Where is Corona Impact Taking the Indian IT Industry?

“If winter comes, can spring be far behind?”- P. B Shelley

Perhaps, the Indian IT industry is spending every day with this hope that just like winter and spring, a promising future will come soon after the end of the pandemic called COVID-19. The flare-up of COVID-19 has brutally impacted the global economy. Businesses, across multiple sectors around the world, have already been exhausted. Let’s have a look at how pathetically the global stock market is running:

IMAGE SOURCE: https://www.bbc.com/news/business-51706225

The outbreak of the virus has compelled maximum countries to enforce complete lockdown. As an outcome, the fear of a terrible recession is brooding over several industries including the IT industry. As the virus has affected the first-world countries mercilessly, its impact in India is comparatively lower.

But wait a while! It’s not a sign of relief for the Indian IT industry. Though the number of Indians affected by COVID-19 is less than in other progressive countries till now, it is not at all kind to the IT sector.

Around 55% of electronics India imports from China. Due to running lockdown, all the international flights have been suspended. It reduces the percentage from 55 to 40. It is known to all that the IT industry has been the backbone of Indian over the last few decades. It plays a remarkable role in supporting middle-class working people.

Industry experts have predicted that the COVID-19 pandemic will cause a slowdown in the growth during this financial year. In April, The Economic Times reported that India’s top software exporters, Tata Consultancy Services, Infosys, and HCL Technologies will be the worst victim of the reduced spending by the US and Europe-based clients.

While this is the scenario of Indian IT giants, how small IT firms and start-ups are doing now? The answer is simple. While big ships are sinking, how can small boats survive? Small and mid-level companies are trapped in India. Most SMEs depend on outsourcing. American, European, and other foreign countries outsource IT services from small and mid-level Indian firms. These companies offer several IT services including affordable websites, mobile app, and other kinds of software development services.

Since the economy of the first-world countries is standing on the verge of collapse, gaining new projects is nothing but a dream for Indian IT firms. Moreover, the running projects may come to a close; payments may become uncertain. In such circumstances, most companies will be unable to provide salaries to their employees. As an outcome, a huge employee laid off is breathing down our neck.

Indian IT firms will find even a more terrific challenge when the companies will renegotiate the existing contracts and try to grapple growth initiatives and discretionary. In recent days, several Indian firms have faced multiple project cancellations by their clients due to the bindings in air travel and shutting down of cities and countries for breaking the chain of Coronavirus.

A report has revealed, “Though management of IT companies has restrained to quantify the potential impact of the COVID-19 breakout on the financials, there has been a disruption in service delivery and execution due to travel restrictions, client’s confidentiality clauses, and work-from-home (WFH) advisories since mid-March”

Bottom Line

From the above discussion, the current state of the Indian IT industry is lucid. Still, we should not forget Shelley’s optimistic line, “if winter comes, can spring be far behind?” Everything is destined to have an ending. One day, the mother Earth will come out of the grip of the virus. The human race will again get the flow of living back. Gradually, the economy will also regain its previous stature. When the economy will regain its strength, the IT industry will get oxygen once again.

Also Read: COVID-19 and India- A Land of 133.92 Crores