Having emerged as a major health crisis, the COVID-19 virus has also severely disrupted the global economy, causing demand and supply shocks, and affecting the production of goods and services throughout the world.
The crisis has been felt throughout all industries and will continue to have far reaching impact as the situation develops. Following is our view of what some sectors may be facing in the short and medium terms.
Effects of the Pause
Tourism, Hospitality, and Travel-related industries
These businesses have been among the hardest hit as authorities push for social distancing measures and consumers are encouraged to stay at home. The International Air Transport Association has predicted that airlines could lose up to $113 billion in 2020. With drastically curtailed flights and cancelled travel plans, many companies in the industry are facing the possibility of bankruptcy. Future aircraft orders are being deferred and reconsidered, impacting profitability of both aerospace and airline companies.
Telecom
Communication has been essential throughout the crisis and will continue to be. The telecoms have strongly supported globally distributed and remotely located workforces. However, global 5G rollouts will be slowed to due to supply chain disruptions in China. Data indicates that the ICT market in China will be impacted by 10% in the first quarter of 2020.
Pharma and Medical Equipment
In a health crisis, naturally businesses oriented toward health will be on the front lines. As the world scrambles to respond to the pandemic, this sector will be called upon to develop tests, therapies, and ultimately a vaccine.
Insurance
Like pharma, the insurance industry will be on the front lines of this crisis. The surge in hospitalizations will bring an increase in insurance claims. Combined with a curtailed travel insurance business, this will likely put a large dent in the industry’s pockets.
Manufacturing
The disruption in global supply chains will have a massive impact on manufacturing. The automotive industry, including electric vehicles, which imports more than $34 billion in parts from China annually, will be significantly impacted. A leading device manufacturer, whose supply chain also leans heavily on China, warned investors it was unlikely to meet revenue targets for the first quarter of 2020.
Energy & Utilities
With much of the world on lockdown, global energy demand is greatly reduced. According to the International Energy Agency, global oil demand has dropped for the first time since 2009 because of the deep contraction in oil consumption, and major disruptions to global travel and trade. Electric companies could see up to 40% of their workforce out sick as the coronavirus continues to spread, according to a bulletin issued by the Edison Electric Institute (EEI).
Retail
Drug and grocery stores have remained open as essential businesses, allowing people stock up on basic needs. However, they are facing challenges maintaining supply chains and also keeping their work force on the ground. As retail deemed non-essential is shuttered, online retail is thriving and is poised to grow further as consumers spend less time in public.
Looking beyond the pause
In the chaos and confusion of the crisis, most organizations have postponed making new strategic decisions. Priority is being given to the immediate future, committing resources to additional infrastructure for screening, quarantining, and treatment of properties and staff. Everyone is working to find suitable mitigation measures and many companies are being forced to consider spending cuts and conserving budgets to reduce the impact on the bottom line. But what about the world beyond the crisis?
Now is the time for companies to figure out how they can reduce leakage, stay relevant and be ready to meet the demand surge that will come when the worst of the virus passes. In this crisis, there is an opportunity to find innovative ways to increase efficiency and enhance the ability to not only survive the current challenges and prepare for similar ones, but also to take a giant step forward.
In our view, there are many technologies that will get attention in this moment and evolve to achieve their next level of maturity, supporting day-to-day business as well as contingency processes. Additionally, there will be innovations that arise as a result of working through these challenges. Following are few areas that we believe may be different on the other side of the crisis:
The repercussions of the COVID-19 crisis will be felt far and wide, perhaps for years to come. However, with lessons learned from past crises and an increasing connected world we may be better equipped than ever before to emerge from this with a more secure and sustainable future. To create a resilient business , organizations can rely on the power of innovation and engineering to navigate this disruption.
Harmeet Chauhan
SVP & Global Head of IES
Harmeet Chauhan is Senior Vice President and Global Head of Wipro’s Industrial & Engineering Services business.
Harmeet defines the company’s global vision and strategy for IoT, Industry 4.0 and Product Engineering Services.
Harmeet is a proven business leader with technology industry experience across products and engineering services businesses. Until recently, he was a member of Aricent's executive team as President - Software and Internet. Prior to Aricent, he held business leadership roles across sales, product management, and business development with companies like HCL, Sun Microsystems and Microsoft.
Harmeet completed his undergraduate studies in Computer Engineering from Pune University, India, attended Business School at Fore School of Management, New Delhi, India. He is a long time San Francisco Bay Area resident and works out of our Silicon Valley Innovation Centre in Mountain View, CA.