Chandra is an experienced technology leader and entrepreneur with corporate, start up and financial industry experience across a 20 years career. He is a successful practitioner in the digital and technology domain and has an experience in solution definition, architecture and implementation leveraging Artificial Intelligence, Machine Learning & Blockchain. Having launched multiple SaaS products in the global market, including HRAPP and Flowboard, he is now focusing on enabling employers to manage their remote workforce using technology.
COVID-19, which first emerged in late 2019 in Hubei Province fast spread to more than 210 countries and territories. Total infections had gone beyond 2 million so far, with tens and thousands of people lost their life. Beyond that, we have a complete lockdown across many countries to contain the impact of the virus. Scientists in research labs across the globe are working on finding a treatment and a vaccine, and we are another twelve to eighteen months away for seeing its result. COVID-19 outbreak is one of the biggest threats to the global economy and financial markets.
Stay at home, travel bans, and closure of public places created a massive gap between supply and demand. Major growth economies are forecasted to decline due to factory closures, cutbacks in service provisions, and supply chain disruption. The situation is very dynamic, and it is evolving every day. Organization for Economic Co-operation and Development (OECD) forecasted global GDP to slow from 2.9% from the previous year to 2.4% this year, and this will further get downgraded in the coming days. Lockdown will create an irrecoverable loss of wealth for businesses and individuals. Though the individual’s mortgages and other financial commitments are in the moratorium, still every citizen is responsible for paying it back when the situation gets back to normal. International Monetary Fund (IMF) estimates the economic impact to be worst since the great depression in 1930.
Lockdown and its impact on employment
Social distancing and temporary closure of factories have a significant impact on the working class. Though the governments across the world are supporting with direct cash benefit and other measures to keep them staying at home, job losses and long-term impacts on their livelihood are immeasurable. Keeping the working-class unproductive for a long time will create social impact and increases the gap between rich and poor. Unemployment rates are quickly rising to a level we have not seen for decades. In India, the unemployment rate is more than 23%. In the United States of America, more than 20 million Americans claimed unemployment benefits since the start of the shutdown. Every country is trying to feed the poor and provide direct cash benefits, but it is not a sustainable option for the most part of the world.
Lower consumer demand
People no longer can go to work, and there are widespread unemployment claims across the world. Countries announced various measures to protect the businesses and also employees until the COVID-19 contained. Companies are cutting their spending and holding off new investments due to the uncertain business environment. Lowering demand will impact the supply side as well. We already see the oil price going down to a level where the majority of the shale oil producers in the United States of America cannot sustain for long and may go into administration. OPEC+ oil production cut announced recently did not help to contain the price fall as the travel industry is a complete halt, and storage across the globe are running out of capacity.
Impact on Startups
Startups are already feeling the pinch. Fully funded startups that are having optimal operational costs can sustain longer than the less privileged ones with no funding. A higher rate of customer attrition in subscription-based SaaS (Software as a Service) model will introduce a cash flow problem. Lower IT investments from businesses during an uncertain environment will impact the growth of the startups. In these uncertain times, startups should work on optimizing the operational cost by reducing the working hours, reducing the workforce, or cutting back on salaries for employees to extend their lifeline. The future is uncertain but planning the path will not only increase the chance of survival, but it also creates a strong foundation for future growth post the pandemic.
Shining sectors during the pandemic
Essential services such as food delivery, farming, healthcare, and cargo charters are in high demand. Some of the sectors are now doing catch up to meet the market demand across the world. The workforce is staying at home and connecting remotely for work. Technology vendors such as remote monitoring, web conference, collaboration, and activity tracking software are having a higher number of subscriptions in the past few months, and it is growing.
At this moment, we need a coordinated economic policy across the globe to fight the life and the livelihood of the people. Governments across the world should increase their resources to the health sector and support the most vulnerable. As we are fighting an invisible enemy where we have so many unknowns, each country needs to be transparent in its research findings and supporting each other on a humanitarian basis to win this pandemic together. History would speak how the current world managed this pandemic and recovered it successfully.