- AUTHOR Mukund Narasimhan
- PUBLISHED ON December 14, 2020
Part 1 of 3: The Ramifications of COVID-19
This year, the broader technology ecosystem has already had to contend with some significant global issues, including ongoing geopolitical tensions and now the outbreak of the COVID-19 virus. Since its first reported case in the Chinese city of Wuhan, the virus been given pandemic status by the World Health Organisation (WHO). Whilst it seems that the vaccine is almost here, there exist questions on efficacy, ability to keep up to demand, and all importantly the supply chain behind its distribution. But nobody can deny the fact that there has been a far-reaching effect on the economy.
The IMF in its report the World Economic Outlook, April 2020 mentions that “The COVID-19 pandemic is inflicting high and rising human costs worldwide, and the necessary protection measures are severely impacting economic activity. As a result of the pandemic, the global economy is projected to contract sharply by –3 % in 2020, much worse than during the 2008–09 financial crisis”. This makes the worst recession since the Great Depression, and far worse than the Global Financial Crisis.
The tech world has not been left untouched especially ISV’s (Independent Software Vendors). There have been far-reaching effects on both revenue and operations
COVID-19 Impact on Revenue & Operations for ISV’s
This will be the first time since the Great Depression both advanced economies and ’emerging market and developing economies’ are in a recession. The chief economist of the IMF, Gita Gopinath in her blog mentions “For this year, growth in advanced economies is projected at -6.1 %. Emerging market and developing economies with normal growth levels well above advanced economies are also projected to have negative growth rates of -1.0 % in 2020, and -2.2 % if you exclude China. The income per capita is projected to shrink for over 170 countries”.
This has had effects on sectors that propel the economy and jobs such as retail, travel, manufacturing, F&B segment sparing no sector. Collaboration technologies and endpoint security have shown some near term spurts in growth, but this is also expected to subdue soon. Consumer spending on hold has severe implications as companies too cut down incremental spending and focus on conserving capital. Many ISV’s and SaaS companies in the recent few years saw significant growth in their SMB channel and emerging markets. With businesses going through difficult times, ISV’s are expected to have an impact of 20-25% on revenue collection. Boards and Investors are advising ISV’s ‘go slow’ and conserve cash during these tough times.
COVID-19 has changed the way organizations now work
The coronavirus disruption has brought about a fresh need for businesses to rethink their operations and how their staff work. Companies have transitioned to a “remote first” model as a result of measures brought in during the pandemic. Digital communication via tools such as video with virtual meetings becoming a regular feature. Teams may pass several months before they see each other physically. Everyone being remote needs some context switching with product management, engineering, QA at different cities becoming the new normal and added to the mix are outsourcing partners.
In the next part, I cover how you can start winning, stay tuned!
Mukund leads the Client Offering function at Niyuj. He helps shape Niyuj’s proposition to help clients stay relevant in changing times. He can be reached at Mukund.email@example.com
We are a “technology first” company. The Niyuj team comprises professionals with 100+ years of collective management experience, including passionate developers with patents in their name, tech innovators, and top performers from leading, global universities. We specialize in building tomorrow’s products for early-stage start-ups, as well as Fortune 500 companies and everyone in the middle.