There is still a fog of uncertainty around COVID-19’s impact. What is clear, however, is this outbreak is unlike any event in living history. The long-term health crisis, economic disruption and social disruption are occurring at levels that were unfathomable just months ago. These changes are taking place in a world that is much different from when the last widespread pandemic, the Spanish flu, hit more than 100 years ago. Technology has become such an integral part of our lives since that time and, as such, will be deeply ingrained in many of the short-term and long-term effects of the COVID-19 virus. In this report, TBR will provide a high-level overview of the impact these recent events will have across the hardware, software, cloud, telecom and services markets we cover. While most of the market effects will be painful due to the economic disruption occurring, many will lead to changes in long-held business strategies and create opportunities as technology needs shift for both individuals and organizations.
Social distancing challenges core of IT services industry
Pain: At the core, IT services and professional services are human-centric businesses, delivered by humans and intended to improve employees’ efficiency or accelerate their ability to connect with clients and enable growth. Changes in travel and personal interaction as well as business disruption all challenge the existing IT services business model. Additionally, many of the largest IT services providers will have new leadership tasked with managing these disruptions. In 2019 TBR noted a large number of C-level changes at the largest IT services vendors and consulting firms, as well as their technology partners. Those leaders will be tested in the coming months, and TBR anticipated more positive than negative reviews. More significantly for the long-term business impacts will be the performance of those leaders at the team and business group level, the equivalent of squad leaders and company commanders in a military organization. Adjusting to COVID-19 safety measures; managing people remotely; delivering to clients and managing their expectations, particularly in a tough economy; and continuing to lead — those will be massive challenges for team leaders. How well prepared they are, how well their companies have trained them, and how agile and flexible they can be in an ever-changing business climate are the factors that will distinguish high-performing IT services vendors and consultancies from struggling ones in 2020. The CEOs and top leadership will set the tone, but execution at the lower levels will become exponentially more difficult with this pandemic.
Change: TBR has already spoken with consultancies and IT services vendors grappling with changes to their business models, particularly around collaborative design sessions in the early stages of digital transformation engagements. Vendors with pilot projects to enhance global coordination and project management have accelerated those efforts and expect to invest heavily in the infrastructure needed to perform at speed and at scale. Vendors have also begun evaluating their technology alliances and resetting expectations around large-scale systems integrations. Also being mentioned are new engagements based on COVID-19, including technology consulting around delivering healthcare — and, critically, testing — through “drive-up” systems.
Opportunity: TBR expects that recent trends around automation, AI and platform-delivered services will be catalyzed by the spread of COVID-19 and imperatives to work remotely and with minimal in-person contact, resulting in a few knock-on effects across the broad IT services and consulting space. Most significantly, those companies that have invested most heavily in automation and remote delivery will see the least impact on their engagements, even if clients begin to freeze or reduce spend in line with a broader economic slowdown. Second, consultancies and IT services vendors with experience in online, remote training and upskilling will be able to both continue their own digital transformations and provide offerings around human capital training and management based on their own lessons learned and best practices. Third, vendors that anticipated a global economic slowdown and prepared to take advantage of lower costs for acquisitions and new opportunities to assist clients in distressed markets — while they likely did not anticipate this virus — are best positioned to provide consulting and IT services throughout the pandemic.