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Business as usual for IT companies despite Omicron, say experts


It seems to be business as usual for Indian IT services providers despite reports emerging of a staggering increase in daily Covid-19 numbers from the United States, parts of Europe and the United Kingdom that are battling the new Omicron variant.


The United States and UK are the top two markets for the $190 billion Indian IT industry and the spike in Covid-19 cases has brought back concerns of a global lockdown, and how this would impact the sector. Industry watchers have, however, ruled out a wider fallout for the industry, which has seen demand rise sharply in the past year as companies accelerated their digital transformation initiatives.

Currently, about 3% of Wipro’s more than 200,000 employees work from office under its hybrid return-to-office policy, including those in leadership positions.

“Beginning January 10, fully vaccinated employees who are senior managers will return to work from offices in India, twice a week (Mondays and Thursdays). Currently, we are in the holiday shutdown period till January 2 and will review our plans early next year,” a Wipro spokesperson said.

Sanchit Vir Gogia, founder of industry consultancy Greyhound Research, said customers were opting for larger IT service providers that usually have a bigger talent pool, over smaller ones that struggle to retain employees during boom times.

“A lot of the digital transformation that started last year is still in progress and it will not stop. The (IT service) companies are insulated by the remote and hybrid working arrangement rolled out over the past year, existing and ongoing demand for digital solutions,” Gogia said.

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A third Covid-19 wave globally would help speed up digital transformation initiatives, instead of hampering them.

“We don’t see any demand-side challenge. 2022 was looking like the year when things were supposed to be back to normal. Now it’s not looking like it,” said Sangeeta Gupta, senior vice-president of IT industry association Nasscom.

The industry will be able to get a clearer picture over the next few weeks since most businesses are anyway shut for Christmas and New Year. “We will have a better idea by the time the world reopens after the holidays,” she said.

During the lockdowns that followed the first wave in 2020, the uncertainty had initially resulted in a slump in new projects, and clients had backed off on making further investments. During the second wave earlier this year, IT services companies were not impacted in any significant manner.

“Business software providers are adding features and enhancing their offerings to be suitable for a world that’s moving towards hybrid work. Moreover, having a distributed workforce –which is becoming more and more common– also helps with business continuity as not every area is impacted in the same way by the pandemic,” said Praval Singh, vice president, Zoho Corp, a Software as a Service provider.

Increased spread of the Omicron variant would hurt the return-to-office plans that IT companies had announced a few months ago, said Pareekh Jain, founder of Pareekh Consulting.

“There could be uncertainties around travel and mobility in impacted countries…Omicron adds to uncertainty in return to normalcy but overall it is unlikely to impact demand or supply in any significant way,” he said.

It is likely to be business as usual unless things change drastically.

“Currently, we do not see the client segments raising concerns about the business impact of this virus. Already, digital spends are up, which providers are struggling to meet due to supply chain issues. We can expect some increase in digitization demand, but it won’t be significant,” said DD Mishra, senior director analyst at Gartner Inc.

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