India coronavirus shutdown hits outsourcing groups

A private security guard stands at the exit gate of the headquarters of Tata Consultancy Services in Mumbai, India on Oct 13, 2016.
A private security guard stands at the exit gate of the headquarters of Tata Consultancy Services in Mumbai, India on Oct 13, 2016.PHOTO: REUTERS

NEW DELHI (FINANCIAL TIMES) - The nationwide shutdown in India because of coronavirus has left some of the world's biggest outsourcing companies racing to maintain services for global clients.

India's IT companies provide back office operations for many of the world's largest corporations, from banks to manufacturers and pharmaceuticals.

The largest of them, Tata Consultancy Services, counts Citibank among its clients, for example, while rival Infosys provides services for Pfizer.

The spread of Covid-19 in India prompted Prime Minister Narendra Modi to announce last week that the country would enter a 21-day shutdown with a strict curfew and only essential services running.

A number of the country's more than 900 confirmed cases were among employees at outsourcing firms in cities like Bangalore or Pune.

As a result, IT companies have had to swiftly shift desktops into employees' homes and upgrade networks so they can continue working remotely.

They have also had to lobby for exemptions so they can continue sending some workers to offices to perform critical functions, such as maintaining clients' cyber security systems.

Tata Consultancy Services, which has US$20 billion (S$28.5 billion) in annual revenues, said that around 85 per cent of its 400,000 employees in India and elsewhere in the world are now working from home, up from 40 per cent a week earlier.

Infosys said that some 70 per cent of its 200,000-strong workforce is working from home around the world.

"This is the crown jewel of the Indian economy," said Mr R. Chandrasekhar, former president of industry association Nasscom and a former government IT official.

While there has been smaller scale disruption before, "this is a completely different ball game and companies are now trying to adapt".

 
 

Collectively, the industry employs around four million and earns revenues of US$180 billion a year.

The shutdown in India and other outsourcing hot spots such as the Philippines has been a challenge for companies in Europe and North America that depend on these businesses to manage internal systems or run call centres.

Some western companies have indicated they intend to reduce their dependence on outsourcing: Virgin Media announced last week that it would hire 500 call centre staff in Britain.

Mr Pankaj Kapoor, an analyst at JM Financial in Mumbai, said most IT companies were managing despite the difficulty.

"Has it increased the risk? Definitely. Are clients happy? Definitely not. But I guess these are the times where the choice was to suspend the work, or get it done with this risk."

TCS said it had put networks in place for its employees to be able to work securely from home, and had required them to sign non-disclosure agreements for an additional layer of protection.

"Organisations have trusted TCS to manage their technology and continue to place their confidence in us to help them tide over this situation," the company said.

Infosys said it is taking steps including facilitating high-speed broadband at its employees' homes if necessary.

 
 

"We are also significantly and rapidly amplifying our technology landscape to support robust and secure remote collaboration at scale," it said.

But Nasscom, the industry group, suggested the ability to adapt may have its limits. In a recent letter, it advised members to explore the applicability of force majeure clauses in client contracts.

"I am confident we can rebuild the industry to its past glory and more, once the crisis is behind us," wrote current president Debjani Ghosh.