Enterprises thinking above and beyond the bottom line

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Not all news related to the pandemic is bad news

Just a couple of months ago, the term “going viral” lightly referred to the match-to-kerosene-like spread of images, videos or other content across borders and populations. Today’s news has literally gone viral, carrying coverage of the COVID-19 outbreak in an unfortunate and devastating new realization of the term.  Every day, there is a deluge of information detailing the impact of the outbreak, including the havoc COVID-19 is wreaking on every person, institution, government and country on the planet. While we may now be associating “going viral” with a darker and more ominous meaning, there are some bright spots that are worth highlighting to complement TBR’s ongoing coverage of the business and technological impacts of the COVID-19 pandemic.

Virtual tools and aid help soften a steep learning curve

After healthcare, education is perhaps the sector most immediately impacted by the COVID-19 pandemic in ways that are evident to individuals and businesses alike. Access to quality education across socioeconomic and geographic groups has been a subject that has inspired a mix of outrage and hope for decades, and there has never been an easy answer. The mandate to institute virtual classrooms has raised the question of how all this can be made possible for the vast majority of global students who have no choice but to continue their education at home.  

A notable example comes in the form of AT&T’s $10 million Distance Learning and Family Connections Fund in support of the education community, including parents, teachers and students. The money will also provide ways to bridge socioeconomic gaps in communities that have become isolated. Specifically, the first $1 million will support the Khan Academy, an educational platform available in more than 40 languages offering practice exercises, videos and dashboards that can be customized to each learner’s unique distance learning needs.

The mandatory pivot to digital learning has also been recognized and addressed by companies such as Logitech and Babbel. Logitech is offering free webcams and headsets to K-12 teachers who may not have the funding to support the transition to virtual learning. Babbel is ensuring that students’ language studies are minimally disrupted by offering three months of free language learning to U.S. students through mid-June. 

Distance working

Until recently, working from home was either an occasional break in one’s schedule or a work lifestyle provided to those who do not have easy access to an office environment. While the work-from-home model is not new and supporting solutions have long been on the market, how to quickly scale remote office environments and capabilities was never considered until very recently. To answer the need for individuals and businesses, especially small ones that may not have the rainy-day funds that larger enterprises usually possess, many collaboration, cloud and CRM providers are stepping in to make “business as usual” possible in the short term.

Google, a leading provider of services to support working environments, is offering Google Meet’s premium features for free until July 1, and Microsoft and Amazon are similarly implementing measures of their own. Zoho is another company with deep collaborative roots and the capability to support workflows of all types. Recently, Zoho announced a program that would offer free support to existing customers that otherwise could not afford it. Launched and deployed in just a matter of days, Zoho Remotely not only enables existing customers to continue their operations but also provides an attractive onboarding mechanism for future paying customers.

Cloud leaders prioritize healthcare as well as mission-critical workloads to ensure public safety

The education and healthcare industries are more frequently converging. For example, Google Cloud earmarked $20 million for medical research and academic institutions. The funds will assist researchers in both the short and long term in the pursuit of a vaccine for COVID-19 as well as the collection of ongoing clinical data to assist in the prevention of future outbreaks. This is one of the many examples in which the cloud leader has dedicated funding and resources to the dual causes of healthcare safety response and education. 

Achieving balance between staving off disaster and facilitating a somewhat palatable day-to-day existence is the ongoing challenge pressuring enterprises, many of which are proving to be the backbone of modern society. As the remote working population has surged exponentially, so have the pressures placed on enterprises that support the new environment. Companies such as Microsoft and Amazon Web Services have clearly prioritized several sectors for mission-critical workload solutions, beginning with first responders, health and emergency management services, and critical government infrastructure.

To hear this clip in its entirety, check out COVID-19 Business Impacts: How the Community Is Coming Together on TBR’s YouTube channel.

Accenture and COVID-19: Challenges ahead

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COVID-19 will pressure Accenture’s short-term performance but could accelerate adoption of automation as the company maintains pricing agility

While a global health pandemic is not something vendors typically prepare for as part of their business continuity plans, for many, including Accenture, the COVID-19 outbreak will certainly test the resiliency of their business models. As a company that came out strong after the financial crisis in 2008 and 2009 with total revenues more than doubled — from $20.9 billion in 2009 to $43.9 billion in 2019 — Accenture has certainly proved that it can navigate the influx dynamics of financially disrupted markets while taking advantage of the advent of emerging technologies.

