Companies across the world are looking to cope with the fallout from the coronavirus pandemic, which has generated very strong headwinds for the businesses, making future look really bleak.
According to the World Bank’s June 2020 Global Economic Prospects report, the global GDP is estimated to contract 5.2% in 2020 due to the COVID-19 pandemic, causing the deepest global recession the world has seen in decades.
IT operations are seeing their limelight moments now when the pandemic has made companies adopt remote working model amidst the government-mandated social distancing and lockdowns imposed to reduce the coronavirus disease transmission. However, the adverse impacts of COVID-19 will still offset the growth witnessed in some segments of the IT industry.
The global IT industry is projected to see a 5.1% year-over-year plunge in 2020, with IT infrastructure being the least impacted segment in the industry with predictions of 3.8% growth, driven by increased cloud deployments amid the coronavirus-induced lockdowns.
While the uncertainty around the pandemic and its effects will have a long lasting impact on the economies and communities, companies are required to overhaul their business continuity plans if they wish to survive. IT firms have a greater responsibility on them to help businesses remain afloat by offering innovative and improved solutions to tackle the new normal conditions. At the same time, IT businesses will also have to consider the health risks of their workforce and triage priorities to chalk out their short-term and long-term plans.
COVID-19’s impact on IT industry
Some early adopters started embracing bring-your-own-device and remote working policies, and adopted technologies such as cloud computing and collaboration tools before the pandemic; however, a majority of the businesses shrugged them off. With coronavirus and the resulting travel restrictions, lockdowns, social distancing and health risks, these once side-lined business approaches and technologies have become mainstream as the world adjusts to the new normal.
Companies have fast-tracked their migration to cloud environments and VPNs to enable remote working for smooth running of operations.
Increased Demand for Cloud Infrastructure
Shelter in-place rules have driven online shopping, on-demand online education, video streaming services and remote working, all of which rely on the Internet. Companies are opting for cloud-based solutions now more than ever to streamline their operations.
Data analytics and consulting company GlobalData’s report projects the cloud services market to grow at a compound annual growth rate of 19% between 2019 and 2024 and reach $661 billion by 2024.
Firms are increasing their spending on cloud infrastructure amidst the COVID-19 situation, with a report by the Boston Consulting Group indicating a two-fold increase in the budget allocation for cloud infrastructure-related projects at companies in Asia-Pacific by 2023, from the existing 5% mark.
The increased demand outlook for cloud services can be further supported by the fact that more companies are now looking to make remote working permanent for their employees. A Gartner report has found that 74% of the CFOs intend to make the work-from-home arrangement permanent for at least 5% of their previously on-site employees after COVID-19. There’s no doubt that the IT departments will have a very busy year, helping their companies migrate to cloud and adopt technologies that are more friendly to the remote working environment.
The increased use of internet-based systems and software is creating a load on the existing internet infrastructure, strengthening the call for accelerated deployment of better broadband and 5G networks to mitigate connectivity and speed problems.
While the increased demand for better internet speed and connectivity will drive the 5G infrastructure market, COVID-19-induced supply chain disruptions resulting from suspended production of 5G devices and components and restrictions on transportation along with delayed issuance of 5G specifications and ongoing US-China trade war will hinder the 5G market growth.
Streaming services have benefitted from the coronavirus-induced lockdowns and home quarantines. Online eSports streaming service Twitch registered a record 22.7 million peak daily active users in March 2020, while Netflix added 15.8 million new paid users between January and March 2020. With theatres staying closed due to the pandemic, movie premieres on OTT platforms will further drive the traffic. Internet service providers are forced to reduce bandwidth allocation for the streaming services to reduce the strain on the network.
Way forward for IT industry
As countries ease the lockdowns gradually, IT companies can guide industries to reopen with greater resilience against the pandemic and restore operations.
Business plans devised by the companies to adjust to the new normal conditions triggered by the pandemic should include-
Renewed business targets in line with the current and foreseeable situation.
Employee protection measures at the workplace and ways to curb the spread of infection by adhering to social distancing norms, sanitisation practices and regular monitoring of body temperature and other vitals.
Business interruption and recovery strategies, including shifting of operations to another facility, backup for infected employees and insurance cover if an outbreak occurs at the site or in the vicinity.
Assessment of the inventory and supply arrangements for essential equipment and components with existing and new suppliers to close any existing and foreseeable gaps.
Thorough assessment of the negatively-affected customer and investor sentiments to project capital availability, market conditions and demands to adjust business plans accordingly.
Adoption of more agile team structures and operational methods that can support short-term and long-term plans while keeping the company vision and priorities in sight.
From ready-to-run SaaS applications to 3D printing for production, companies need to adopt approaches that can help them circumvent the disruptive effects of events like pandemic and natural disasters and survive.