COVID-19’s impact on IT services will be deep, immediate and long-lasting, says GlobalData

All IT services companies will have a difficult 2020 as a result of COVID-19, says GlobalData, a leading data and analytics company.

The company’s latest report, COVID-19 Impact on IT Services, reveals that, while there may be a potential upside from COVID-19 for most tech, media and telecoms (TMT) sectors, there is little optimism around IT services.

David Bicknell, Principal Analyst in the Thematic Research Team at GlobalData, commented: “Providing technology services that enable digital transformation is a major area of business for IT services vendors but, in the short-term, this business will disappear as clients look to reduce costs. Any work slated to support this year’s projects will be pushed out. Several vendors taking stock of the impact of COVID-19 have admitted that they cannot yet provide any future guidance on revenues.

“Clients either postponing or cancelling major IT projects until they have a better picture of where they stand will bring short-term pain for IT services companies. The widespread shift to remote working across all industries may bring some relief for IT services providers, as companies will need support during this transition, but opportunities will still be few and far between.”

GlobalData’s IT services sector scorecard reveals that no companies will enhance their position in IT services over the next year. All IT services companies will have a dismal 2020, where the best-case scenario is that the impact lasts only one or two quarters.

Bicknell continued: “IT services companies face significant issues with remote working, even for those support staff in countries where there is acceptable broadband connectivity. India recently eased its lockdown, with IT services vendors nominally able to function at 50% strength on campuses. However, large players like Tata Consultancy Services (TCS) and Infosys are still in no rush to get their staff back to offices.

“From an outsourced contact center perspective, providers around the world are not set up for mass home working. Agents cannot handle the same number of calls from home as they can in a contact center and are likely to have problems communicating with colleagues. Eventually, outsourced service providers will find a way of enabling staff to work remotely, but this is some way off. The likely balance will, at best, be a mix between bricks and mortar offices and some element of remote working.”

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