At large, the shift toward working from home due to COVID-19 will certainly constrain Accenture’s high-touch consulting model, pressuring advisory-centric sales. However, we also see pockets of opportunities, particularly around change management services, where the company can support clients that have not previously adopted work-from-home policies. We see the larger opportunity around integration and management of digital workplace solutions enabled by technology platforms such as ServiceNow and Microsoft Teams. Managing internal knowledge sharing and shifting on-site frameworks to remote will likely be the biggest hurdle as Accenture strives to ensure standardized service delivery. While the company’s Future Systems framework provides a strong foundation to innovate at scale through adopting KPIs centered on outcomes rather than tactical financials, Accenture Interactive’s unit has an opportunity to demonstrate its core value proposition — being creative — as it determines how to best engage with clients during the COVID-19 outbreak.

While we expect Outsourcing, led by Accenture Operations and Accenture Technology, to provide a strong backbone for Accenture’s financial performance, we also anticipate the company’s high reliance on offshore hubs such as India and the Philippines will challenge its global delivery capabilities during the COVID-19 outbreak due to underdeveloped infrastructure, lack of iNet availability and the need for employees to work from home. During the company’s FY2Q20 earnings call, Accenture CEO Julie Sweet said, “We have already enabled a very significant percentage of our people to work from home, approximately 60% of our people in our centers in India and the Philippines. … In the Philippines, we’re probably about where we expect to be. In India, we’re still adding.” TBR estimates that over 44% of Accenture’s workforce is housed in India and the Philippines, raising questions about the company’s ability to leverage these two hubs at maximum capacity and the need for distributing workloads to other sites, where working remotely at 100% capacity is more feasible. 

While Accenture’s deep relationship with many of its clients will help the company address these challenges, demonstrating pricing agility will be a must, likely providing an opportunity for greater use of automation for service delivery.

Note: The above text will be included as a scenario in TBR’s 1Q20 Accenture report, publishing April 9. For additional insights, please see this recent special report on Accenture Technology.

In time of pandemic, IT services focuses on leadership, partnerships and automation

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Accelerated automation

Following market leader Accenture (NYSE: ACN), IT services vendors will aggressively adopt automation tools to drive down their own costs, improve remote delivery and retain clients during the global economic downturn. Automation will help ensure standardized delivery, even as engagements, implementation cycles and large-scale integrations change amid more remotely managed IT environments. IT services vendors that have implemented automation at scale internally will most readily serve clients seeking the same.

Splintering acquisition strategies

Global economic conditions will allow some IT services vendors to acquire talent and IP at discounted prices, provided leadership at those vendors maintains control of cash flow and risk assessments. In contrast, those vendors ill-suited for work-from-home and remote delivery or struggling through corporate restructurings will miss the opportunity to soften organic declines with inorganic boosts. While on the surface this might not be significantly different from normal disparities in companies’ acquisition strategies, the current massive disruption will reveal weaknesses around leadership and organizational nimbleness that may see normally aggressive acquirers struggle and typically passive nonbuyers make bold moves. TBR expects M&A moves made within the first half of 2020 will substantially impact which vendors will be best positioned to grow during the expected late 2020/early 2021 recovery.

Every part of the economy, including the IT services market, will suffer serious disruption from the COVID-19 outbreak. While not predicting which of the many possible scenarios will be most likely to play out through 2020, TBR’s Professional Services, IT Services and Digital Transformation team anticipates three overarching themes will dominate, leading to six topics worth watching in detail. In the first theme, leadership at every level will not only reveal which IT services vendors and consultancies were best prepared for a pandemic disruption but also determine which will continue to succeed, relative to peers. Second, alliances between IT services vendors and their technology partners will be stressed by immediate economic pressures, talent constraints, and uncertainty surrounding 2020 and 2021 forecasts. And third, IT services vendors that invested in automation early and at scale will see their ability to standardize delivery and reduce costs become essential to retaining clients and meeting their own financial targets. Automation, already a priority for some, will become a mission-critical capability, and accelerated adoption will separate leaders and laggards.

