The Coronavirus is also a test for IT companies – which of them will pass?

It is becoming increasingly clear that the Coronavirus pandemic will cause an economic decline that we have not faced in decades. The fall of demand and production stoppage will result in a crisis, that will be much more difficult to overcome, than simply by means of an enormous bailout, as in 2008. The future of many companies and even entire industries is in question, and becomes an impulse for intensive transformations.

An open issue is the impact of the pandemic results on the rather flexible and instantly adapting IT industry. There is no shortage of opinions, that the companies associated with IT, are the ones to pass the crisis without damages, and that they may become even stronger than ever before.

Optimistic scenario – serious, but not catastrophic slowdown

According to a memo by professor Witold Orłowski, who is the chief economic advisor for PWC Poland, the general impact of the COVID-19 pandemic on world economies will be severe, but not catastrophic. The professor notes, that difficulties in production and supply maintenance are noticeable, particularly in industries strongly associated with the Chinese economy, or those focusing on export. 

However, one should note, that the forecast is only related to a scenario, in which the situation will begin to stabilise in 1-2 months. Then, at the end of the year, the GDP growth of many European countries will amount to zero. The situation in Asia is not looking much better. According to The Economic Times estimates, all largest IT corporations in India will be affected by a significant growth slowdown, equivalent of the loss of income between 2% and 7%.

This – rather negative – scenario for Asian markets alone shows the differences between the IT industry and other industries. While numerous companies, particularly those exporting or importing goods, will, in portion, probably vanish from the market, the IT situation is solely discussed in terms of growth slowdowns, and one digit income decreases. Due to workflows and supply chain digitisation, the IT industry is much more immune to crises such as the aforementioned pandemic, than other branches of economy.

Big tech will leave the crisis stronger

Additionally, one should not expect, that the pandemic will have a negative impact on the operations of cloud services providers. Quite the contrary – the popularisation of remote work has caused a boom of interest in their offers, with some providers even facing issues in maintaining the availability of services, and load balancing caused by a gigantic increase in demand. Demand, the decrease of which is a negative factor in many other industries.

It is to be expected, that following the current popularisation of remote work, a part of companies will not return to the in-office mode, therefore, the interest in infrastructure outsourcing will grow even faster than before. Almost all corporations that maintain social networking services are noting growth, also streaming services, and the producers of all sorts of communicators are doing great, particularly those who provide the videoconferencing function.

Due to necessary isolation, using the aforementioned is no more a novelty, but has become a necessity in many cases. Companies, that previously have not had implemented, appropriate procedures of remote work, are now forced to develop the, and whether they return entirely to previous methods of work organisation after the pandemic, is not obvious.

Coronavirus – a chance or a threat to fintech?

One of the branches of broadly perceived IT, which will definitely be affected by the pandemic is fintech. Innovative financial institutions must face significant issues, primarily resulting from the uncertainty of the consumers themselves. The time of crisis is an incentive to save, and commission own savings to the most trusted enterprises, primarily operating in a more traditional model than fintech, and being able to prove decades of activity.

On the other hand, analysts agree, that the Coronavirus will not drastically affect companies that offer payment services. They too will probably have to revise the expectations regarding the income growths forecasts, however, simultaneously, due to isolation and shutdowns of a portion of stores, the interest in digital means of payment is increasing. Additionally, the pandemic is a good opportunity to introduce new services and partnerships with chain stores and e-commerce services.