COVID 19 and the Indian IT industry

If you’re as old as I am and you’ve been working in and around IT industry long enough, you’ve seen your fair share of instabilities and downturns like the one we are experiencing now. In times like this, it is normal to look back and make comparisons against other times of stress to assess how industry & markets reacted and what the fallout was after the crisis.

Even though my looks may say something different, I wasn’t alive at the time of the great crash of 1929, and I was just a kid when India experienced various economic and political crises in 1975, 1984 and 1992. I was, however, alive and well (with less grey hair) working as an IT sales leader during the dot com and telecom crashes, and was front and centre leading a very large company during the 2008 recession.

These are interesting times, and we are clearly in unmapped territories. As uncertain as things seem, we have been given a gift, the gift of history and experience. Setting aside just for a moment the health toll this is taking on us as a society, we have lived through worse economic experiences than the one we are experiencing today. To put it into perspective, the crash of 1929 saw an 89% decline in the US stock prices. During the crisis in 2008, the average decline in global indices was a whopping 49%. So far, the COVID-19 crisis has seen around an average 35% decline in the global indices during the period of February to the end of March.

We may have seen the bottom of the market, but most experts say we’re not out of the woods just yet. History has generally shown that after a crisis comes change and, most of the time, change for the better. In 2001, dot com start-ups sprang up to leverage the internet. When we look back at the this era, it’s easy to see that buzzwords like “eCommerce” and even “the Internet” were conceptual. Investors hungered to be part of this innovation and invention, and quickly threw money into anything that seemed capable of turning a profit. In 1999, there were 457 IPOs and over 25% doubled in stock prices. But within two years, the infamous dot-com crash erased much of that progress. Many of the most promising companies filed for bankruptcy including Pets.com, WorldCom and FreeInternet.com. While this boom and crash was unfortunate for investors, it actually produced some of the most innovative ideas that were simply just ahead of their time.

Concepts developed by many companies that went under, including VoIP, eCommerce, big data and the web experience, still live on today, in many cases as the fundamental concepts driving success in large corporations. And, from the ashes of the dot com bust came a new way of doing business through the public cloud which helped online start-ups with an asset light way to build, survive and be successful. In 2008, change in the financial markets came in the form of improvements in risk mitigation, the organization of resources, and the automation of legacy processes. Again, the public cloud was at the forefront in helping building new and automated business models grounds up.

What will the COVID-19 crisis of 2020 change forever? In speaking with CEOs of various companies across India – from large enterprises to mid-sized companies and digitally native businesses, one thing is clear – none of them had planned to run a business in which most of their workforce would be forced to work from home for 2-3 months. Also, none of them planned a scenario in which most of their sales channel would be paralysed due to the lockdowns that came in effect. In fact, every BCP scenario they had planned for was for 2-3 days thinking about the usual issues like floods, earthquakes or law & order issues.

A global pandemic was never even discussed. The real challenge for our customers is sales and revenue!

I truly believe that the IT industry as a whole will come out of this crisis with newer more innovative ways of helping our customers sustain even the blackest of black swan events.