Predicting the unpredictable: COVID-19 is changing the IT devices business

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The devices business is sensitive to how and where people work, communicate and play

The COVID-19 crisis is changing how and where people work and how they spend their free time, all of which directly affects the PC business, adjacent devices and services businesses, in addition to networks, data centers and cloud businesses. Many of these changes are opportunities for device vendors, but the global recession, and buyers’ conservatism in the face of uncertainty, will negatively impact vendors until a recovery is underway. The novel coronavirus illness and consequent control measures are influencing the supply and delivery chains as well as sales and servicing processes. Even after recovery from both the pandemic and the recession, some of the changes in working patterns are likely to be permanent as institutions and people find benefits in remote work, accelerating and institutionalizing a growing trend. Similarly, the movement toward using technology to improve health and healthcare is being greatly accelerated by the crisis.

The global crisis has many moving parts, all affecting devices and how they are used

There are several different components to the changes brought about by the COVID-19 pandemic.

  • The illness itself is changing the lives of many people and directly affecting the global workforce as people become ill and others are caring for them.
  • The measures taken to slow the spread of the disease are drastically reducing economic activity, and devices sales are closely tied to economic activity.
  • Most importantly for the devices business, many more people are working remotely and many are relying more heavily on home-based communication and entertainment.
  • The implosion of the travel and hospitality businesses, as well as other personal services and retail businesses, is causing a rapid decrease in global economic activity, exacerbated by the downstream consequences of direct impacts to business.
  • It is possible that the virus and its mutations will impose a long-lasting threat, resulting in long-term changes to patterns of living and working.
  • Some of the changes brought about by the pandemic are accelerations of existing trends, such as working remotely, adoption of cloud-based solutions, and telemedicine; as such, these will remain in place after the crisis subsides.
  • The severity and the duration of the current crisis is indeterminate, undoubtedly leading to long-term consequences.
  • It is likely that as some geographic areas recover, other areas, especially rural areas, will experience new pandemic-based limitations on social interaction.

COVID-19 catches manufacturing and retail verticals flat-footed, limiting IT and service investment

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While manufacturing and retail companies are capitalizing on some opportunities during the COVID-19 pandemic, they are also experiencing significant negative short-term impacts. Making matters worse, most companies in these verticals lack the agility and IT infrastructure necessary to adjust in the current environment. The result will be a severe slowdown in these sectors, which will delay or halt many IT projects and service engagements that could have long-term business value.

Service opportunities will take a hit due to the downturn in manufacturing and retail verticals

Early assessments predict the manufacturing and retail industries will be among the hardest hit by the economic fallout of COVID-19, for reasons related to supply chain disruption, government-mandated store closures, and inefficient operations for factories using a mostly remote workforce. TBR’s Management Consulting Benchmark includes industry revenue splits for the 13 covered companies, providing a view into which consultancies could be most exposed to clients’ economic struggles. Consulting, by its nature, loves chaos and uncertainty, but the clients themselves may struggle financially and delay or outright cancel plans to extend or transform their digital and IT environments. We cannot predict whether clients will need more or less from these consultancies, but we can understand their exposure. At the highest end, PwC and BearingPoint earned more than 27% of their management consulting revenues in 2019 from those two industries, with Europe-based BearingPoint the highest in the benchmark at 28%, in TBR estimates. At the lower end, Accenture (NYSE: ACN) was the only consultancy that saw revenues from those two industries at less than 10% of its 2019 total revenue (just under 9%), while EY came in at 15%. The remaining firms ranged from 22% to 26%, considerable exposure for two of only nine industries tracked in the benchmark. We can state with confidence that the consultancies that deployed automation internally, implemented asset-light strategies, and invested in remote delivery and robust remote employee structures will fare better than peers. From an organizational perspective, we will also likely see consultancies that have 20-plus distinct industry “specializations” consolidate into broader and more diverse verticals, spreading out the risk of any one practice suffering from another pandemic-like economic crash.

‘Every company is a technology company’ is new mantra for post-digital world

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TBR perspective

“Every company is a technology company.” That combined description and imperative from Accenture Group Chief Executive—Technology and CTO Paul Daugherty made clear how the company sees its clients now and entering the post-digital future. All companies will need the technological savvy and innovative culture of digital natives while pivoting from pilots to execution. In simple terms, digital is everywhere, so every company must be able to execute digitally, including developing a digital core, optimizing operations and investing in new technology-driven offerings. For Accenture, maturation as a technology company has resulted in an increase in technology-centric headcount, paired with an emphasis on platforms and tools (see below analysis on myNav, myWizard and myConcerto). A new recently announced growth model has shifted former Accenture Technology leader for North America, Annette Rippert, to be the new Group Chief Executive leading the combined Strategy and Consulting services, further cementing Accenture’s role in moving its clients toward a future where “every company is a technology company.” Building on the technology mantra, Accenture can now bring leadership deeply rooted in emerging technologies applied at scale to its strategy, supply chain & operations and talent & organization consulting clients. Based on Rippert’s long-standing emphasis on Accenture’s relationships with technology partners, clients can expect ecosystems and alliances will factor substantially into the company’s strategic advice as the post-digital future nears. 

