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Doing it the COVID way

Every organization irrespective of its size is facing novel challenges as they continue to navigate through the impacts of the COVID-19 pandemic. A record 3.28 million Americans filed for unemployment benefits in the week ending March 21 as coronavirus-induced layoffs surge around the US. Even when the short-term effects end, the long-term economic impact will ripple for years. Many companies are taking drastic steps to stay in the business, facing the crisis with a spirit of innovation through accelerating digital transformation and implementing mobility and fluidity in operations. There is no doubt that coronavirus will alter the way in which the world functions. The big question is ‘whether the world ever be like it used to be?’Governments and central banks of all major economies are trying to infuse liquidity in the economy by introducing stimulus packages to support businesses to continue their operations. The Indian government announced an INR2.65 lakh crore worth of a revival package in November 2020 to revive and boost the growth of the COVID hit economy. This package amounts to 15 percent of the GDP of the Indian economy.

With the lack of clarity about the future, businesses are witnessing the negative impact of this conjecture. The majority of countries have imposed lockdowns and advised people to work from home. Putting a restriction on the mobility of individuals has had a detrimental impact on a number of major industries. One of the brightest examples of industries negatively impacted by COVID-19 is that of oil and petroleum. As a result of the precipitous decline in air travel, industrial activities, and other forms of long and short-distance transportation, there was a steep decline in the global demand for oil and petroleum. In April 2020, US oil prices plunged to less than 0 for the first time in history. Companies involved in oil exploration, storage, and distribution have huge amounts of fixed costs and in the face of low demand for the product, piling costs have been driving companies into severe losses. In the face of mounting costs and no source of revenue, companies are resorting to firing employees to stay afloat. Several start-ups and small and medium enterprises have shut down operations due to the financial crisis created by the pandemic. Despite government initiatives to help companies overcome the crisis and encourage them to hire employees, limited government resources and red-tapism have resulted in an overall decline in the situation of such companies that are at the beginning of their corporate lifecycle.

Despite the measures taken by a number of countries around the world to kickstart their economies, unemployment has resulted in lower disposable income and financial insecurity has led to cautious spending by consumers. As a result, companies are seeing a very flat growth in the demand for their products and services. The decline in business travels due to remote working and concerns regarding social distancing and sanitation have left industries like Tourism and Hospitality in dire straits with people not willing to spend on non-essential services like those of hotels and restaurants. In a similar manner, companies providing non-essential services that require direct or indirect physical human contact, including salons, spas, gyms, etc. are looking at heavy losses and even bankruptcy.

Despite the uncertainties, this situation has also brought benefits to certain industries like pharmaceutical and companies providing web call services. Zoom enhanced its profit with more than 25 million dollars in the very first quarter of the year. This is the highest ever jump the US-based telecommunication company has achieved in a single quarter.

The economic impact of the 2020 coronavirus pandemic in India has also been largely disruptive. India's growth in the fourth quarter of the fiscal year 2020 went down to 3.1% according to the ministry of statistics. After the announcement of the economic package in mid-May, India's GDP estimates were downgraded even more to negative figures, signaling a deep recession. Unemployment rose, more than 45% of households across the nation have reported an income drop as compared to the previous year. Without a doubt, the COVID-19 pandemic has simplified the existing vulnerabilities of India's banking sector, particularly of banks and non-bank finance companies. Since April 2020, not only has the credit growth of banks slowed down but more importantly, their asset quality has also deteriorated sharply. The government aims to commit spending billions of dollars to better fight the health crisis and to fast track economic recovery from the Covid 19 induced recession. Injecting billions of dollars into the economy now to save a 2.9$ trillion economy is the most effective way out of this crisis.

In the wreckage left from the global pandemic, we can find a positive if we look for them. The most obvious one is an overall increase in efficiency as corporates cut costs at a maddening speed. But the less obvious one is the efficiency in the processes brought about by a decrease in face to face human interaction. The pandemic has increased the use of digital transactions as more and more people go online for everything from work to shopping to buying groceries. COVID-19 is pushing the limits of collaboration between different entities with examples like cities partnering with hotels to house homeless populations to curb the virus's spread. These relationships built during a crisis have the potential to define business and technology in the future. As the pandemic ushers us all into our homes and prompts us to set up our offices inside, we are saving precious time on the commute, the chit chat, and the numerous coffee breaks that used to extend well beyond a simple cuppa. Video conferencing, although already there, is now being used readily. It won't be a far-fetched thought to imagine preferring to continue this style of business and lifestyle even after the pandemic has subsided.