Coronavirus: Indian IT sector takes hit

The impact of the Covid-19 coronavirus pandemic on India’s IT market will be evident by middle of 2020 as more companies cut down on discretionary IT spending, according to IDC.

This could affect contract renewals and the number of new deals as more enterprises “recalibrate their cost structure” in the coming months, said Sharath Srinivasamurthy, research director for enterprise solutions and ICT practices at IDC India.

Srinivasamurthy said existing projects have already taken a hit due to travel restrictions, adding that IT vendors will be forced to relook their growth targets for the rest of the year as the impact becomes evident in the next few quarters.

“On the other hand, it has provided an opportunity for 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,” he added.

Many companies, including Indian IT firms, across the subcontinent are already implementing telecommuting during the national lockdown, which was recently extended to 3 May 2020.

Although remote working is not a new concept for Indian companies, IDC noted that “it is a testing time to see 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,” IDC said in a report.

Meanwhile, IT suppliers are working with their clients to relax service-level agreement (SLA) requirements wherever needed, and have their employees continue providing services remotely, especially in supporting mission-critical IT systems.

Amid the outbreak, IDC said Indian companies also grappling with protecting data and assets against cyber threats as more workers work from home. This will speed up the adoption of zero trust policies, which assume nothing is trusted within or outside a corporate network, thus requiring controls at all levels to minimise security risks.

To ride through the outbreak, IDC urged IT companies to focus on building and improving their capabilities to address emerging use cases, such as the use of artificial intelligence for disease detection, tracking, and prevention.

“While we expect challenging time ahead for IT vendors, it opens an opportunity for IT vendors to handhold the clients in the hour of crisis as a trusted partner and help them sail through the situation,” it said, adding that they should also look to offer incentives on existing contract extensions and build conversations on business continuity and disaster recovery in the cloud.

S Mahalingam, Tata Consultancy Services’ former chief financial officer and executive director, told the Press Trust of India recently that the pandemic is the most challenging time to date for the local IT industry.

Describing the impact as phenomenal, he said India’s IT industry, with its proven capabilities, will need to help global businesses resume operations, though he acknowledged that will take some time.

Mahalingam also lauded IT firms that have continued to deliver high service levels despite the lockdown. “That’s a phenomenal kind of thing which shows that both the communication infrastructure as well as ability to come up with remote secure environment have really been extraordinary,” he said.

According to ICRA, an Indian investment information and credit rating agency, the IT sector in India could grow by just 3-5% this year, down from 6-8% that it had projected earlier.