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Covid-19: IT companies brace for disruption of service delivery model

The $191-billion Indian IT sector is staring at an event that will change everything — from the way it works to its client outlook to its business strategy, going forward.

Rajiv Ahuja, President at NYSE-listed Startek (formerly Aegis), says the last fortnight is something he can never forget. For Ahuja, who spent the first eight years of his working career in the armed forces, the battle against the pandemic is unprecedented. “The rulebook has changed completely,” he says, explaining that in conventional warfare, the enemy can be seen but not in this case.

Companies, both IT and IT-enabled services (ITeS), had not factored in this kind of a situation. “We have a data-driven model for natural calamities but not this,” says the VP of a Gurugram-based BPO.

Complicating matters initially was the administration not allowing BPO workers to travel to work.

This also presented a dilemma — whether to continue work or think about employee welfare, before they opted for the latter. Industry watchers feels that the government seems to have not factored in these aspects before announcing the lockdown.

On March 24, the government brought IT-ITeS services under essential services.

Tech infra challenges

Then there are tech infrastructure challenges. “Overnight, how can my 1,000 employees all work from home when their systems are not up to client specified standards in terms of security?” the VP remarks.

Others, like Ashank Desai, founder of Mastek, who has been associated with the sector for almost four decades, point out that reliable bandwidth, a vital part of tech infrastructure, is a challenge for work from home. Industry people like Ahuja agree and add that CRM applications, opening multiple screens in the background, all require sizeable bandwidth, which makes moving of work challenging.

Even with these challenges, clients of IT and BPO companies, in the future, will look to have a chunk of their workforce ready to work from home (in case of another Covid-like attack).

Automation to go up

Nitin Kumar, CEO, Appnomic, who is based in New York, is of the view that automation of business processes will go up significantly. “Right now, everybody is trying to figure out this Armageddon as it is very dynamic and older forecasting methods need not necessarily provide an answer,” he says.

From a contracts or deals perspective, there will be changes. “This will push fence sitters on the Board to go for a higher degree of automation, says Desai.

BS Rao, VP, Marketing of CtrlS, a data centre company, feels that routine tasks in any form of business process will get automated. “The question is, how fast it will happen,” he says.

Job cuts

Even before Covid-19, automation was feared and many thought it would ring the death knell for several kinds of jobs. Already there are reports that small and medium-sized BPOs will shut shop. These entities, which do outsourcing work for their clients globally, are seeing their business get hammered. Sectors such as manufacturing, travel and tourism, and hospitality have been severely impacted.

“There could be a sizeable workforce reduction, probably in many thousands in the near term”, says Kris Lakshmikanth, CEO of Headhunters India.

The Indian IT industry employs about 4 million people directly and 16 million indirectly. The sector grew 7.7 percent in FY20 and added 2 lakh jobs.

―The Hindu Business Line

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