Prime Minister Narendra Modi in his address to the nation on April 14 extended the total lockdown till 3rd of May to prevent the spread of the coronavirus and loss of lives. This effectively means that India is witnessing a complete lockdown of now almost a month and a half. India has crossed 13,000 cases with more than 400 deaths due to the pandemic. More than 146,000 deaths have been reported around the world.
COVID-19 has already caused a lot of upheaval. An economic recession is around the corner. Global GDP is expected to contract. The world after the coronavirus pandemic will be a different world. It will never be the same again!
I anticipate many changes that are likely to take shape in the short to medium term.
Job losses (companies will identify redundancies)
Industries are struggling as due to the lockdown there is no business. Airlines have already slashed salaries of staff by 30%-50%. Media houses have fired many people or asked many of them to go on leave without pay, as per reports.
After the lockdown ends companies will be facing demand side issues as consumption will take some time to pick up.
Profits will be under pressure and hence the focus of companies would be on cost reduction. Many of them will identify jobs which are no longer required or without which companies could still run smoothly.
Usually, big companies have some people who act as buffer resources or are hired for expansion: these could face the axe.
Work from home solution for some of the staff
During the lockdown many companies have realized that work can go on uninterrupted from home as well, except some functions like production. Some companies could be tempted to put certain roles and functions on a permanent, or a rotational basis, work from home. This will help companies manage costs
This will lower the rental/power/admin costs of companies. Rent is a big cost. In these difficult times these cost reductions will help.
This will lead to correction in commercial property prices, especially in big cities like Mumbai and Delhi.
Work from home is likely to increase the costs for employees, power, data, tea/coffee, etc. This means some sort of compensation will have to be provided by employers.
Employers would gladly be willing to do so as this would cost less than what they are saving.
With parents working from home and cash flow pressure/uncertain future, some people could take the decision to let go off nannies and maids. This could lead to further job losses and put pressure on the poor people living in slums and dependent on people living in societies for their living.
Boom for data/OTT platforms to continue
Reliance chairman and managing director Mukesh Ambani said at one of the company’s AGMs that data is the new oil. There has been a 16% increase in data usage since the lockdown.
This is a big plus for telecom/data companies, notwithstanding their AGR dues issue.
OTT platforms also have witnessed an increase in subscriptions and viewership.
Less stress on public transport, less consumption of fuel, less pollution
As some people start working from home, there will be less stress on public transport, leading to less traffic on roads and, thus, there will be less pollution. In Delhi, air quality index (AQI) levels are usually in high 200s on a good day. Anything above 25 is considered as unsafe. During Diwali, it goes up to 900. During lockdown AQI levels have regularly fallen below 20.
Fuel sales in India dropped by 18% in March and 66% in April till date. We all know fossil fuel combustion is the biggest contributor to pollution.
Remote working will increase the scope of companies to hire the best talent from across the world. As per Global Workplace Analytics, in 2020, the number of people who work from home has increased by 140% since 2005.
Almost 60% of Cisco employees work remotely or are mobile, reporting to the office twice a week. The company has saved close to $400 million on account of the work from home initiative. Most organisations, including Fortune 500 companies, are actively encouraging remote working.
Be ready to accept the new world and the changes...
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