, cycle economy
How has the banking sector transformed and reinvented itself during the challenging economic crisis that saw the Greek economy contract by 25%? What lessons have been learned? What are the sector’s prospects going forward, and the outlook for 2020?
The banking system still struggles with the management of NPLs and NPEs and cannot yet cope with fulfilling its principal mission to provide fresh credit to the market at a competitive cost. A lot of work has still to be done by the banks to deal with business disrupting emerging alternative financial services providers like fintech etc.
Technology, R&D and innovation are considered as multipliers for the economy. How would you assess Greece’s technological and digital transformation? How is the country navigating through this age of globalization and disruptions?
In this era of exponential change and digital disruption, Greece needs to leapfrog ahead in terms of our digital maturity. Unfortunately the financial crisis and the inefficiencies of the economic model that brought us to that situation have left their mark on the Country also on that front. According to the Digital Economy and Society Index (DESI) published by the European Commission, Greece is ranked 26th among the 28 EU countries – up from last place in 2018 – and according to the SEV Digital Maturity Index we recently developed as Deloitte on behalf of SEV we rank last among all EU countries. What our research showed is that although investments in ICT solutions and infrastructure have been close or higher than the EU average in the last years, both in the private (11th out of 17 countries) and public sector (7th out of 17 EU countries), Greece ranks low in almost all dimension that constitute the digital maturity of a country (ICT sector, connectivity infrastructure and services, digital skills, digital government, technology penetration to businesses and society, government vision and policies that enable digital transformation).
Nevertheless, we can be optimistic that Greece’s performance can improve; we can see strong efforts for a more digital public administration and simplified processes; large projects of connectivity infrastructure and the adoption of 5G are expected to mature within the next years and there is a strong interest and willingness form Greek businesses of all sectors and sizes to move faster towards Industry 4.0 and the new digital era.
But what is most important is the abundant talent we have in Greece. Our young, educated and ambitious people that form the most precious competitive advantage of our country and can bring our country to the new digital age.
AI, robotics, blockchain, data management are transforming organizations. How is Greece embracing these global trends? How would you evaluate the impact and benefits locally?How is the economy adapting, becoming more extravert and globally competitive? Insights into the Deloitte Alexander Competence Center in Thessaloniki.
Organizations have started adapting to these technologies a few years now. Greek corporations are in the beginning of this journey since we just overcame the financial crisis and a lot of investments have started accumulating towards these trends. Specifically data management, visualization and machine learning projects are being built in-house, especially in bigger organizations, making data-driven decisions the cornerstone of their strategy, from Marketing and Sales to IT and Operations. It is also a pleasant surprise that we have seen several companies having their Analytics departments with their own PnL and accountable for their business recommendations (e.g. forecasts and other ad-hoc analyses), whereas in the past such technologies were being used only for consultation to other cross-functional teams, having more of a supportive role.
The impact of these trends to the local economy is of extreme importance and has to do with the creation of more jobs, with the mitigation of brain drain since ‘trendy’ and ‘eye-catching’ jobs-postings are now the norm, and with the deployment of growth strategies and cost reduction initiatives. Automation of low-value processes with RPAs is now the baseline that leads to FTEs reduction and to people’s efficiency increase, customer and marketing analytics lead to more accurate targeting and hence to higher ROIs, and data management with advanced visualization tools result in better and more timely decisions and lead to data democratization since access to data is nowadays more relaxed.
All the abovementioned lead to the establishment of Greece to the cluster of countries who have started adapting to Industry 4.0 age, having companies create better products, offer better services and start supporting a successful nascent startup ecosystem.
Thanks to our deep knowledge and understanding of these trends across our businesses we manage to extend our footprint in Thessaloniki through DACC (Deloitte Alexander Competence Center in Thessaloniki) where we are able to serve clients all over Europe to address I4.0 challenges.
The last years have seen a consolidation in the Greek startup scene with new successes. What needs to be done now to further stimulate entrepreneurship and start-up development in the country? How could this help and reverse the brain drain?
