September 29, 2023

The increasing widespread of COVID-19 has transformed the world’s hustle into varying degrees of uncertainty. One of the few things that seem fairly certain is that the current downturn is fundamentally different from recessions we have seen in the past. This is not just another turn of the business cycle, but a shakeup of the world economic order. Economically speaking, India is faced today with perhaps its greatest emergency since Independence. The global financial crisis in 2008-’09 was a massive demand shock, but our workers could still go to work, our firms were coming off years of strong growth, our financial system was largely sound, and our government finances were healthy. None of this is true today as we fight the corona virus pandemic. Yet there is also no reason to despair. With the right resolve and priorities, and drawing on India’s many sources of strength, it can beat this virus back, and even set the stage for a much more hopeful tomorrow.

The below are 7 ways in which the business landscape could shift

post covid 19 world

  1. The shift towards localization: For sectors that are seen strategically important, there is more localization of supply chains, especially of essentials is expected.

  2. ‘Digital’ get a real push: As most of the companies have chosen to work remotely and the employees are now ‘online’, this crisis has highlighted the importance of investment in enabling technologies like cloud, data, and cyber security. This will change the way we work with far reaching implications on B2B, B2C, B2G services, commercial real estate, e-governance, cyber security, process automation, data analytics, self service capabilities etc.

  3. ‘Cash is king’ for businesses: Once again the situation has proven that it is important to conserve cash and be financially prudent. Companies that are living on the edge and over leveraged are feeling the pinch now and are the most vulnerable.

  4. Move towards variable cost models: Here arises the importance of reducing the overall business costs by converting fixed costs into variable costs wherever feasible. The companies can also explore the option of outsourcing thereby lowering the fixed costs.

  5. Building sensing and control tower capabilities: In a shorter time lag, alternative data can offer insights into an activity. The importance of sensing capabilities, building transparency through ‘digital control towers’, ‘digital twins’ etc have been realized by governments and other companies. For instance, analytics companies are now extracting alternative data such as traffic jams, food orders etc. to track COVID 19 shock.

  6. Supply chain resilience is key: Companies will have to ensure that their supply chains are resilient to remain competitive. Resilience capabilities must be developed inorder to respond to the consequences of unexpected events.

  7. Building agility: Quick actions even in the absence of complete and perfect data is imperative during the ongoing pandemic time.

The future of remote work

The corona virus pandemic has forced millions of employees to work from home. In the months and years ahead, experts say remote work will only become more prevalent. Now people are being forced to do something different and finding out there’s real value in it. It eliminates all of the driving and traffic and stress. And employees who can now work without interruption and may be far more productive than they’ve ever been. Workers, too, bear no small amount of responsibility. Being more independent requires greater levels of proactivity (frequently updating managers about work challenges, what’s coming down the pike, etc.), more polished interpersonal skills and a greater degree of empathy to compensate for the dearth of physical proximity.

Discretionary spending to dip

Consumer spending will see a change due to the Covid-19 pandemic and lockdown across economies. For individuals, health and safety will become the top-most agenda. There will be more spending on this area while there will be reduction in other discretionary spending. The ticket size of spending will drop for a while. People will spend on cheaper goods than on expensive goods or delay spending for a while. There will be extreme acceleration in digital economy– home education, entertainment and fitness.

People will be less loyal towards brands as other aspects will take over. People will switch brands faster due to various other concerns like safety. There will be trust deficit amongst stakeholders like vendors, customers, employees, borrowers, banks, etc. Banks will have trust deficit with borrowers, companies will have trust deficit with suppliers.

Investors would be more likely to invest in countries that are less battered. Western economies are badly battered while countries such as India and Indonesia are not so impacted. Global capital could flow into India if the nation can act efficiently to pull it.

There is a possibility of emotional and economic backlash against China. Already, countries and companies are working on strategies to pivot away from China as part of their supply chain. Japan Government has announced packages for its companies to bring back manufacturing home.

Wholesale, Retail, etc.

  • More people will prefer to buy from retail stores where there is perception of safety (Eg. Sanitation, cleanliness, crowds, etc). They will move more towards malls away from markets. Many will move towards online stores. Wholesale suppliers also need to concentrate on such retailers.

  • Customers also need to be ringfenced:
    • A high end restaurant in Delhi is giving 40% of bill value as a gift coupon to be used anytime upto December 2020.

    • Car companies are giving buy back offers, incase the customer loses his job in the next one year.

  • Pricing needs to be re-approached. People are looking for cheaper prices or cheaper goods.

Real Estate

  • Indian real estate economy is sitting on a huge inventory with a huge cost-of-carry
  • The industry is highly leveraged with low margins.
  • Unsold inventory is considered as an appreciating asset, but might turn out to be a flawed view.
  • Market was already overdue for a huge reset, which will be accelerated by the pandemic.
  • Also, the sharing and co-working space could be hit as more businesses try to have their own smaller spaces and more WFH employees.


  • Gold-as-an-asset could see appreciation.
  • Jewelry, as a discretionary spend, will take a hit.
  • The Indian wedding industry will take a hit, as social distancing, cost consciousness, travel avoidance, etc., will prevent fat weddings, destination weddings, etc. This will hit all connected industries. (Eg. Silk, party wear, etc)

Financial Markets

  • There will be value destruction and value creation in different companies in the same sector.
  • High Debt low margin companies will find it difficult. (indicates risky or unscrouplus management)
  • High Debt high margin companies could be rewarded, but caution needs to be exercised. (may indicate sharp or dynamic management)

  • No debt high margin companies are best rewarded now.
  • Know more about the CEO and management and their actions and activities. (Eg: 3 branches of Starbucks were kept open in India for last few days. The CEO of Starbucks India sat in the Fort (Mumbai) branch throughout the day to give his employees confidence and motivation)

  • New tech unicorns will be born. Those involved in cyber security, cloud services, online education services, etc.

Forex Markets

  • No doomsday scenario (i.e. Dollar will become 90 rupees etc). Such scenarios don’t seem realistic
  • Government should be buying as much oil as possible, as such prices may never be seen in the future of oil.

  • As the western economies are more battered and Indian economy is less battered so far, there is more liquidity coming in. That’s why there is a rally in the market. This scenario could change depending on the spread of the disease in India.

  • Watch out for sharp spikes in the market. Better to avoid the spikes.

Globalisation and Trade

In the medium-term, the pandemic will drive risk-mitigating procedures designed to track employee health, reduce human to-human interactions, and upgrade ventilation and physical barriers. Companies could gain competitive advantage by adopting emerging automation technologies, such as robotics and artificial intelligence (AI) vision systems.

In the world beyond the crisis, the COVID-19 experience could accelerate the transition to approaches such as additive manufacturing (3D-printing) which has the potential to deliver significant advantages in speed, cost, precision and materials. This, in turn, might enable new business models and reshape business models not just in manufacturing but also associated sectors such as logistics. It might also cause businesses to move from off shoring to near-shoring and even reshoring of production. This could boost the backlash against globalization that has been visible for the last few years.

Like all crises, the pandemic will bring out the best and the worst in us. At a time when companies are being called on to assume a broader societal role, business leaders can lead by tackling misinformation, combating scapegoating and addressing the urgent challenges ahead. At the same time, they should keep an eye on the many changes underway in the global economy, technology adoption, societal norms and consumer behaviour — which will together shape the new normal beyond the crisis.

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