How has coronavirus affected Indian outsourcing?

The effects of the lockdown on Indian outsourcing and the knock-on effect for the country's IT market.

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India’s IT outsourcing market is the back office of the global economy but has seen its heady growth of recent years choked off by the Coronavirus pandemic and worldwide lockdowns. Ever resourceful, the Indian IT players are staying flexible as they look to re-invent their relationships with clients and rush ahead with automation, artificial intelligence and machine learning to carry them through to future growth.

The big six IT outsourcers – HCL, Tata Computer Services, Wipro, Infosys, Cognizant and Tech Mahindra – and consultancies such as Accenture are looking to reinvent the way they work. They are looking to restore heady growth to the Indian outsourcing market, estimated to be worth some $177bn last year.

As Jagdish Mitra, Chief Strategy Officer and Head of Growth at Tech Mahindra, says, “COVID-19 has been an accelerator for digitalisation across industries, resulting in innovations in global delivery, with more offshoring and optimum utilization of resources.” He says 25% of the company’s staff are working in offices and the rest work from home during the current lockdown. But in the long-term, he expects up to a third of staff to continue remote working. And he thinks the move to remote working and consuming will change the way many businesses operate. “The pandemic has exposed a lot of opportunities across industries including manufacturing, banking, communication, and retail primarily around providing omni-channel and omni-commerce delivery, among others, resulting in a more aggressive shift towards digital,” he says.

Even so, lockdown and the ensuing economic downturn have taken their toll on revenues across the industry. In 2019, IT outsourcers in India grew their second quarter revenues at between 6 and 13%. But in the same quarter of 2020, revenue growth had slumped to between -6% and plus 1% as the effects of the pandemic were felt, says Gartner analyst Neil Barton. This is quite a reversal from previous years, when growth has been explosive.

“It’s not the end of the world not to be growing at up to 25% a year anymore, it’s just a new experience for companies which have experienced constant growth in the ten years since 2008 and the great financial crisis,” he says.

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