Covid disruption opportunity for IT much bigger than the risk from global recession

By DK Agarwal

Covid-19 has thrown up challenges as well as many opportunities across various businesses segments. The pandemic has caused unimaginable loss to the global economy, and the loss of human lives has been unprecedented in an era of global peace.

An uncertain business environment due to health crisis is forcing corporates to review their business. Social distancing has become new Norm. Organisations across the world are realizing the need for operational and systems resilience. Amidst all the chaos caused by the pandemic, there is still a ray of hope for the business world. Thankfully, the digital world has some sort of a solution to the problem.


This is good news for an industry, which investors are looking at with doubts in recent time due to the near-term recessionary outlook for the western economies, which have been major consumers of IT services.

In the post-coronavirus world, businesses will undergo a transition and the biggest gainer could be the IT industry. Many IT companies have digitised all their processes and invested in cutting edge infrastructure and collaboration tools to support their location-independent agile delivery models and secure borderless workspaces.

Businesses -- mainly those in the services sector like banking & other financial services, education, retail, healthcare, food & grocery delivery -- will further embrace technology and automation to better leverage growth. Many organizations through rapid adoption of digital transformation have already embraced cloud and mobility trends. The expanding information technology (IT) industry, along with the rising trend of digitalisation, is one of the key factors that will continue to drive growth of IT companies.

We need to understand that every sector will move towards digitization and automation. As the work from home is beginning to become the new normal, more workloads will have to be migrated to the cloud to ensure that businesses can function as usual. Sectors like retail will spend more on IT and IT infrastructure for enterprise applications and retail support services globally.

Manufacturers of industrial tools and household hardware and security products providers are planning to deliver end-to-end applications, infrastructure and scale digital services as part of the client’s digital transformation strategy. Banks will have to further digitize end-to-end infrastructure operations and transformation and take automation initiatives across data center and cloud, workplace, cybersecurity, network and service managements.

Chemical companies may implement automation solutions and deliver PC as a service (PCaaS) for client’s global workforce. The current crisis has opened new avenues for the education ecosystem, where digital learning methods and solutions will be seen more seriously, thereby increasing industry acceptance.

Similarly, technology is going to evolve as the backbone of e-commerce. Not only does it help connect sellers and customers on mobile and web platforms, but also enable effective management of customer orders, deliveries, returns and payments for purchased goods. Many countries are leveraging artificial intelligence to detect infections, inform healthcare systems and deploy rapid actions to curb its spread. India, too, will follow suit.

Going forward, digitization, cloud computing, machine learning and artificial intelligence will dominate the technology space. Investors should focus on companies with strong balance sheets, stable growth, attractive dividend yields and low profit volatility to cash in on the current crisis. Companies such as TCS, Infosys, HCL Technologies and NIIT Technologies are expected to emerge stronger from the virus outbreak given their past records of execution, strong client relationships, and focus on cost control measures and new deal wins.