Following Daugherty’s presentation, Accenture CIO Penelope Prett emphasized the role cloud continues to play in Accenture’s own digital journey, even describing cloud as “mandatory to capitalize on innovation.” Prett noted that roughly 95% of Accenture’s applications reside in the cloud, with adoption of some legacy architectures still a challenge. Among the lessons Accenture has drawn from its own experience are the need to consider the pace of business change and the need to account and plan for interoperability and long-term simplifications. Echoing Daugherty, this imperative to move to cloud at scale and to innovate plays well into Accenture’s overall go-to-market strategy around technology enablement.

Overall, Accenture’s belief that “Every company is a technology company” raises questions about how the company will engage with its clients going forward. Accenture has excelled at developing talent with specializations and exceptional, often industry-specific skills. As the company shifts toward assembling teams with diverse talents and skills and takes those teams to scale, how prepared is Accenture’s middle management leadership? What resources have they dedicated to training the military equivalent of majors and lieutenant colonels? Prett spoke of teams assembling within hours, rather than weeks, which provides a tremendous boost to productivity, provided leadership can keep up.  

In addition, Accenture’s evolving approach to industries will come under pressure from two forces. Clients, according to Accenture and its peers, increasingly look beyond their own industries for best practices, recognizing that emerging technology solutions typically start with horizontal capabilities applied within an industry and business context. Internally, Accenture must continue to share broad, industry-agnostic best practices across the entire company, even as it develops a common language, separate from industry. Secondly, ecosystem partners such as Google (Nasdaq: GOOGL) and Amazon Web Services (Nasdaq: AMZN) are not organized by industry, which may make it easier for Accenture to align with those hyperscalers. Though more traditional partners, such as SAP (NYSE: SAP), pushing an industry-led approach, through initiatives such as Model Company, may challenge Accenture’s ability to manage competing ecosystem pressures.

The Accenture Technology Symposium brought together over 200 Accenture (NYSE: ACN) clients, along with industry leaders and practitioners. Similar to last year’s event, Accenture discussed and showcased disrupting technologies in areas including cloud, blockchain, AI, automation and security while using client case studies and testimonials to highlight Accenture’s innovation-led approach to solving business problems.  

COVID-19 pushes automation to the forefront of business strategies

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Automation shifts from a discussion to an imperative across all industries

The decision to embrace automation typically requires an organization to engage in careful strategic planning and analysis over a period of time. On one hand, automation enables a level of efficiency, consistency and quality that manual deployment alone cannot achieve. On the other hand, skeptics have long questioned the point at which automation can go too far and how to find balance and decide which tasks should and should not be automated. That debate is now over, as the deployment of automated processes and technology is imperative to fill in the innumerable voids in a new reality where COVID-19 is not just part of our vocabulary but a new abnormal in which we all live. 

Past discussions of whether to automate were typically highly dependent upon factors like industry vertical, whereby sectors with a heavy manufacturing arm, for instance, were much more likely to embrace automation than others. Massive staffing shortages are now the primary driver behind the call for widespread automation, and the interest has manifested itself in multiple forms, such as the deployment of robots, drones and AI — technologies that are being leveraged by industry verticals across the board.

Staffing shortages have affected every grocery store and pharmacy, and many are relying on robots to transport goods from warehouses and stores to delivery vehicles. In agriculture, there has been an increase in the use of terrain-based robots to convert agricultural units into disinfectant sprayers. In manufacturing and delivery, Baidu (Nasdaq: BIDU) has partnered with Neolix to deliver critical items such as food and supplies to hospitals in Beijing with the use of the Apollo autonomous vehicle. Baidu has additionally applied AI algorithms to track the spread of infection and predict where the next hot zone may crop up so that local facilities are better prepared. While the number of riders of public transport has plummeted, railways, buses and subways still must operate even if on a skeleton schedule. The deployment of automated technology such as self-driving trains has increased dramatically, as has the use of robots to disinfect and clean cars.

