News: Covid-19 pandemic: IT reworks operations as clients cut discretionary spends -07-04-2020
Updated On: Apr 07, 2020
Clients turn to IT projects that make shop floors and operations more cost efficient and flexible. Services that are expected to reduce cost of ownership include cognitive analytics to predict raw material prices and 3D printing to produce small parts. This could benefit large IT services firms, say analysts.
Mumbai: Clients in the automotive and manufacturing verticals have told IT services providers that they will defer discretionary spending amid the Covid-19 pandemic. Instead, they will focus on IT projects that will make their shop floors and operations cost effective and flexible, they have said.
In the automotive segment, projects on connected cars and 5G networks, will be put on the backburner. “The focus is going to shift from giving additional features to the customer to reducing the cost (of making the vehicle) and ensuring supply chain continuity,” said Maneesh Pant, vice-president at Capgemini India.
“The discussions are changing. Today they are saying can you help me in making my supply chain agile, decentralised, resilient, reduce total cost of ownership, help in remote control and automation of plants, greater leverage of AR/VR, virtual showrooms… we are looking at many deals around these topic now,” he added.
Services that are expected to reduce cost of ownership include cognitive analytics to predict raw material prices and 3D printing to produce small parts.
Initially, productivity fell due to unavailability of parts in China, the epicentre of the outbreak, but companies are approaching IT partners to chalk out agile supply chains.
This could benefit large IT services firms, say analysts. “What clients are already seeing is that they don’t have as much insight into their operation as they want and that’s a data issue, analytics issue. That’s all a positive for the big IT service providers,” said Steve Hall, president - ISG EMEA and partner, digital advisory services.
Engineering services company LTTS is seeing a shift in what its ER&D clients want to spend on.
“Rapid disruption in technology has driven a change in behaviour of many of our customers. They are rethinking core operations, relying more on partners for newer technologies,” said chief executive Keshab Panda.
Companies that have already “embraced Industry 4.0” will find it easier in the prevailing scenario of business slowdown and when the pandemic recedes, business models will be different, he said.
LTTS is also looking at short-term projects for customers in the engineering division to save on costs. “Everyone is looking at a quarter or two of temporary impact … our priority has been working on high-priority projects with a quick return on investment (for clients),” said Panda.
