What is the new normal and how are we going to live after the pandemic
Every day we are bombarded with information related to COVID-19. Many predicted the crisis, but only a few said it would be a virus that spreads like wildfire. Its impact on the global and local economies is enormous. And even the biggest optimist is already aware that the world is entering a period of another and, quite possibly, protracted crisis.
Economic stability and fears for health topped the list of our worries. The International Monetary Fund, along with other reputable organizations, ring the alarm and recommend that we prepare for shocks on a scale no smaller than during the Great Depression of the 1930s: the world economy will show a negative growth of 3%, the fall in GDP will not bypass almost any country and will range from 0.6 to 9.1%. This blow will be felt especially strongly by the USA, EU countries, Great Britain. More than 90 countries have already submitted their applications for assistance to the IMF, and this is an unprecedented number of applications during the existence of the fund.
It is obvious that this situation will have the most negative impact on the Ukrainian economy, which is heavily dependent on imported raw materials and goods. But what about the IT industry, which has been showing double-digit growth for several years in a row?
We will face a recession
Throughout the active growth of the Ukrainian IT industry, we have always considered its inseparability from global economic processes as a benefit.
The field of information technology strongly focused on customers in Western countries, has been actively growing with them. Now that these countries are experiencing a decline in production, a wave of unemployment, and are immersed in solving their domestic problems, it is logical to assume that our IT industry will change the decisive growth to free fall.
I am an optimist and believe that there will be no rapid decline. The industry is facing a temporary recession. However, the recession is not equal to the crisis, but only a slowdown in growth. At the end of the year, we are unlikely to be able to state the usual dynamics of + 20-25%. The numbers will be a bit more modest. The important thing is that they will still have a "+" sign.
Yes, it will be difficult for many small and medium-sized IT companies (for some it already is). But a business with a diversified customer portfolio will be relatively stable during this period.
Transformation is inevitable
Forecasts by McKinsey, the International Monetary Fund, other organizations and experts, promise us unprecedented changes in lifestyle - a phenomenon that has already been dubbed the "new norm" (new normal).
Social distancing, the use of personal protective equipment in public places, a more careful approach to hygiene and personal health, a contactless economy, a review of values and consumer behavior, localization - this is by no means a complete list of new habits that will firmly enter our lives. And, perhaps, it will become an integral part of it.
Those companies that have the necessary digital infrastructure and expertise to organize online business processes will fully enter the era of the "new norm". We have been investing in this direction for decades. Today, the IT infrastructure has allowed us to seamlessly switch to remote operations in two days without losing efficiency. Even if the quarantine ends tomorrow, and we all return to a more or less normal life, Ukrainian businesses should think about developing their digital infrastructure. You just can't brush it off.
The world did not stop. Life goes on
But, despite all the innovations of the "new norm", multiplied by the fall in GDP, people still need food, clothing, appliances, entertainment. And business has to meet these needs. The new way of life will surely make adjustments to the usual existence, but will not eliminate our needs. So business will live. Only the forms, methods and approaches to consumption will change. The digital economy is booming.
Even though many areas are experiencing stagnation, which is likely to intensify (hotel and restaurant business, airlines, tourism, oil industry and others), there are still some industries that are experiencing an unprecedented rise.
More than 50% of the world's population has increased the consumption of streaming services, 45% have spent more time in online chats or watching TV, 44% - in social networks, and another 36% remembered about the existence of video games. And these are just numbers from the world of media and entertainment. The share of online shopping in Ukraine has already grown by 25.8% and continues to grow.
The mass transition to online will not end in results. On the contrary, most of us will adopt this new approach to meeting consumer needs as a norm. Healthcare and telemedicine, retail, education, logistics, entertainment - due to the crisis and the "new norm", the share of IT solutions in these sectors will only increase. So, the IT business will definitely have something to do.
Shock is normal
Every crisis, in addition to negative effects, has positive consequences. The Great Depression taught the world to deal with global crises (and not just by waging large-scale wars); the deadly collapse of the video game industry in 1983 (falling revenues from $3 billion to $100 million) prompted the industry to reconsider its approach to business - today the market is estimated at more than $ 150 billion; the explosion of the dotcom bubble in 2000 cleared the market from random people and gave an understanding of what online business really is; The Great Recession of 2008 taught us to use financial instruments wisely and the importance of the "airbag". And what will this new crisis teach us? We’ll know when it's over.
This global crisis will not kill the Ukrainian IT industry. As it happened with the dotcom bubble, casual players will be swept out of the market - a period of widespread optimization and efficiency gains will require more expertise and competence. Most companies are reorienting to new niches, and maybe someone will create them from scratch. Fortunately, there are all possibilities for this today.
Yes, we slowed down. But let's not stop. Take care of yourself and the people around you. Everything will be fine.
Source: New Time