World’s economic growth will be severely impacted amidst the coronavirus lockdown causing enormous disruption across multiple sectors. According to Dun & Bradstreet’s latest Economy Forecast, the probability of countries entering into recession and companies going bankrupt has increased and India is not likely to remain decoupled from the global meltdown. Industries’ worst-hit shall be among Financial, Textile, Electronics, Tourism and Aviation and all those sectors (Pharma, Chemicals, Shipping) where the supply chain has been disrupted due to worldwide lock-downs. The crisis continues unabated and there are simply too many variables to control for.
However, I am trying to find a silver lining in the dark grey tunnel. There are a few sectors that have seen an unprecedented hike in customer queries, product demand, and usage. Being home quarantined the general public at large is getting hands-on experience for digital services and the majority of corporates are working from home using digital platforms. Interestingly enough, once these businesses have begun their journey towards a digital/app-based business model and environment, it is highly unlikely they will go into reverse. This might just be the beginning of an altogether different business world with newer models gaining momentum. The coronavirus shut-down in China unfolds a big opportunity for India in those sectors where China is a major exporter. The epidemic has also underlined the importance of over-reliance on Chinese products in the Indian market and it is high time that the government encourages Indian manufactures to step up local production, which can be used to India’s advantage.
Telecom, Broadcast Services
As the number of Covid-19 cases mounts, the nation urged its citizens to stay at home and practice social distancing. This move shall aid the telecom sector as Indians consume more and more data. Consumers are expecting the internet to work round the clock to enable them to function seamlessly. In January and February, when China—the epicenter of the virus outbreak—was under lockdown, the revenue of telecommunication services rose 1.5 percent compared to last year, according to the data released. The fact that people are keen to entertain themselves, working from home or accessing educational resources and online courses; has thrust the telco industry into the limelight. The success of almost every element and facet of society is dependent on the success of the telecommunication industry and authorities are putting in a lot of measures to cater to their customers not only for daily life needs but also for emergency services. Vodafone Idea Limited (VIL), Bharti Airtel and Reliance Jio Infocomm have deployed senior technical staff and smart hands at their network management war rooms to closely monitor critical operations and ensure uninterrupted mobile and broadband services amid the 21-day nationwide lockdown with temporary food and stay arrangements at their data centers. Other than Telcos, Broadcast Service Providers like Cable Operators and DTH Industry are also in for a favorable time with consumers gaining on the Watching TV time. Globally the TV viewership has increased by approx. 12% if compared pre and Post Lockdown.
For the cloud companies, the coronavirus outbreak is effectively forcing some organizations through a very rapid digital transformation project, to embrace the cloud and mobility trends. The cloud computing segment has been on the rise for years, as more employees find themselves restricted to their homes more workloads will have to be migrated to the cloud to ensure the business can function without disruptions. Amazon Web Services, Microsoft Azure and Google Cloud are the obvious beneficiaries as market leaders while other traditional players might have to reinvent their business models. This could act as a catalyst for accelerating the already fast-blossoming cloud segments.
Video conferencing and collaboration
Although there is no substitute for a face-to-face meeting, alternatives have to be sought today amidst the quarantine. Businesses are encouraging meetings to be conducted via video links rather than email to ensure effective communication and ensure the well-being of employees. Contact with colleagues via video link is not perfect by any chance, but it might be an alternative to get the job going and aid remote working. Microsoft is an obvious beneficiary here, it announced last week the number of daily active users for its Teams collaboration suite increased by 12 million. Zoom Video Communications, a remote conferencing service company headquartered in San Jose, has seen share price increase by 130% since the beginning of the year. More corporates are turning to companies like ON24 to purchase webcasting and webinar services to ensure lead generation projects can continue. Some companies are being forced to adopt a digital transformation and some of the remote working capabilities might be retained in the long-term looking at the costs and benefits.
Physical cash is already becoming a thing of the past with electronic payments in vogue, and the COVID-19 outbreak has accelerated this. Merchants like Visa, Mastercard, and AMEX are already benefitting from these trends. Some retailers and vendors are now accepting only digital payments and this in the long-term could force the majority of customers into adopting digital payments. While some from the traditional generations still resist the use of digital currency but the refusal to accept physical payments by some shops, will force consumers to adopt digital payments and encourage the use of digital currency.
Online Grocery and Food delivery
With the rush on supermarkets persisting as the days turn into weeks, online grocery delivery companies are seeing a surge in popularity. Online shopping delivery service Ocado suspended its website last week, telling customer demand exceeded its capacity to deliver. The share price for Ocado has surged this month, though it did decline once it announced it would temporarily stop taking orders. Buying of everyday grocery and other necessities are being routed to online sellers like Amazon, Big Basket and Grofers encouraging the trend of contactless grocery delivery at doorstep. Food delivery by Apps like Zomato and Swiggy has also witnessed an upward trend amidst the lockdown.
Streaming, gaming and video content platforms
This is perhaps the most obvious example of a beneficial segment. Video streaming will see a boom as parents will need to occupy children, while adults will also need entertaining as pubs, clubs, theatres, parks, beaches, holidays and gigs all disappear. OTT players like Netflix and Amazon Prime are already popular among the young generation and there has been an enormous surge in the number of newly added subscribers. All streaming platforms could benefit, while Disney+ is launching at a good time to capture the attention of European consumers. In terms of video platforms outside of streaming, YouTube is enjoying particular success. Not only are there those who are trying to entertain themselves, but there is also millions of hours of information (some much more accurate than others) on the pandemic itself. From a gaming perspective, with the usual entertainment venues shut down, consumers will need more options to be entertained at home. Microsoft Xbox, Google Stadia and PlayStation are likely securing additional subscriptions as well as in-game purchases.
For those corporations in a more fortunate cash position than others, the shock to the financial markets could be viewed as an opportunity. Softbank is a perfect example. On March 23rd, Softbank announced it was selling off certain unnamed assets to fund a second share buyback program. Combined with the first announced on March 13, Softbank will be able to retire 45% of Softbank shares which are currently on the open market. Share buyback programs could be viewed as a way to protect a corporate strategy from short-term influences and aggressive investors.
A large amount of air pollution we breathe comes from traffic. With many countries on lockdown, the levels of traffic pollution have plummeted. Satellites have picked up very large decreases in levels of NO2 (primary from diesel) in all industrial regions of the world and the ozone layer has finally begun healing. We expect the fine particulate matter (PM) has similarly reduced. Big reductions in pollutants will also come because people are no longer traveling. It is too early to say whether these improvements will offset any of the mortality from Covid-19, or other health problems due to being confined indoors.
Such a tiny silver lining can hardly make up for the devastation of the COVID-19 pandemic. But these preliminary numbers demonstrate that this global health disaster gives us time to re-think and an opportunity to assess –
i. which aspects of modern life are absolutely necessary
ii. what positive changes we need to adopt in our daily lives and
iii. the amount of restructuring required by mankind on a global scale.
I leave you with these questions to ponder for the rest of the lockdown while we are in a fight for survival and existence.
Every situation teaches us what we haven’t learned until now and having experienced this global pandemic in our lifetimes we all need to take big-time learning from hereon!