Impact and Opportunities in the “New Normal”

May 18, 2020 By: N.V. Subrahmanyam

A lot is being said and shared over the internet on the post-COVID-19 lockdown or the “New Normal”. But all of them sum up to one convergence – the scenario is not BAU; with several restrictions regarding social distancing at workplaces, business travel-related, public transportation or chartered transportation to work spots, do’s and don’ts at workplaces, etc. The common allusion is, that these restrictions are here to stay for longer than expected – a horizon of 9 to 12 months period.

Then, how do businesses adjust to this “New Normal”? More specifically, let’s examine what would it imply to the IT and IT Services Industry.

Let’s divide this into two parts – one, the likely impact on Organizations and the second, the likely impact on the workforce.

Impact on Organizations

  • The size of the market for customers is likely to get shrunk.
  • Many of the customers may categorize services into dependent and non-dependent services to identify areas where there is a need to spend and where it could be deferred.
  • Many customers may look for resources on demand rather than opting for fixed resourcing.
  • There would an increased tendency of passing on the risks to the service providers (IT Cos) due to the shrunk budgets of the customers.
  • Engagement model may change; WFH and BYOD even on onsite engagements are likely to occur to optimize the office space and Infra norms in the “New Normal”.

Impact on Workforce

  • Some of the verticals like Travel & Hospitality, Automotive, Aerospace, etc have taken a large dent due to COVID-19 and thus the resources engaged in these vertical projects may have to weather decreased workloads. New initiatives may be shelved for want of budgets and the IT Cos may have to digest this factor.
  • There would be demands to reduce the costs by customers and thus need for increased automation would arise; therefore, employees/IT organizations have to plan for reskilling/cross-skilling resources for increasing the capacity utilization by their organizations.
  • In the “New Normal”, WFH percentage would increase; and, BYOD may become a requirement. But, for the IT Infra teams monitoring and supporting the devices remotely would be a herculean task.
  • The employees working remotely/WFH should demonstrate more self-discipline, should be able to meet higher productivity expectations.
  • Employees should adapt to the changed work-life balance that has been brought in by WFH.

Opportunities for IT Organizations & Their Approach

  • Due to budget constraints, companies will give a huge emphasis on automation and manpower cost reduction.
    • IT Companies with a vision similar to their clients and deliver value would emerge as an alternative to incumbent service providers and provide cost-effective solutions.
    • IT Companies having RPA capabilities can automate service offerings across SDLC in today’s scenario; where legacy applications are being supported automation is possible with RPA capabilities albeit in a circuitous way.
    • Continuous delivery (includes continuous integration and deployment) at least up to the staging area if not production deployment could be automated.
    • This approach brings increased SDLC automation, decreased timelines, enhanced productivity resulting in reduced cost to the customer.
  • Customers hitherto preferring on-premise systems, would tend towards SaaS, PaaS & TaaS to optimize the cost of ownership of the IT services. It is expected that due to the “New Normal” situation, all future IT investments over several quarters, would be subjected to justification whether it gives the ROI in a shorter-term or will it lead to a revenue stream in the near term and thus whether those investments could be delayed or deferred.
    • With expertise in different Enterprise software applications like ERP, QAD, Salesforce, Progress – companies will be able to provide SaaS/PaaS-based services; however, they need to plan about hosting needs, pricing models and support strategies.
    • TaaS (Testing as a Service) model, which is a platform-agnostic test offering can be positioned as a multi-tenant cost take-out alternative to on-premise or dedicated test services.
    • With increased cloud-based systems, cybersecurity and security testing will assume significance. Thus, companies could build a cloud-based security testing platform and offer the services on a subscription or pay-per-use basis.
    • Another dimension to the cloud-based test offerings is Performance testing, which also could be available as a hosted solution with attractive pricing options.
  • The tendency towards WFH will make the resource available from across the globe; this is a positive for the IT Companies, as they could start crowdsourcing, right resourcing and increased acceptability of resources according to customer requirements.
    • Companies have established that WFH during the Covid-19 times has not dipped any of its delivery capabilities and customer commitment.
    • It is imperative that companies must evolve a new metric to measure and monitor the productivity of the WFH resource model.
    • Right sourcing improves client engagement as WFH removes the barriers of resource location.
    • Also, companies could explore the model of on-demand and/or crowdsourcing when the demand arises and thus could reduce the resource carrying cost.
    • Crowdsourcing model also helps IT companies to provide skill at scale to meet the demand surge.
  • IT Companies are now exploring collaborative and agile delivery models to benefit customers. There is an increased demand for efficiency, cost optimization, and transparency from the customers. With the current shrunk budget scenarios, as mentioned earlier customers would like to pass on the risk to IT Companies.
    • With the customer expectations that there is skin in the game, IT companies may have to come up with outcome-based pricing.
    • As there are going to be less ‘Face’ meetings, ‘C-Level’ collaboration with the client would become imperative to keep and increase customer confidence levels.
    • Collaborative initiatives with customers who look for diversifying their operations but unwilling to invest, in setting up new outsourcing centers.

In these tough times, it is important to stand together, and companies are helping their customers. Stay safe and stay healthy. Please remember that some of the best initiatives are built-in trying times. Like all difficult situations, this too shall pass!

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