The outbreak of Coronavirus is both a challenge as well as an opportunity for companies to relook into their business and operating models, said an industry expert.
At the end of the day, Jyoti Lalchandani, Vice-President and Regional Managing Director for research firm International Data Corporation (IDC), told TechRadar Middle East that both revenues and profits are going to be impacted as demand is going to drop and will force organisations to take a hit in the short term in some of the sectors such as retail, hospitality, transportation, etc.
“Technology investment is going to slow down and on the other hand, some of the disruptive business models are going to emerge and it is going to get positive in the long run. The current view is that it is going to be a short-term impact,” he said.
Moreover, he said that countries are forced to stimulate the economy by investing in more government and infrastructure projects and also support the banking and financial services sector, apart from supporting SMEs in difficult times.
The Central Bank of the UAE has rolled out an AED 100b economic stimulus package while Abu Dhabi, as part of Ghadan 21 plan, has announced 16 initiatives and Dubai has announced AED 1.5b package to cut the cost of doing business and living. Saudi Arabia’s central bank announced a 50b riyal package.
“I am quite confident that governments will announce a lot more stimulus packages to help SMEs and the economy. Many countries may go into the recession phase if it [virus] continues for the next few months,” Lalchandani said.
Furthermore, he said that countries are forced to stimulate the economy by investing in more government and infrastructure projects and also support the banking and financial services sector, apart from supporting SMEs in difficult times.
In the near term, he said that companies and SMEs will look at their cost structures and understand where are the areas they can save cost and will relook at their product sets and pricing strategy in the transition period to drive demand.
However, he said that there is going to be a lot of uptake for digital transformation.
Companies cautious in short-term investment
“The expectations of customers are going to be how do I get the same level of service and during disruptions, how am I going to leverage the technologies. It is a CEO’s agenda on how do they deliver their services in a digital format as there are restrictions in some of the traditional channels to the customers.
“We are seeing a lot of emphases on delivering consumer-facing services through remote channels rather than the physical channels in retail, hospitality, banking and financial services, transportation, etc. It is going to speed up digital transformation efforts. The challenge is what does it mean in terms of the economic impact of the virus as multiple industries are been impacted despite weak consumer confidence,” Lalchandani said.
Companies are cautious in short-term investment in this point of time, he said, because of the uncertain nature, how long is the virus going to impact and last.
From a digital perspective, he said that it is going to have two effects – one is customers are going to expect a similar level of services through digital channels and that is not going to change while the second one is the impact on organisations’ revenues and profits.
Remote work to become a new norm
When working from home is quite a common phenomenon in many countries for many years as commute times are quite significant, it has been a tradition, so far, to go to the office in the region, he said.
However, he said that a number of companies in the UAE have adopted a work from home policy.
“All the infrastructure capabilities are available right now but there will be an adjustment period and we have to get used to it but time will tell, in terms of productivity and net gains. Remote working is going to increase sustainably and it is going to put a lot of pressure on IT departments to provide the level of support for remote workers and greater investment in remote-working applications,” he said.
As governments and industries become comfortable by working from home, he said the phenomenon is going to become the new norm.