PERSPECTIVES
Services sector post-COVID: Shifting gears for the next ‘wave’! With the rise of digitisation and automation, accelerated by the COVID-19 pandemic, India will have to evolve its strategic approach towards services in order to stay competitive in the sector in the post-pandemic future. BY VIRAT BAHRI
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he services sector is the highest contributor to India’s GDP at over 50%. Unfortunately, it was also among the worst affected as a result of the pandemic-related transformations. Within services, however, noncontact segments like IT, financial services, professional and business services were relatively unaffected, while tourism, retail, trade, hotels, entertainment and recreation were deeply impacted. The business community witnessed a sudden surge in use of technology tools that enabled remote working. There is a general consensus that this paradigm will outlive the pandemic. A McKinsey Global Survey of Executives concludes that as a result of COVID-19, companies have accelerated the digitisation of their customer and supply chain interactions by 3-4 years, and Asia Pacific is at the forefront of this change. Companies that have proven more resilient to the crisis have identified strengths in a range of technology capabilities – filling gaps for technology talent during the crisis, use of more advanced technologies, and speed in experimenting and innovating. To understand the importance of improving India’s digital resonance for its services sector, we look at how some of the major sectors have been transformed by the pandemic. INFORMATION TECHNOLOGY The sector stands to benefit from the growing prominence of remote interactions and the demand for knowledge intensive and high technology services. Indian companies witnessed revenue
growth of over 21% in H1, 2021-22, owing to demand for digital support, cloud services and infrastructure modernisation to address new pandemic challenges. IT companies need to prepare to tap on sunrise segments including remote collaboration tools, e-commerce and Industry 4.0 technologies. IT spending trends show the possibility of increased investments in cloud infrastructure services and specialised software. Emerging tech areas like IoT software, big data/analytics, AR/VR, etc are expected to grow the fastest by 104% between 2018 and 2024. HEALTHCARE The healthcare ecosystem was brought to desperate fire-fighting mode during the pandemic. Shortage of essential equipment like oxygen, medicines, PPE kits and hospital beds took a toll. This tragic period has also made us realise both the importance of
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technology, and its relatively weak penetration in healthcare. Telehealth systems had to evolve in quick time to respond. In July 2021, McKinsey concluded that telehealth services had risen 38X from the prepandemic baseline. Buoyed by this trend, venture capitalist (VC) firms invested 3X more money in digital health startups in 2020 as compared to 2017. India’s healthtech industry, valued at US$ 1.9 billion in 2020, is expected to reach US$ 5 billion by 2023, growing at a CAGR of 39%. Telehealth tech, continuous and remote diagnostics, remote mental healthcare, virtual fitness, and aging-in-place technologies are expected to continue to grow post the pandemic. EDUCATION As per World Economic Forum, even before COVID-19, there was already high growth and adoption in education technology, with global
