The IT and IT-enabled services (ITES) sector in Andhra Pradesh has kept its fingers crossed with the COVID-19 dealing a body blow to the investors who are struggling hard to put up a good show in the new financial year.
An uncertain future looms large with many apprehending loss of orders from their clients in the United States and Europe. Resource crunch leading to downsizing and right-sizing are inevitable, many stakeholders in IT and ITES sector say.
‘A mixed bag for BPOs’
IT Association of Andhra Pradesh (ITAAP) president R.L. Narayana while admitting that the new situation was posing a big challenge, told The Hindu that it could bring a mixed bag particularly to Business Processes Outsourcing (BPO) segment.
He said they were successful in installing office desktops with required software at the houses of most of the employees after declaration of the lockdown to enable them to work from home. This might bring a large volume of business now handled by countries such as COVID-hit Philippines.
Cost-cutting measures
“The shutdown of units in some countries in the post-pandemic phase may prove beneficial to the BPO units in India. However, the losses in core sectors such as aviation, hospitality, tourism and travel industry will lead to drastic cost-cutting measures,” said Mr. Narayana.
Rushikonda IT Park Association vice-president Naresh Kumar said all players in the IT sector needed to reorient their strategies and priorities post-COVID. He said the sector was expected to suffer client payments and credit cycles. Small companies with no cash reserves might be constrained to down their shutters.
“The billing amount will not see any increase in the near future with 25% to 30% of the MSME IT firms engaging less than 100 employees may endure a very gloomy future,” he said.
He said most profit-making companies might run on tight margins with focus shifted to high-end visual servers with better connectivity to higher bandwidth, cloud computing and data security.
