The Covid-19 situation has been having an impact on Indian IT and ITeS sector along with invoked Business Continuity Plans (BCPs) by organizations globally and all the activities pertaining to business halting drastically. This has been as a consequence of the lockdown announced to stop the spread of infection, along with other restrictions, especially of travel.
The pandemic is expected to have an impact with a GDP reduced to 3% in 2020, according to International Monetary Funds (IMF) because of the covid-19 impact. This has been observed similarly with the Indian IT and ITeS industry that are accounting in India’s GDP for up to 8% in key domestic and global markets because of lockdown.
Moving further, the sector accounting largely for clients for Indian IT and ITeS Sector, BFSI and Aviation and tourism have also been impacted majorly.
Major impacts on Indian IT and ITeS sector due to covid-19:-
The IT and ITeS companies varying in all sizes have been affected because of the existing business being stopped and also for new business. There is a greater challenge for small IT and ITeS than the larger ones for shifting their businesses to work from home.
The larger ones also face the concern of data privacy. The IT and ITeS sector are also asking for easy credit lines, tax breaks and relief in statutory dues from the Government. The Small IT and ITeS are also observed to have asked the government for cash assistance, STPI compliances to be moved online and clearance of pending government refunds.
One of the major impacts seen is through delayed payments from clients and investors not supporting additional funding, especially for the start-ups, where cash conservation becomes necessary.
In India they have largely been successful in shifting to work from home but it has many threats, while seeing from a long-term point of view. These are in the form of data security, restriction on VC funds and cyber security, in addition for startups funding issues from investors.
The key solutions for these impacts on Indian IT and ITeS sector:-
The key focus of the Indian IT and ITeS sector should be on appropriate incentive plans and enhancing employment engagement. This also includes providing them temporary accommodation in case of urgency faced due to WFH issues.
The other focus areas should be considered for service delivery continuity, client engagement, strengthening client relationship, scenario planning and weekly cash flow forecasting. The crisis can help in pushing Indian IT and ITeS sector for digital transformation globally the same way as in 2000 delivering its legacy system support.
The structural changes relating to Indian IT and ITeS sector can actually be beneficial in reshaping their strategies as clients prefer local service delivery. Indian IT and ITeS sector has an upscale during these times as the world is moving to a digital world. This could be seized by upgrading the digital workforce for a seamless and secure support for the clients.
This would increase more talented and diligent employees and reduce overheads coming from real estate. The companies could also be more willing to sell as a consequence of the pandemic, thus Indian IT and ITeS sector can acquire “value-buy”.
The pandemic comes with a risk but an opportunity too for global commerce and trade for enabling technology enablement and digital transformation.