There are several reasons for the corporate world to panic in the wake of the deadly Coronavirus outbreak. The growing impact of the unprecedented human tragedy on the global economy has hampered the functioning of several sectors, including technology, aviation, automotive, pharmaceuticals, banking, consumer electronics, travel and tourism, among others.
One of the biggest stories of the moment is the major hit delivered to the tech sector that has behemoths like Apple, Google and Amazon grappling with unexpected challenges to business continuity. Issues such as low inventory, supply constraints and launch delays of smartphones and tech accessories are just some of the immediate aftereffects of the pandemic. Also, as many as twelve high-profile technology conferences have been cancelled, resulting in missed partnership opportunities for industry stakeholders. Barcelona’s Mobile World Congress, Facebook’s Global Marketing Summit and Google’s annual I/O developers conference are some of the key industry events that stand cancelled this year due to COVID-19. According to a report, the economic loss resulting from the cancellation of these events is estimated at $1 billion.
In India, analysts believe that the $190 billion IT services and BPO sector will lower discretionary spending, posing a challenge to the industry for at least a couple of quarters. Faced with uncertainty around when the pandemic will end, the pace of recovery is expected to be a long and painful one for the sector. The dismal mood is, however, reflective of the overall gloom cast on the global tech industry.
Even as leading technology companies started closing offices, stores and factories in China, they also braced themselves for the medium- to long-term implications of COVID-19 for the IT sector.
A broken chain
For starters, as the global tech industry — including India — is heavily dependent on Chinese vendors for the design and manufacture of components and systems, COVID-19 has caused a major disruption to the global supply chain. The closure of Chinese factories and supply networks has significantly affected technology companies. The U.S. tech industry bore the brunt of the hit as it relies on China for its immense manufacturing capabilities in consumer electronics, smartphones, microelectronic chips and other technology products. For example, Foxconn, Apple’s iPhone manufacturer, was forced to suspend assembly-line production in response to the Coronavirus outbreak. Subsequently, though Apple proceeded to ‘cautiously’ resume production, it warned that it does not expect to meet its own revenue guidance for the second quarter.
The financial effects of the pandemic have adversely impacted the bottom line of other tech players, too. Leading hardware company Hewlett-Packard also lowered its earnings guidance citing the havoc on the global supply chain.
Further, as Wuhan — the epicentre of the Coronavirus — is the manufacturing hub for optical components required by telecommunication networks, the disruption in the supply of optic fibres is expected to impair the rollout and implementation of 5G technologies. The supply chain slowdown due to the shutting down of factories in China is expected to disrupt the migration of 5G equipment to major global markets such as the U.S., Europe and elsewhere.
As China’s factories gradually return to normalcy, original equipment manufacturers (OEMs) grapple with issues such as a reduced workforce, shortage of components from lower-tier suppliers and a fractured transportation network that adds to the bottleneck in delays.
In the long run, global supply chains are expected to undergo a massive reshuffle to rebuild resilience in the post-Coronavirus scenario. Tech companies might also localise their supply chains, kickstarting a new era in handling supply-chain risks.
However, until such solutions emerge, the pandemic underscored the vulnerability of global companies across industries — all victims of COVID-19’s destruction. The downside of just-in-time manufacturing has also been put to the test during the current global crisis.
A new paradigm of work
The rapidly spreading Coronavirus has also prompted technology companies to encourage remote working for employees, heralding a new era in the future of work. Giant corporations and small businesses alike were nimble enough to adapt to ‘working from home’, during the early days of the pandemic.’ They showed a human side by ensuring the well-being of all employees through such proactive measures. Conglomerates such as Twitter, Cisco, Oracle, Hitachi and others have made ‘work from home’ a mandatory policy during the Coronavirus pandemic. Facebook has gone a step further and announced six-month bonuses and an additional $1,000 (Rs 76,295) to factor in unforeseen expenses such as setting up a home office and child care.
In my view, remote working affords the tech sector an opportunity to reshape and reassess how organisations can better invest in their employees. The lethal virus could, well, be a gamechanger and shift the narrative to embracing a new work culture that is anchored in global connectivity.
While such developments are welcome during a pandemic of this scale, tech companies are also reorienting their workforce for critical new learnings that don’t involve in-person meetings. Businesses — especially startups — have to create an enabling environment that harnesses productivity. While the reality is that a sharp decline in productivity and business continuity is expected from the virus scare, organisations should adopt strategic measures to ensure continued business growth. In the current times of social distancing, remote participation by the workforce in collaborative efforts has been made possible by virtual web conferencing/meeting tools. Zoom, GoToMeeting, G Suite and Webx have created a ‘community’ feel for employees across the world. Also, technologies such as cloud telephony and cloud-based document sharing have made communication between teams seamless and flexible. Thus, even during the Coronavirus outbreak, technology companies are exploring new ways to do business and communicate both within the organisation and with clients, vendors and other partners.
As it turns out, I believe the right tools and methodologies can help businesses keep the show going. Productivity need not happen only in a brick-and-mortar office. The new rules of work have also made employees happier. As there is no stress of a daily commute, it has paved the way for increased productivity. Besides, the IT sector’s best practices should also include ensuring process efficiency, keeping the long term in perspective.
Heightened cybersecurity is the need of the hour
With more people working from home, a new challenge arises in the form of cybersecurity breaches and malware attacks. Cybercriminals disguised as alarming COVID-19 news reports have also been reported, targeting the global workforce with phishing emails containing malicious software. According to cybersecurity firms, bank employees should be vigilant about such attacks that hack into the system to carry out data thefts.
I urge IT teams to reassess their security threats and ensure that their company’s firewall, antivirus protection and other security features that demand authentication are in place to mitigate malware risks. A VPN (Virtual Private Network) is another trusted tool that will secure the remote ‘office’ environment for proactive organisations. The workforce should be educated about such tools and the importance of maintaining ‘security hygiene’ when remote working is the norm.
A horizon of innovative opportunities
Despite the chaos around COVID-19, new business opportunities for the global tech sector seem imminent. The human tragedy has trained our focus on potential revenue opportunities by adopting a two-fold approach.
First, as business leaders are doubling down on technological solutions to the crisis more than ever, technology has emerged as a critical tool for both living and working. Besides collaboration tools that aid remote working, telehealth and robotics are also seeing a spike in demand.
Second, I believe the time is ripe for tech companies to crank up the innovation game. Suddenly, there are swathes of opportunities have emerged. There is going to be massive disruption in the way the post-Coronavirus tech scenario will emerge. Hence, instead of incremental innovation, technology companies should focus on full-blown innovation to leapfrog into the post Coronavirus economy.
Innovators around the world are leveraging disruptive technologies to find innovative, unique solutions to improve the management of the pandemic and contain the further outbreak. The technology sector has already come out in strong support to work with medical practitioners and governments to contain the Coronavirus. Several startups, too, have deployed drones and AI-based robots for high-risk tasks, such as patrolling public places, disinfecting rooms and communicating with infected patients.
Going forward, I see more such innovations on the anvil that will deploy technologies such as machine learning and AR/VR to lend technological support during a large-scale health crisis such as COVID-19.
Suffice to say, technology will continue to thrive in the backdrop of the war on the Coronavirus. However, innovation will be the true game-changer.
— Ravi Narayan, CEO, T-Hub
NOTE: This article was originally published in Financial Express on April 7, 2020 with the title ‘How Covid-19 has created revenue opportunities for tech businesses adopting this unique approach’.