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In the countless video conferences that have become the hubs of collaboration this pandemic season, a witticism has crossed over from its origins as a WhatsApp forward to become a legitimate presentation-starter. Who has done the most to drive digitisation at the world’s biggest companies? CEOs, CTOs, CIOs or Covid-19? The answer is obvious.As the world hunkers down to weather the coronavirus outbreak, a few things have become clear. Consumers will demand minimal in-person interaction with businesses. A much greater proportion of work will be done from home. People are going to be a lot more conscious about health and well-being. Education and government services will increasingly move online. Technology will become a greater mediator of human interaction.These represent important shifts for humankind. They also represent a source of immense opportunity for India’s $190 billion software services industry. 76236547As every business and institution in the world moves to erect robust digital tools for internal as well as consumer facing needs, someone is going to have to build them. And by virtue of long years of evolution, deep pockets (ergo the ability to acquire emerging tech), large pools of talent and clients, and remote working acting as a leveller, Indian IT is poised to exploit the emerging opportunity.“As Covid-19 impacts every aspect of our work and life, we have seen two years worth of digital transformation in two months,” Microsoft CEO Satya Nadella said in a media interview recently. He should know. The company’s collaboration platform Teams was clocking 4.1 billion meeting minutes every day by the end of April.The pandemic has generated its own ITlinked demand, although it’s a sliver of what will likely be created over time. In India, apart from the central government’s Aarogya Setu app, state governments have developed their own apps and websites for services such as checking the availability of beds in hospitals, issuing e-passes for interstate travel and digital tokens to avoid crowds at liquor vends. Tech forecaster IDC reckons that by 2023, 500 million new applications will be developed. That’s as many as what was developed over the last 40 years. 76236571“This is definitely a huge discontinuity. Work from home (WFH) has digitised everything. It has been a crash course for everyone in using technology. India is going to play a very critical role in this digitisation wave,” says Nandan Nilekani, one of the leaders of India’s tech industry and chairman of Infosys.Y2K ReduxIf, in 1995, it was the launch of the internet that accelerated global sourcing, and in some ways globalisation itself, it was the Y2K (year 2000) bug, which came five years later, that helped establish Indian talent on the global stage. A large number of the world’s computer systems had to be reprogrammed to avoid problems when the year 2000 came around. Another push came in 2008 as banks and other industries looked for cost savings after the financial crash. Eight years later, in 2016-17, as the era of SCAM (social, cloud, analytics, mobility) rolled in, it provided yet another ballast for Indian IT. In the last few years, in a challenging global economic environment, Indian IT has been trying to convince domestic and international clients to invest in artificial intelligence, machine learning, internet of things, virtual reality, blockchain and cloud. 76236631“Covid-19 has sent a strong message to all, that digitisation was in fact to be completed yesterday. It is the catalyst to consolidate workspaces, create transformative growth and become profitable,” says CP Gurnani, MD and CEO of Tech Mahindra.“It’s a Y2K moment for digital,” says Raman Roy, CMD, Quatrro Global Solutions. Even if the engine remains the same, companies will upgrade the body, so the interface for users is automated, contactless and digital — much like banking via an app.According to tech consulting firm Gartner, while in the last three years, 50% of incremental IT spend was on digital businesses, this will now go up to 75%.Umesh Sachdev, cofounder of Uniphore, a conversational AI company, has seen tripledigit growth. “It’s a stroke of good fortune for us. Covid-19 has led to a huge mindset shift (towards automation),” he says. Amid brisk business, Uniphore will add 100 more to its staff of 150 this year. 76236641This era could see a rise in digital-first companies which will be specialists, says Sangeeta Gupta, chief strategy officer at Nasscom. “Indian IT outsourcing will have to reposition itself as a digital solutions service provider.”Pandemic as CatalystNTT India, part of NTT Holdings of Japan, is developing RFID (radio frequency identification) and Bluetooth-based solutions for manufacturing clients. When two factory workers come less than six feet of each other, a beep goes off till they get back to safe social distancing.Bengaluru-based Mindtree is enabling smart recommendations (auto-generated information on consumption, demand, inventory) powered by machine learning so that sales staff from, say, consumer packaged goods (CPG) companies do not need to visit retailers to take the order. “We have enabled our customers with auto-order creation capabilities, using AI built on top of knowledge representation layers and leveraging cloud capabilities, to avoid manual intervention in order creation,” says Debashis Chatterjee, CEO, Mindtree. The company’s business from digital services stood at 38.5% for Q4 2020. It sees projects in high demand from communications, media and technology, banking and financial services, consumer packaged goods, modernisation of workplace, automation and cyber security. 