Impact of COVID 19 on Indian IT Industry

COVID 19 outbreak which was declared a pandemic by the WHO in February 2020 led to an unprecedented health crisis and has disrupted economic activities and trade globally. In India, the nationwide lockdown was imposed from the 4th week of March, which severely impacted Manufacturing activities, the Tourism industry, and all others. 

The country's information technology sector has also witnessed a recovery in revenue growth at 7.9% in FY2019-20 as per the Economic Survey 2020-21. It is estimated to post a 2.3% rise in domestic revenues to $194 billion (19400 Crores in Indian Rupees) in the current fiscal, as per Nasscom.


Impact of Covid 19 on IT industry


Nasscom's President Debjani Ghosh said the industry reworked its models in the lockdowns. They also ensured that work continues to deliver as per schedules. And IT is now the first sector to call out a revival post-pandemic. "We have emerged more resilient and more relevant from the crisis. We have been the bellwether to lead the fight against Covid 19."


Soon after the Pandemic started


In its early stages of lockdown, India did not see a steep rise in coronavirus patients due to the stringent imposition of restrictions and monitoring. When the life of every individual was in lockdown in their homes, the IT industry did not stop, rather the services became more essential in this digital world.


In mid-March 2020, the Companies started advising their employees to work from home wherever feasible. Policies and directives related to working from home and infrastructure support were implemented almost on a real-time basis for enabling employees to shift seamlessly to this new method of working.


The government also undertook several structural reforms amid the pandemic to drive innovation, technology adoption, and efficiency in the sector, including relaxation of OSP Terms and Conditions, and Consumer Protection (E-commerce) Rules, 2020.


The growth in the IT industry means, there would be a significant increase in job creation, talent hunt, making India a global hub for digital services and taking it to the next level of growth and innovation. This is as per the Economic Survey done by Economic Times.


Effects of COVID-19 on Economy


Export revenues (were) above $146 billion in 2019-20. During 2019-20, the revenue growth for the IT sector (including the BPM sector) made a recovery to reach 7.9% up from 6.8% in 2018-19. There is a significant boost in revenue growth (6.6% in 2019-20 from -0.3% in 2018-19). During the lockdown, the Industry added 1.38 lakh people to its workforce on a net basis during the year. It is also taking the total number of employees to 44.7 lakh, as reported.


By the National Association of Software and Service Companies.


Covid Statistics On IT Industry


The IT industry now delivers 8% of the Indian GDP. It contributes to over half of services exports and 50% of the foreign direct investment. The IT industry filed 1.15 lakh patients in FY21 in India and 8,000 in the U.S.A. In the meanwhile, 1,600 new start-ups were added during the same period. It is also taking the total number of tech companies to 12,500.


Upcoming Challenges in the IT sector


Since the 1980s, the information tech sector has become a pillar of India's development history. The Indian IT industry has depended heavily on non-home industries for competition and services. It has established strong global links by co-locating with customers. Foreign travel made possible and rapid on-site relocation. They also have served as a crucial factor in the development of "perceptual proximity" productivity.


The COVID 19 epidemic, on the other hand, is likely to allow foreign travel and tourism more difficult and expensive. The conceptual change puts major obstacles in the way of IT companies maintaining conceptual proximity with their customers, which could affect their profitable role.


Restrictions on foreign trade, rigid social isolating practices, and the suspension of industrial production, among other things, can be devastating to industries such as IT, hospitality, transportation, minerals, and casinos. To succeed and prosper in the post COVID 19 nation, businesses in a variety of other industries may need to rethink their corporate strategies and activities.


What to expect in the future?

  • The companies may have to face cash-flow challenges. And they have to find a useful alternative solution to confirm readiness during this crisis.
  • Business sustainability policy may not allow the complexity of an emerging pandemic.
  • The business traveling will be less so that can lead to limited client interactions.
  • As the companies are moving towards remote working, the demands of IT professionals and experts will also increase. The professionals will have to retain the top talent to survive in the market.

How Work from Home suits the IT industry?

  • The pandemic led to a shift in working from home, making the physical location of an associate less important.
  • In addition, there is now a 10% change to outcome-driven pricing structures. It is due to the previous trend of static contract rates depending on man-hours.
  • Rao explained that this demonstrates the industry's belief in its ability to successfully show its capacities. Yet this is because experimental programs are transitioning to significant expansion.
  • From a human resources perspective, a Hybrid model involves working from both homes and offices in the clear future.



During this pandemic, many new prospects in the IT sector have appeared. It including the increasing demand for 5th generation (5G) technologies. This could facilitate the growth of networks that promote optimized remote interactions.


Following COVID 19, IT has been the most popular organizational component with industry as well as other departments demanding IT resources.  Within the post COVID 19 era, the Information Technology sector will get to be the pillar of the industry.

We Serve clients globally in diverse industries

Stay Upto Date With Our Newsletter.