The IT story in the times of a pandemic

There will be light at the end of the tunnel, but nobody knows how long this tunnel is. Even those in the business of keeping companies future-ready are grappling for answers as the coronavirus pandemic dislocates commerce across the world. And that is all the more true for the $190 billion technology and business service sector.After all, this segment has helped global corporations stay ahead of the curve and keep critical business functions running during various crises. But with Covid-19, the technology and business process management services sector is staring at a washout in travel, hospitality and aviation businesses, though it is expecting higher workflow from healthcare, pharma and insurance segments. Overall, volumes across services will dip and unemployment might increase as promoters tighten purse strings.Business development and customer acquisition are expected to slow to a crawl. Sangeeta Gupta, senior vice-president at Nasscom, says, “US and Europe account for 85-90% of the business of Indian IT companies and these markets have been badly impacted by Covid-19. Obviously, the April-June quarter looks challenging and it is yet unclear how the rest of the year might play out.”In January, research firm Gartner projected that global IT spending for calendar 2020 would be $3.9 trillion. It is likely to revise that downward soon. Market intelligence firm IDC expects the annual growth in global IT spending to drop to 1% in calendar 2020 from an initial forecast of more than 4%. 74986518Volumes will sharply decline even in vital services such as banking, retail and oil & gas as demand declines in a slowing economy: a lot of Indian ITeS companies handle transactions in these spaces for global customers. Raman Roy, CMD of Quatrro Global Services, says, “Volumes are going to decrease dramatically. Across services, including credit cards, loans, mortgages, etc, queries will be less. Lot of people are going to be unemployed.”Companies have already seen a huge dip in travel. Recalling a recent interaction with a global travel firm head, Rohit Kapoor, vice-chairman and CEO of EXL Service, says, “Their transaction volume is down 97% and revenue down 100% as no international travel is happening.” The only transactions happening with such clients are refunds and postponement of travel dates.Apart from travel, the automotive sector has also been severely impacted. Cancellations widespread business disruptions will limit growth in the current year, which will delay fresher hiring as well. Even job cuts are likely as companies cut back on IT spending. Among the positives in the otherwise dark outlook are that tasks in healthcare, insurance claims and pharma are much in demand. And demand could go up in these segments.Tech Mahindra, which counts communications as its largest vertical and healthcare and life sciences as the fourth largest, has been able to keep its staff in these segments busy. Jagdish Mitra, chief strategy officer & head of growth of the company, says, "Communications is the bedrock of connectivity and becomes essential in such times. Network resilience is being tested as companies work from remote locations. In healthcare, we are seeing more demand for support services."Some CheerCompanies in the healthcare and life sciences segment manage electronic medical records¡¦ products, support infrastructure services, cloud migration and data analytics, among others. "In healthcare, we actually need more people as volumes are increasing, particularly on the provider side," says Kapoor of EXL, which serves some of the payers (insurance companies) and providers (hospitals).Some service providers are also seeing an increase in volumes as global pharma companies work overtime to find a cure for Covid-19. Ramkumar Ramamoorthy, chairman & managing director of Cognizant India, says, "We are collaborating with a tech company that develops and markets SaaS for clinical trials for Covid-19." The company also claims to be delivering services to a life sciences supplier for fast-tracking Covid-19 diagnostics kits, besides clinical data management for vaccine trials. Apart from this, he says, "Cognizant has helped develop a new app for a life sciences company that enables employees to report their Covid-19 exposure and diagnosis." The company declined to share data citing silent period ahead of its results.Services companies that support financial transactions and stock exchanges, among others, have also seen a spurt in volumes as more customers are using digital means to transact. "The volume of insurance claims is increasing. Customers are also asking if they can take a loan against their insurance policies or enhance coverage. For us, the insurance industry piece is quite favourable as volumes are going up," says Kapoor.The stimulus being offered by governments across the world could also lead to some transaction-related work trickling down to services companies in India.Given the way things have turned around with Covid-19, Mitra sees three distinct eras for services companies. "Businesses will see the world in three blocks: BC, DC, AC-- or (Before, During and After Coronavirus). There will be lot of reset as some industries are impacted more than others." In the long run, Mitra sees a change in the way people consume goods and products. Digital transactions will become the new normal for everybody. Everybody is waiting for the AC era.

from Economic Times https://ift.tt/2UJhG6s