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Last Updated : Apr 22, 2020 08:00 PM IST | Source: Moneycontrol.com

In a post COVID-19 world, less business travel could be the new normal

For tech companies, travel constitutes a significant part of their business and could range anywhere from Rs 1,000 crore to Rs 4,000 crore

 
 
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IT industry will be seeing a new normal in the post COVID-19 world, including a cut on business travel and a re-look at existing products and services, says Kris Gopalakrishnan, co-founder, Infosys.

In an interaction with Moneycontrol, Gopalakrishnan said business travel is one of the few areas where the drop could be more permanent. He pointed out that with technology, travel could be cut down and companies are saving on cost.

For tech companies, travel accounts for a significant part of their business. Thousands of techies travel to meet customers across the globe and locally for new project deals. They also meet with existing customers for relationship building and to on board new customers.

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Infosys spent close to Rs 1,392 crore on travel in FY19. For Tata Consultancy Services (TCS) and Wipro, travel accounted for about Rs 3,474 crore and Rs 1,500 crore in FY19, respectively.

But with the travel ban in place, business travel had come to a halt. Some countries will look at suspending work visa temporarily until normalcy restores. All this would further restrict travel a little longer, by as long as few months to a year, analysts pointed out.

“But the positive is that people have figured out how to do business without travelling,” Gopalakrishnan said.

IT firms are now investing heavily in the collaboration tools and the stigma around virtual meetings has diminished. However, he cautioned that to acquire new customers, companies have to rethink travel in the long-term. Currently, a majority of the business comes from existing customers and less than 20 percent of income accrues from new consumers.

New product and service lines

Other area of focus should be building strong products and services. Gopalakrishnan explained that with recession, companies will have to take a look at their products and services. “They can take advantage of this situation and create new products and services,” he added.

“So if you are in the digital content business or servicing the travel or hospitality industry, you will have to re-look and re-purpose your portfolio. If you are in Internet of Things, can you look at IoT products for health since there will be focus on health in the short-term,” he added.

Unlike the other sectors, IT industry boasts of rich cash reserves and can afford to make risky bets by tweaking current portfolio and investing in building new products and services. Infosys has Rs 27,500 crore in cash reserves and zero debt.

Business continuity

If anything, novel coronavirus outbreak is a lesson in implementing business continuity planning (BCP).

When crisis strikes, the focus would be implementing BCP to ensure that the businesses and deliverables are not impacted. However, at the time of a health crisis like novel coronavirus, existing BCP will hardly work.

BCP was designed to tackle businesses during natural disasters such as earthquake. “So it only involved moving to a different location. It never involved work from home (WFH),” Gopalakrishnan said. Now more than 90 percent of IT services employees are WFH and companies have been able to enable WFH within matter of couple of weeks.

Like most analysts pointed out, WFH is likely to stay. “We will see at least 20 percent of the workforce WFH in IT,” he added.

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First Published on Apr 22, 2020 08:00 pm
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