COVID-19 has accelerated digitisation process: study


COVID-19 had accelerated the digitisation process across industries, and technology service providers saw a jump of 30% digital transformation deals since the pandemic’s outbreak, industry body Nasscom and McKinsey & Co. said in a joint report.

The report ‘Future of Technology Services – Navigating the New Normal’ added that there had been an 80% jump in cloud spending and 15% in customer experience during the period. Further, with a ‘dramatic acceleration’ in the need for digitisation across industries worldwide, more than 80% of the near-term incremental spending by enterprises may be driven by COVID-19 resilient digital offering.

“Investment in digital re-invention and resilient operations saw a dramatic acceleration since the start of the pandemic,” said Noshir Kaka, senior partner and global leader, Analytics, McKinsey & Co.

“The report suggests that the world has leapfrogged on digital adoption by 3-5 years in the last nine months,” he added.

Nasscom and McKinsey stated in the report that 70% of enterprises were looking to either increase or reprioritise their outsourcing expenditure, with business digitisation (including remote enablement) and cloud transformation being the top two spend priorities over the next 12-18 months. About 50% of CIOs interviewed said that while their outsourcing budget will not change, they will reprioritise projects. On the other hand, 22% said their outsourcing budget will increase.

It added that looking ahead to 2021, however, analysts are cautiously optimistic, especially in the area of enterprise software which is expected to take the biggest leap on the back of remote working and other virtual services. “Certain micro-verticals [e.g. travel, hospitality, heavy engineering] which have been massively affected by the pandemic will also take longer to recovery. Technology service providers will need to actively rebalance their portfolio to play in the high growth micro verticals in the next normal,” it said.

Debjani Ghosh, President, Nasscom, said, “The next 10 years will be fundamentally different from the past and require all stakeholders to develop strategies and insights to identify new opportunities and mitigate the risks. To ensure faster recovery, companies need to develop a two-part response to the evolving landscape: near term plan of action and long-term strategic rethinking.”



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