Ten years ago start-up success stories were nonexistent and the Greek field of startups begun to develop only when the financial crisis “hit” the Greek economy and urged businesses to turn to alternative solutions. However now, the Greek Start up scene seems to be entering the maturity stage with all the more investors opting to support innovation “made in Greece”. A fact to note is that the number of companies that required fund evaluation within the period of JEREMIE operation, is equal to the number of companies examined by EquiFund (a platform established by the European Investment Fund that plans to provide Greek startups with up to €1 billion for early-stage and growth-stage funding by 2022) in the last ten months.
Examples of the most successful Greek Startups that have gained international recognition and funding are: Persado (€83,6 mil.), Blueground (€78 mil.), Workable (€73,8 mil.), Hellas Direct (€23,8 mil.), Softomotive (€21,8 mil.) and Viva Wallet amongst others.
As capital is becoming more readily available and more of a commodity, the establishment of a cohesive and sustainable startup ecosystem requires much more; and Startups, especially in their earliest stages, require a friendly business environment, stable market conditions, access to the “right” talent, operational support and guidance, as well as business mentoring.
Greece can and should aspire to become the preferred startup destination and innovation hub in the SE Europe and in order to do so, the Greek state, large corporations and Greek academia, should form a solid alliance in order to create the necessary infrastructure and nourish the Greek Startup ecosystem, now that for the first time all the odds are favorable.
- The Greek State should establish a “National Strategy”, incorporating Startup-friendly tax policies and regulations that are fundamental to generating economic growth and driving greater competitiveness.
- Moreover, it should improve the Intellectual Property support network so that it can help startups better secure their IP, but also allow universities to fully engage in the technology transfer process.
- Established corporates are expected to play an important role in nurturing the startup ecosystem by working together on accelerating innovation, partnering in product development, and funding support or mentoring programs.
- Academia should develop a closer link with businesses and enhance / guarantee the access to high caliber, specialized talent, for example through the “subsidy” of specialized degrees adapted to upcoming digital technologies, integrating courses to meet high market demand skills (eg specific programming languages or software packages) and the establishment of the mandatory ‘apprenticeship’ in corporations for ICT graduates.
- Enhancement of the higher education curriculum with a focus on skills such as entrepreneurship and initiative, leadership, communication skills, etc.
All of the above, together with two solid initiatives that are already in place, «Brain Regain» and «Knowledge & Cooperation Bridges» are expected to have an adverse effect on the major problem that the Greek economy is facing since the economic crisis started; that of more than 500.000 young, educated and high potential individuals leaving the country, in search of a better future. If we manage to make Greece a Startup destination and an Innovation Hub, then the easiest way for young Greeks to find a job will be to establish a startup company. And not only that, but capitalizing upon the competitive advantages of Greece as a country, such as its strategic location, the quality of life, excellent living conditions, the compressed cost of living, the solid infrastructure, the economy that is “picking-up”, it won’t be long before we see freelance executives choosing Greece as their place of residence and work.
Greece’s new Government has vowed to make the country more transparent starting with the establishment of a National Transparency Authority. How would you assess the country’s progress with regards to governance, transparency, good practices and rule of law?
The new government has demonstrated a positive intention to improve governance, transparency and importantly to impose the rule of law. However, there are historically deeply rooted political-social particularities that led to institutional deficiencies and shortcomings that need political resilience, persistence and long-term decisive remedial action that must be fueled by continuing strong political will to deal with and transform the overall environment.
Education is essential to guarantee any country’s future and prosperity. What do you view as key to reinforce the strength and attractiveness of Greece’s higher education system?
Upgrading the public universities by allowing and decisively protecting for the academic community a true independence from the political system. Allowing competitive private universities to operate in Greece. Also offer curricula connecting educational system with today’s business environment and preparing students for the new era and the future of work
Concluding remarks and final message to the readers of Foreign Policy.
Greece has survived an almost ten year unprecedented fearsome financial, social and political turmoil. Optimism has returned to people and that is a fundamental prerequisite for growth and prosperity but Greece should continue to decisively proceed with the necessary fundamental structural reforms discussed above.
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