THE GIST of Editorial for UPSC Exams : 23 April 2020 (India’s IT services sector faces grave challenges (The Hindu))

India’s IT services sector faces grave challenges (The Hindu)

Mains Paper 3:Economy 
Prelims level: Information Technology service 
Mains level: COVID 19 challenges towards IT services sector 

Context:

• Just when India’s information technology services companies had adapted to the changing business models arising out of the emergence of new digital platforms, they are faced with yet another disruption in their delivery models. 

Work from home:

• The ongoing economic lockdown due to Covid-19 has disrupted the way IT companies function as more than 85 per cent of the workforce now has to work from home. 
• From a centralised architecture, IT services companies have had to restructure their entire organisation — a transformation that is here to stay even after the lockdown ends. 
• In the pre-Covid era, companies such as TCS had a highly centralised delivery model. 

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Future working model:

• In future, not more than 25 per cent of employees would be working from offices. 
• This means companies will have to rejig cybersecurity mechanisms, their project management practices, and put in place systems to ensure that proper work allocation, monitoring, and reporting is done. 
• Under this model, costs related to real estate and managing offices will go down over a period of time but higher spending will go into collaboration and other kinds of productivity tools. 
• Dependence on H-1B visas will also come down as on-site delivery of services will not be relevant. 
• The sector is up against massive demand destruction with lockdown-induced slowdown coming on top of the ongoing contraction in key markets. 
• India’s top three IT companies — TCS, Infosys and Wipro — signalled the distress ahead, as they all missed street estimates in March quarter earnings and suspended revenue guidance for the year ahead.

Reforms needed: 

• IT companies must reduce over-reliance on big-ticket deals from traditional markets like the US and the UK. 
• There should be a quick transformation into a distributed delivery architecture instead of the centralised one today. 

Conclusion:

• In the long term, behavioural shifts as a result of Covid-19 will help the sector. 
• The human interface will reduce and technology will be required to take over many functions. 
• This behavioural change can open up opportunities for Indian IT companies to earn higher margins doing consulting-led work.

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Prelims Questions:

Q.1)With reference to the Active Virosome Technology (AVT), consider the following statements:
1. Active Virosome Technology (AVT) developed by Seagull Bio is useful for the production of vaccines & immunotherapeutic agents. 
2. The AVT platform is useful for producing novel, non-hazardous & economical Active Virosome agents expressing desired antigens from the target pathogen.

Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

Answer.......................

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Mains Questions:
Q.1) What are the major challenges faced by Indian IT sectors during the lockdown period? How behavioural change can lead to open up the opportunities in this sector?