76236648Automation Anywhere (AA), a robotics process automation (RPA) firm headquartered in San Jose, California, has seen a surge in demand from hospitals and airlines. In the UK, its bots have been deployed by the National Health Service. “Our bots are helping government in data entry and contact tracing,” says cofounder Ankur Kothari.Some airlines are using bots to send refund vouchers.In March, due to Covid-19 disruption, Japanese firm Konica Minolta faced problems of key components not arriving on time. Within 10 days, it deployed AA’s bots to automate the process of tracking sales, inventory and placing orders.Cognizant, which has 28% of its business coming from healthcare, has built mobile channels to facilitate communication on Covid-19, besides automated tools to locate Covid testing facilities in the US and book appointments digitally.Digital from HomeEven as the industry is adopting digital at a fast clip, all of it is happening from homes. Workplace as we knew it, at least for the knowledge industry, has changed forever. Think of everything that companies built in a workplace — the glass facades, processes, facilities such as cafeteria, security, coffee machines, meeting rooms, biometric attendance, etc. “Layers of processes and structures were built to support the earlier construct of a workplace,” says Suresh Sambandam, CEO, Kissflow, a SaaS company whose product platform, Kissflow Digital Workplace, allows corporate workers to manage all their work in one place.The lockdown has forced nearly 4 million IT employees in India to log in from their homes and therefore the industry will be able to anticipate well the needs of their clients on this regard. 76236697“Once companies adopt remote collaboration tools and practices, distance does not matter,” says Milind Borate, cofounder and CTO of Druva, a SaaS-based data protection and management services provider.While there’s wide acceptance of WFH, what will matter are security and the ability to execute computing-heavy tasks and complex software rollouts across multiple locations.Since March 11, when Covid-19 was declared a pandemic by WHO, tech major IBM has observed a 6,000% increase in spam. To check spams, Trojans and other attacks, companies are sensitising employees to be aware of threats and improving the security of their work devices.Another area of concern is delivering complex, compute-heavy tasks from home. Most SaaS solutions are designed for personal systems and hence can support a majority of applications.However, Lux Rao, senior director for solutions at NTT India, warns: “Computeintensive and special-purpose applications that need high-end infrastructure may not perform optimally on remote access.” Also, there are program rollouts of IT projects that will need an office set-up and robust infrastructure availability. That’s where small teams working in offices will bridge the gap.A bigger worry for IT services providers could be “home shoring” as customers see opportunity in hiring geeks in their geography, as unemployment peaks. Says Roy of Quatrro: “About 10 million people have lost jobs in the US. WFH can increase there as well, at lower costs.” 76237291Sales Pitches on ScreensIt is not just the services delivery staff which is benefitting from WFH, but teams wooing potential customers. Covid-19 has saved them travel time and money. Aneesh Reddy, cofounder & CEO, Capillary Technologies, says, “Earlier we were travelling 15 days a month; now I am meeting five people in five countries on the same day. There’s a 12-15% reduction on sales cost.” He has done more CEO calls in the last two months than in the last two years.Says Chatterjee of Mindtree: “Now we have been able to seek and provide focussed attention to both business and people. Our client meetings have all become quick and easy.” A downside could be a client in US asking for a call at 2 am India time.Brand India ScoresWFH and accelerated digitisation could make companies evaluate multiple destinations. This includes the Philippines, which does a lot of back-office work. However, Roy believes that over the years, India has built deep capabilities, and customers who operate at scale will keep coming back.Agrees Sidhant Rastogi, managing partner, Zinnov: “India has been the world’s IT capital. Amid allround disruption, I doubt whether customers will explore anybody new. The incumbent will have the advantage.”Roy doesn’t see India losing its competitive edge, though 12-15% of employees could be retrenched as companies seek digital skills across AI, ML, big data, cloud, blockchain and so on. Not everyone can be reskilled, he says.