It was a nightmare for India’s nearly $200 billion IT industry to shift into the work from home model overnight when the lockdown because of Covid-19 was imposed in the month of March. However, at present, with the unlocking phases going on, the sector is in no rush to return to the workplace.
Condition of the IT industry
Industry insiders are of the opinion that the month of April was a bit difficult for the IT industry as people realised that the lockdown was going to last for a longer period of time and so it took some time for the IT sector to readjust them and to continue with the work from home setting as this infrastructure was not available in many companies. Sangeeta Gupta, Senior Vice-President, NASSCOM in an interaction with scroll.in talked how the IT industry in India was coping up with the lockdown. He stated that in the first week of the lockdown, less than 2% of the workforce had to come to offices to operate data centres and set up a virtual private network, as companies were moving laptops and setting up the infrastructure to support work from home. After that, 90% and 70% of the companies in the IT and business process outsourcing sector, respectively, settled for work-from-home.
Zakir Hussain, Director, BD Software Distribution said to BE, “At present, there is no crisis as such for the IT industry as though the employees have shifted home to work, they still require support and services. I feel that the BPOs have taken a hit as they have lost many employees and working from home may pose a challenge to them but now government has allowed offices to function with certain number of employees which can be beneficial for them as well. It is more of a realisation than a crisis at the present situation that we are going through.”
Reacting if the travel restrictions have in any way impacted the IT industry, a software executive from Bangalore informed BE, “Usually, the onsites who were already based out of any other country, have stayed in their base location and continued with their work as usual. Although most of the clients are not based out of India, most of the communication takes place via Microsoft teams voice and video calls. However, in companies which need more of a face-to-face interaction with clients, business might have been affected.” He further added that the clients have remained the same throughout the pandemic but less business opportunities can be attributed to the overall decline in the revenue generated in client companies. Aviation and travel industry-based clients have largely decreased expenditure as a measure for cost cutting to cope up with the pandemic.
Massive lay offs
In the current situation though the IT industry seems to be functioning without much hurdles, the employees have not been at peace. According to a report by Mint in July, International Business Machines (IBM) laid off about 2,000 employees globally as the company reshaped its business. At least, a few hundred of its India employees was affected as the country accounts for about one-third of IBM’s global headcount with more than 350,000 employees. Nasdaq-listed Cognizant Technology Solutions also laid off thousands of benched workers in India. India happens to be Cognizant’s largest employee hub with more than 200,000 employees of its global headcount of nearly 290,000.
Reacting to this lay-offs, Hussain stated, “IT as an industry is huge comprising of services, products, solutions, softwares etc. It is dependent on the business of the company, if for a company, the business with which, it is associated is doing good, the company will hire more people and if it has no business, the company will lay off. However, I feel, once, the total system re-opens, the people will be back at their jobs.”
The clash between India and China has raised anti-China sentiments and the government banning the Chinese apps can provide an opportunity for the Indian IT industry to grow in the domestic market. Hussain stated that the Indian IT companies should utilise this opportunity. However, the problem is that now because of the lockdown and the rising number of Covid-19 cases majority of the industries are closed in India as well. He added, “There is a growing discontent against China all over the world and so if Indian IT companies utilise this opportunity, they will be able to expand their business internationally as well. Earlier, India did not use to make PPE kits and all but now it is one of the biggest hubs. IT is a bit more difficult than this but if we start from now, we will be able to capture the global market.” Industry insiders also feel that most of the hardware parts are imported from China, so India should strengthen its manufacturing base to become a key player in the global market.
Although at present, all the sectors are in some way or the other going through some crisis situations, it is expected that there will be a lot of opportunities before the IT industry in the post Covid-19 world. According to a report in The Economic Times, there is a renewed focus on 5G and Artificial Intelligence (AI) and these are going to become even more relevant in the global market. In this context, there is a skill gap in the industry that will have to be addressed. Tech Mahindra is focusing on leveraging next generation digital technologies like 5G, Artificial Intelligence and Blockchain. Over 40% of the company’s revenue already comes from digital technology and services which include a combination of digital strategy, automation and technology-driven business models. Its investments in supply chain track and trace, digital matching engines, Internet of Things (IoT) and robotics are coming into play now. The firm is witnessing that these create a huge demand for the company’s communications infrastructure. Most companies which are AI focussed are relying on internal resources to train new recruits. Some firms are spending close to 10% of salaries on training.
In the post Covid-19 period, the fundamentals of business will remain the same but work from home applications, cloud solutions, security network, e-commerce and AI applications will see a surge in popularity and IT firms can cash on this growth.