Thirty per cent WFH to stay; impact more severe on SMEs: HYSEA President

Bharani Kumar Aroll, the newly-appointed President of Hyderabad Software Exporters’ Association (HYSEA), is an IT industry veteran. Actively involved in the ecosystem, Bharani, who is also CEO of Infopeers Solutions, talks in his maiden interview about the impact of Covid-19 on the industry and hiring prospects, how it could change the way the IT-BPO industry functions post the lockdown. Excerpts.

The IT industry will undergo a paradigm shift in the service delivery model, leveraging enhanced digital infrastructure, innovation, enhanced processes and automation.

We will see more rapid adoption of digital technologies. Work from home (WFH) will be here to stay and we expect the new normal to have an average of 25-30 per cent workforce working from home, while maintaining a high degree of connectivity, security and communication levels.

Many functions like sales, marketing, and recruitment will also see the adoption of online techniques. These were already prevalent to some extent but will now scale up. The organisation work culture will evolve to adopt to the new normal with virtual teams cross-border.

From a business perspective, large companies generally have long-term, multi-year contracts and have better resilience, despite slowdown in acquiring new business, contract cancellation, etc, because of their strong cash and bank reserves.

However, small companies generally have short-term projects ― typically staff augmentation-based engagements ― and any cancellation of projects or ramping down the project resources will impact them severely from a cash flow standpoint. The impact is more severe for SMEs than the large companies.

This is precisely the reason why HYSEA made some strong recommendations to the central and state governments requesting relief measures to SMEs. They need more cash in hand, access to loans and capital to survive. These have been addressed so some extent in the FM’s package announced yesterday. More needs to be done in this direction very soon before companies are forced to the brink.

We anticipate that the US and Europe may consider increasing their offshore outsourcing due to cost-cutting measures for business sustenance. We expect some sectors like healthcare, online business, and digital technologies to see relatively increased spending.

Digital transformation is expected to move faster in enterprises leveraging technology platforms like AI, data analytics, cloud computing and cyber security. Therefore, products and solutions adopting these technologies and collaborative platforms will be in higher demand and will throw up a lot of opportunities for the India IT-BPO sector. The other opportunities that may come India’s way are from businesses that plan to exit China. However, considering the world-wide impact and the estimated recovery in general, it will be muted or flat growth over the next eight to 10 months.

The average year-on-year growth in Hyderabad has been close to 15 per cent over the past few years. With 2020-21 seeing a slowdown due to the pandemic, followed by time taken for recovery, we expect this average to come down slightly to approximately 10-12 per cent YoY for the current financial year.

We are quite optimistic that the growth rate will recover back to 15 per cent and above in the next FY due to the state government’s strategic and aggressive initiatives to attract global enterprises to set up their global delivery centres in Hyderabad.

At this stage, companies that have already made offers to freshers are honouring the same and onboarding them. The same applies to lateral hiring as well. However, unless the recovery is faster, it will not be quite an encouraging situation for the fresh engineering graduates who already face the challenges of rapid changes in technology and skill demands. Now, with the anticipated slow recovery and thus reduced demand globally for traditional businesses, and companies intending to tighten their belts, things will be tough for two to four quarters on the overall hiring scene. The brighter ones and those who can learn quickly may be able to find jobs.

The graduates should acquire new skills and tap opportunities in the start-up ecosystem. They can pursue higher studies.

Generally, start-ups with weak products and solutions will find the going tough and some will collapse. Funds will obviously flow towards the stronger ones and they will rebound sooner or later. The crisis will force investors and the market to take a hard look at start-ups and separate the top ones from the also-rans.

Covid-19 is an unprecedented crisis and it should not be considered the benchmark or compared with any other economy-based crisis . So, the impact on the start-ups due to Covid-19 is more temporary in nature and the future for start-ups remains as strong as ever. Currently, start-ups in the internet, retail, flight, hotel bookings and co-working space are severely hit. The so-called gig-economy firms including Ola, Uber and Airbnb, too, are impacted. On the contrary, start-ups in sectors like video conferencing, gaming, streaming and online education content providers are all doing extremely well.

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