Effects of the Coronavirus on the IT industry:
If wishes were horses, beggars would ride and If AI could contribute in eliminating a certain pandemic, we all would thrive! The love story of mankind and technology though, has never got stronger. Through the decade of 2010, it looked like a piece of cake. Everything! We almost could turn to Alexa to bake a cake for us! Well ALMOST. A fairytale script isn’t it?
Surprise surprise! Cometh 2020, cometh the dream-shatterer! And technology no longer looked like the better half of mankind. You’d relate to the impact, the IT industry has been through and will witness going forward, If you had played the game of dominoes; quite ironically of Chinese origin. The effect of COVID-19 is quite similar, but with accentuated velocity.
Companies that had their feathers rufﬂed back in 2008 during the recession, had an advantage though. I’m sure, ‘recession’ and ‘advantage’ don’t quite go hand in hand but the comparative scoreline, reads Advantage – 2008. The difference between the two frameworks are, the collision and aftermath of the ﬁnancial downslide back in 2008 was far fragile compared to today’s latitude since every sector today is coming under the scanner.
If physical indulgence wasn’t a matter of concern, we could have braved the whiplash. Alas! Again, if wishes were horses, beggars would ride! With IT making inroads into practically every category from Aviation, F&B, retail, ERP solutions, sports analytics, live entertainment, banking, ﬁntech, to the blue-eyed one of hospitality & tourism, this is a classic case of ‘What goes up, must come down’.
Most sectors that technology has elevated, has had physical indulgence. This has broken the demand and supply chain considerably. Thus causing the Dominoes effect. To fan the ﬂame, 2020 has no clue as to when the lockdown will be lifted and even if lifted, when things will begin seeing the light of day. As of today though, the IT industry is walking through that tunnel, where even if we spot light, it is of the train charging towards it.
Blog 2: Can IT revive itself to its fullest glory? Can they heave a sigh of relief post this pandemic? Will the million dollar babies – The start-up ecosystem continue showcasing astronomical valuations? All this and more will be keeping the grey matters in motion, of industry stalwarts.
The IT sector has a considerable presence in China and this phase could be decisive. With the global lockdown playing spoilsport, albeit with intentions of curbing the dreadful COVID-19 virus, the sector is in for a bear walk. IT sees itself in practically every area of today’s scenario right from aviation that is a major contributor, new-age aggregators, F&B, retail, Sports analytics, live entertainment, banking, ﬁntech to the more famous and widely recognised hospitality and tourism sector, this scenario of social distancing and minimal physical intervention could be the achilles heel for the global IT industry.
With this backdrop, the plot gets even more ominous. This has already begun playing its role in affecting the demand-supply cycle that has paved way for a cascading effect. IT being the epicentre of all industries, the gravity of the situation is felt a lot more here. We also hear many mid to high cap companies have suspended operations in China.
Companies of the order of Google, Amazon and Microsoft all have decided to take a sabbatical from their operations in China owing to this precarious situation. The revenue through IT in India, is expected to drop by 2-7% owing to the shutdown. This steady dip can be expected in the next couple of quarters.