What Is The Impact Of Pre-Covid And Post-Covid In the IT Industry?
Information Technology and allied services have been fundamental driving forces fueling economic growth worldwide. With the outbreak of the pandemic Covid-19, every industry on the spectrum faced significant changes, and the IT industry was no different. While the government took sudden shutdown measures to prevent the spread of Covid, remote working became the new norm, leading to a severe contraction in the economy.
Are you wondering how the pre-covid and post-covid phase impacted the IT industry? Read on to understand the implications of the pandemic on the technology sector.
How was the IT industry before Covid?
The IT industry has been the backbone of every strong economy for decades. The sector also encompasses the IT-enabled service industry, including Business Process Management, IT services, Software products, Engineering services, IT consulting, and Hardware. For tech consultancy support, people today opt the benefits of the best Salesforce consulting company.
IT outsourcing has also been a significant part of the industry, where companies strategically use external service suppliers to provide IT-related business services. With such outsourcing, companies can scale back their business costs, accelerate project completion, and get external expertise to achieve core competencies.
Before the pandemic, the IT sector has been accelerating at a higher pace, both in spending and growth. Before the pandemic hit, the IT service sector was estimated to grow by 4% during 2019.
How did the pandemic affect the growth of the IT industry?
Given the spread of coronavirus worldwide, experts had predicted the global economy would shrink by 5.2% in 2020. It is the steepest decline in the numbers since the recession after the Second World War.
When the pandemic grew from China, many countries imposed nationwide lockdowns. With firms shut down to prevent the virus’s spread, employees had to work remotely from home. Although the work continues, there has been a decline in productivity, growth, and investments. Besides that, many firms also decided to downsize their operations, thus letting go of many employees. It has led to a situation of uncertainty, unemployment, and massive losses.
The pandemic has also managed to impact the technology sector by affecting the supply of raw material, disrupting the value chain of electronics, and inducing an inflationary risk on the products. It has also led to the acceleration of the new norm of ‘remote working’ and increasing focus on evaluating and de-risking the electronic sector’s end-to-end value chain.
Due to the pandemic, companies who deal with international dealers also incurred a loss of opportunities. For instance, Apple Inc’s shares fell by 5.6% due to the lack of availability of iPhones in the market. The company gets the parts for the iPhone from China, which was affected because of the lockdown. Besides that, tech conferences are also a considerable part of the IT industry. They help the emerging IT companies to interact with the pioneers and expand their horizons. On account of the threat of the virus, many such conferences could not take place. While organizers tried to host the events online, the reach was still limited. It led to a massive monetary loss to the organizers, while companies had to bear the loss of growth opportunities. If you go by the reports, there is an estimated US $ 1 billion loss due to the major tech events’ cancellation.
Going by the trends evident in the IT sector, it is safe to assume that tech firms’ growth will slow down. The country’s major tech companies’ revenue will bear the maximum jolt, with revenue falling by 2-7% on average.
Are there any disguised benefits of the pandemic?
Economic slowdown tends to impact almost all the sectors, but the effect can vary greatly. The IT industry has a track record of doing great after a recession. In the 1980s, the deep recession led to personal computers’ popularity, making Apple and Microsoft what it is today. With the mild recession of the 1990s, the government handed over the internet’s reign to the private sector, which laid the foundation for a boom of dot-com, giving rise to Google and Amazon.
Similarly, the 2008 recession didn’t impact the tech sector much and paved the way for tech companies to become the world’s biggest companies. By the year 2009, Apple increased the stock price by 900%, while Amazon increased by 2000%, and Microsoft witnessed an increment by 400%. The startups of the recession-era, like Netflix and Uber, have now managed to become driving forces around the globe.
While Covid impacted almost every industry worldwide, only a portion of the ripples reached the IT industry. Though effects on job security, investment, and delay in the value chain are some aftermaths, the technology sector is also benefiting from this unprecedented situation. Even after the pandemic, there has been a rise in demand for software and social media platforms like Zoom, Microsoft Teams, WhatsApp Video Call, and Google Hangouts. These applications have not only helped people stay connected but also to continue working or studying with ease. The pandemic has only pushed people more deeply into the realm of technology since they depend on it for personal and professional reasons alike. Industry experts believe that the longer the pandemic goes, the deeper will be the dependence on technology. It has also opened up opportunities in the sector, like the need for 5G technology. The IT industry can experience a massive growth of 4.2% in 2021 and reach $5 trillion.
The Covid-19 pandemic has undoubtedly created an unprecedented economic situation. Amid the uncertainty and fear caused by the coronavirus, the IT industry has undergone significant global level changes. With the coronavirus, the IT industry experienced an array of positive as well as negative changes. The tech industry’s short-term future might not look great at the moment, but it is still less than the damage caused to other sectors. In the long run, the IT industry might become resilient and self-sustainable once the pandemic gets over and grow exponentially in the years to come. It is safe to say that Covid-19 widened the horizon for the IT sector.
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