“About 75% of the world’s IT outsourcing is done by Indians or Indian companies,” says Sandip Agarwal, associate director, Edelweiss Financials.Covid-19 and ensuing disruption have helped consolidate brand India’s position in the world. “Achieving 90%-plus uptime in such a short time is nothing short of remarkable.Tech sector has demonstrated terrific resilience,” says Nitin Bhatt, global leader (risk transformation), EY India. Global analysts see Indian IT industry showing mettle in coping well and bouncing back despite unprecedented disruption leading to overnight transition to WFH arrangements.The industry has been battle-tested, having successfully moved delivery models from onpremise to remote locations, says New Yorkbased Moshe Katri, MD, Wedbush Securities. In terms of larger impact, Katri says: “This will accelerate the ongoing cannibalisation of legacy IT services projects as delivery continues to shift from capital-intensive models to capital-light models with the help of cloud, SaaS and automation. The likely winners will continue to be companies with large digital capabilities.” 76237309Digital BazaarsBusinesses have realised that in a post-Covid world, health will be paramount and some of the new ways of living — social distancing, avoiding crowded areas, empty trial rooms at garment stores — are here to stay. This will lead to a higher dependence on technology services, and SaaS companies such as Capillary Technologies, which have over 300 clients, including Levi’s, Benetton, Pizza Hut and KFC, see an accelerated growth to digital and an opportunity to sell products such as loyalty stack, customer analytics, campaign tools and ecommerce stack. “Across Asia, 95% of retail business is offline.They want to go online,” says Reddy of Capillary Technologies. Many of them are small and mid-sized businesses which cannot afford to set up their own infrastructure and could be attracted to the pay-per-use models of SaaS providers.Many horizontal SaaS platforms like those from Kissflow, Zoho, Freshworks and Chargebee are seeing tailwinds.Governance DeliveryAs contactless models evolve for a post-Covid era, there could be a faster acceleration to e- governance as well. Aarogya Setu app helps identify Covid hotspots and people in the vicinity. The Kerala State Beverages Corporation launched BevQ, a virtual queue management app for liquor sales. The app was developed by Kochi-based startup Faircode Technologies. It generates e-tokens for sale of liquor and directs users to the nearest vend based on GPS. “Post-pandemic, we will see a tremendous surge in apps for e-governance such as Aarogya Setu as it becomes imperative for a bi-directional G2C (government to citizen) direct engagement,” says Rao of NTT.Short-Term PainWhile Covid-19 has potentially opened up huge opportunities for Indian IT, companies will have to tide over the disruption wreaked by the pandemic in the short term. James Friedman, senior fintech research analyst at Susquehanna International Group, who tracks Indian IT services closely, says: “Pricing pressure is accelerating, especially on contract renewals.”Many clients are pushing for contract renegotiations. Arup Roy, research VP at Gartner, says: “Some clients have gone back to contracts signed even in December 2019 and are reworking terms with 8-25% reduction in rates.”At Capillary Technologies, discount budget has increased by 10% of its revenue. Technology heavyweight Infosys, in a US SEC filing, flagged risks, including reduced demand for services, which could have a negative impact on profitability unless it is able to eliminate fixed costs in line with reduced demand.With global customer businesses shrinking 20-30% due to Covid-19, they will in turn spend less on IT or seek more for less. At the same time, there are companies, like a bank in New York, which outsourced work for the first time ever, last month. Peter Bendor-Samuel, CEO of Everest Group, points out that Indian IT firms must pivot from project mentality to large digital transformation. “The two firms they are all trying to catch up with are Accenture and Deloitte, both of which enjoy a substantial lead in the large digital transformation market.”Even as they catch up and reskill developers, in the short term, the market will be volatile. “In the short term (18 months), revenues will be impacted as business customers globally are under stress and declare bankruptcy. In medium to long term, Covid-19 has accelerated a transition already underway towards Industry 4.0. Digital is the only way to conduct business,” says Kris Gopalakrishnan, cofounder of Infosys.Through multiple past disruptions, Indian IT companies have survived, only to grow bigger, leave behind legacy services and move to a different orbit. This time will be no different.

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