As the number of deaths and the rising COVID-19 cases continue unabated in the US and Europe--the main revenue generating geographies of Indian IT companies--experts feel that it could be a mixed bag of challenges and even opportunities for these firms. As per a recent report by research firm International Data Corporation (IDC), there would be a decline of at least 3-4 per cent in global IT spending, proving to be a setback for the Indian IT vendors.
The report says that considering the prevailing 'pessimistic scenario' due to the outbreak of the COVID-19 pandemic, the impact might be even more profound as the spread has engulfed many countries beyond China. The report says that while the major impact is expected to be on the hardware business, the software and services businesses are also expected to slow down as the spread of COVID-19 goes beyond the boundaries of Asia.
There are also expectations that adoption of collaborative applications, security solutions, big data and Artificial Intelligence is set to an increase in the coming days. Experts from IDC feel that the COVID-19 crisis may give an opportunity for IT vendors to test some concepts of 'future of work' and some of them might become mainstream as the dust settles. The crisis may also provide an opportunity to IT vendors to step up as consulting partners to handhold their clients in helping them sail through the crisis.
“The actual impact of COVID-19 on the India market will be evident by the middle of 2020. We expect a slowdown in terms of discretionary IT spending, contract renewals and new deals getting signed as enterprises re-calibrate by cost structuring in the coming months. Existing project executions have also taken a hit due to travel restrictions in place. IT vendors will be forced to re-look their growth targets for the rest of the year as the impact will become evident in the next few quarters,” explained Sharath Srinivasamurthy, Research Director, Enterprise Solutions and ICT Practices, IDC India.
The IDC findings say that the COVID-19 crisis will provide an opportunity to IT vendors to test their resilience on business continuity, remote connectivity, and security as they look at innovative ways to service their clients. Enterprises are looking at IT vendors to handhold them in the hour of crisis.
Experts say that while work from home is not a new concept for Indian corporates, it certainly is a testing time to see the success at this scale. Enterprises are also exploring ways of working together that leverages conversations, meetings and assets across platforms with employees working remotely from wherever they are located to serve customers better and ensure business continuity. It is also expected that there would also be the adoption of collaborative applications growing at a rapid pace after the COVID-19 outbreak.
Currently, many Indian IT companies are working with their clients to get special approvals and service level agreement holidays wherever needed to have employees connect remotely to continue providing services, especially in supporting mission critical IT systems. Going ahead, IT companies are also expected to pay attention to have necessary force majeure clauses to cover situations like outbreaks, in addition to existing clauses around acts of God and natural disasters in their contracts.
For instance, HCL Technologies Ltd (HCL) has been monitoring the COVID-19 outbreak since late January and had invoked its Business Continuity Plan (BCP) and Risk Management Framework quite early to minimise the impact on its employees and clients. HCL had stated that the situation arising out of this outbreak and its rapid spread across the world was unprecedented and extremely dynamic.
HCL also said the economic impact was visible with varying degrees of intensity across multiple countries. HCL is also actively engaged with its clients and has executed client-specific and HCL internal operations-centric BCP to ensure continuity in delivering to its client and employee commitments. The company is, at the same time, constantly reviewing the situation at hand with utmost priority and fully complying with all government advisories and recommendations. The company has also looked at ensuring medium-term sustainable measures in place to ensure continuity of all its operations and client deliverables.
The IDC report observed that as IT organisations take preventive measures by encouraging their workforce to connect from home, they are also facing different challenges such as grappling with securing their data and assets from cyber threats. “We expect the adoption of a zero-trust policy to increase, in the months ahead, as an increasing number of people connect to work from personal networks. We recommend organisations to keep their VPNs and Firewalls updated with security patches in place,” remarked Srinivasamurthy.
