#Coronavirus Impact: Indian IT Companies Can Lose Rs 40,000 Crore; Hardware, Services Will Be Worst Affected
The Covid-19 pandemic has not only affected the tech sector, which we have been fervently covering since the past few months but also has shown massive blow to not just the Indian economy but also the world economy.
Now, a report released by market analysis and research firm IDC has depicted that the IT industry in India may see a decline in overall revenue by up to 3-4% due to coronavirus pandemic.
IT Industry Decline in the World
According to the market report, the impact on the overall IT industries of the world will compound as the year unfolds, in which time the exact extent of the impact on India will also be clear.
Going by these projections, and taking into consideration how significant the IT industry is for India, the slowdown in overall IT expenditure across the world may cost India billions of dollars.
According to this analysis, hardware businesses will face the maximum impact and the cumulative effect will have to be faced by the software and services industries across the world.
India to Face IT Industry Decline too
According to the India Brand Equity Foundation, the IT and BPM (business process management) industries of India accounted for $177 billion in FY19, of which $137 billion came solely from exports, or overseas projects undertaken by Indian IT giants.
With India being a major contributor to worldwide IT services, a decline of close to 4% in global IT spends is bound to have an impact on India as well.
Not taking India’s own IT sector into account, at the estimated rate of decline, India stands to lose over $5 billion in IT services exports itself.
This can be a significant juncture to consider, as a global economic slowdown has officially pegged the world to be in recession, with many executives undertaking salary cuts and thousands losing jobs across the world and through industries.
What Can be Expected?
While the actual impact of COVID-19 on India market will be evident by middle of 2020, we expect a slowdown in terms of discretionary IT spending, contract renewals and new deals getting signed as enterprises recalibrate by cost structure in coming months.
Existing project executions have also taken a hit due to travel restrictions in place. IT vendors will be forced to relook at their growth targets for the rest of the year as the impact will become evident in the next few quarters.
With alarming projections showing what it may cost the world in the long run, it remains to be seen how global IT majors such as TCS, Cognizant, Infosys, Wipro and other stakeholders in the industry innovate and readjust to new economic parameters in order to weather the storm.