The healthcare industry faces the most pressing challenges as it seeks to employ remote workforce programs and develop scalable solutions on an emergency-fueled time line. While some degree of on-site presence is unavoidable, the risk is being mitigated, in some cases, by the use of disinfection robots, which were deployed by Xenex Corp. to over 500 hospitals in China and are also now being shipped to Italy. Drone delivery of medication is anticipated to be the next wave of automation, and companies like Drone Delivery Canada (DDC) Corp. predict that they will become commonplace, and soon. DDC President and CEO Michael Zahra stated, “The company is in dialogue with governments at various ministries and levels emphasizing that the current situation is an ideal use case for our proven drone logistics solution to limit person-to-person contact; bring needed medical and pharmaceutical supplies to remote, rural, and suburban communities; transport blood samples to laboratories for testing; and deliver other relevant supplies.”

The application of automated technologies is clearly not confined to one area and will continue to ease the burden that COVID-19 has placed on all of our lives. When the pandemic eventually subsides, the silver lining to the shortages, panic and crippling effect on the economy will be that healthcare providers, companies and individuals will be more apt to embrace the use of automated technology in almost every aspect of their daily lives.

Click here to listen to this audio clip, COVID-19 Business Impacts | Remote Work, in its entirety.

Aligning assets with partners’ complementary solutions: 2019 strategy may be critical for Wipro in 2020

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As we look at significant changes coming to the IT services landscape and focus on agile shifts toward a post-COVID-19 world, strategies launched in the last 12 months may prove to be critical for some vendors’ long-term success. Understanding Wipro’s February 2019 moves can point to how the company might perform throughout 2020. 

Wipro has significantly expanded its addressable market via alliances and has the opportunity to generate cross-selling momentum for strategic portfolio areas. Given Wipro’s lack of digital scale compared to peers, aligning its assets with partners’ complementary solutions will allow the company to build use cases that aid in direct-sales efforts, provided near-term initiatives focus on appealing to demand for Wipro’s emerging portfolio of value-add digital solutions and services, thereby expanding its wallet share in partner-led engagements.

Just over one year ago, Wipro expanded its alliance with Oracle by launching the QuMic platform, which accelerates integration of Oracle Cloud for clients, supporting migration of clients’ assets while also improving their ability to leverage digital tools and assets. To further strengthen its arsenal/portfolio/set of these digital-oriented solutions and platforms for clients, Wipro and Oracle deepened the partnership in November with the subsequent launch of the RAPIDS Digital Experience Platform (DXP), which caters to the evolving needs of telcos and communication service providers (CSPs). RAPIDS DXP combines Wipro’s existing DXP with Oracle’s Digital Experience for Communications solution to offer a multifaceted platform that provides CSPs with reference solutions to deploy use cases covering next-generation services like 5G, SD-WAN and IoT. Further, RAPIDS DXP offers an integrated digital experience omnichannel solution, allowing telcos to better engage with customers throughout their life cycles, from customer onboarding to customer billing. While the solution still leverages partner technologies, limiting Wipro’s share of the customer’s wallet, TBR believed this approach was a step in the right direction, with the potential for Wipro to increase the applicability of its to new entities — in this case, telcos — undergoing digital transformation initiatives. Further, an updated alliance with Oracle will also provide case studies for Wipro’s sales teams to aid in direct-sales efforts of Wipro emerging solutions, like DXP, which will be critical to the company’s ability to reduce its reliance on partner-led engagements and increase awareness of the company’s offerings among prospective customers seeking digital solutions and services.

One year on, TBR maintains its assessment that Wipro has taken the right strategic approach, even as we continue to look for definitive signs this strategy has begun paying off. In the post-COVID-19 environment, partnering will be even more critical and Wipro may have established an important foundation in February 2019 that will prove beneficial in the latter half of 2020. 

COVID-19: Impact on IT organizations

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We asked 205 IT leaders who are decision makers for cloud purchasing about the current impact of COVID-19 on their companies and their expectations for the future. These responses were collected between March 17 and March 24. Initial findings show disruption to ongoing projects and increased importance of cloud capabilities in the future.

The impact of COVID-19 on the technology market is coming in waves. The first wave was the disruption caused by the shuttering of key hardware manufacturers in Wuhan province as China grappled with the initial outbreak of the virus in January. The impact was slightly delayed because of inventory levels within the supply chain, but in February and early March major hardware OEMs experienced shortages of key components for their data center infrastructure offerings. Just as those hardware supply chains are beginning to be replenished, the second wave of impact is occurring. As widespread business disruption occurs in Europe and the United States, it will affect customer demand for IT products and services. There is still much uncertainty about exactly how this disruption will play out, but it has caused vendors like Oracle and Microsoft to decrease or widen the range of their 2020 financial guidance. During the third wave of disruption, we expect long-term changes to spending patterns and business strategies.

TBR asked customers about the impact of the second (short-term spending patterns) and third (long-term spending patterns) waves of COVID-19 disruption.

For second-wave impacts, existing projects are slowing and new spending is frozen, but customers are spending to triage urgent COVID-19-related responses:

  • The majority of IT organizations are being impacted by COVID-19, with only 19% of respondents indicating they have not yet experienced changes to IT operations.
  • While 43% of respondents indicated existing projects are being delayed due to social distancing restrictions, companies are opening their wallets to maintain productivity as many employees shift to remote work. About 34% of organizations surveyed have spent on technology related to productivity as a result of the COVID-19 pandemic.
  • Cloud consumption is also up, with 17% of respondents indicating higher cloud usage due to data center component shortages and 10% indicating higher cloud usage due to labor impacts.

In the third wave, cloud delivery will play an even greater role after the COVID-19 outbreak has abated:

  • Disruption to normal business processes has highlighted the importance of having remote access to data, apps and collaboration tools.
  • While all organizations we surveyed are already using cloud technologies, 48% of respondents believe that the COVID-19 pandemic will lead to an increase in their cloud technology usage as part of long-term IT strategies. A lesser amount, 26%, are not expecting changes to long-term IT strategies at this time. The remaining respondents are unsure about the impacts to long-term strategies.

Today, only one thing is certain: uncertainty:

  • At this point, it is too soon to tell what the final impact on IT organizations will be in terms of technology spend and initiatives.
  • Companies are likely to take a wait-and-see approach to better understand impacts to revenue, profit and ultimately budgets before committing to new IT spend.
  • Cloud adoption, collaboration and employee mobility were already major industry trends prior to the COVID-19 pandemic; however, TBR believes the outbreak will accelerate the development of organizations’ business continuity strategies and remote workforce programs going forward.

The federal IT market braces for impact

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Uncertainty underpins the short- and long-term outlook for the impact of the coronavirus pandemic on the federal IT space. Federal agencies and their IT contractors face disruptions across their supply chains, operations, procurement functions and fiscal management.

Near-term turbulence is inevitable

Defense majors Northrop Grumman and General Dynamics, on March 19 and March 23, respectively, published 8-K filings updated with assessments of the potential negative impact of the coronavirus on their businesses. Risk factors are far-reaching and extend beyond company fiscal health, including diminished employee productivity and contract performance, supply chain disruptions, increased cost of and diminished availability of investment capital, temporary suspension of operations at customer facilities or work sites, and reduced demand for company products and services stemming from possible economic downturns in the U.S. and abroad. These contractors and others issuing similarly cautionary remarks have further noted they cannot predict the full impact of COVID-19 on their business or the industry at this time.

TBR foresees additional near-term challenges in the form of purchasing delays and deferred starts (and thus revenue recognition) on recent awards as the entire procurement cycle shifts to the right, along with project execution on programs already underway. Travel bans or restrictions will further impact project delivery and impede business development efforts.

As the federal IT market moves into calendar 2Q and the fiscal reporting season for calendar 1Q20 begins in late April, COVID-19 will be a major factor driving revised outlooks for 2020 fiscal performance for contractors amending their guidance (and we expect many, if not most, will be compelled to do so). During its earnings release on March 19, Accenture revised its projections for fiscal 2020 global top-line revenue and growth from its previous forecast of 6% to 8% growth over fiscal 2019 to a new projection of 3% to 6% top-line growth over fiscal 2019 (both ranges in local currency).

Raytheon Technologies is another federal contractor that is particularly vulnerable to the impact of COVID-19. Raytheon’s legacy defense business will face the same challenges as its defense sector peers as the COVID-19 situation plays out, but as the merger with United Technologies (UT) includes the integration of UT’s Pratt & Whitney and Collins Aerospace operations, Raytheon will be highly exposed to the aerospace sector. The commercial aviation market has been particularly hard-hit by COVID-19-related travel bans and restrictions, and the negative effects will linger for years. This underscores the urgency for Raytheon to complete the merger quickly and fully assess the potential impact of the inevitable decline of the global aerospace sector.