COVID-19 Slams Tech Outfits And Startups In India

With COVID-19 cutting a devastating swath throughout the world, what everyone wants to know about India is how bad the situation really is. In a country with a large but mostly poor population of 1.3 billion and a per capita of around just $2,000, a virus such as this can spread like wildfire and cause devastation. 

So far, India has seen 612 cases and twelve deaths, but this is easily a questionable number considering the lack of testing kits, testers, and the country's massive population. China shut Wuhan down almost instantly and still suffered. India, like China, could also be deeply affected, especially if it has under-reported its figures. Realising this, the Indian government has done the smart thing by implementing a 21-day lockdown -- or de-facto "house arrest" -- along with an international and domestic flight ban, and a stoppage of the railway service. 

The Indian government, with help from tech firm Haptik, has also launched a WhatsApp chatbot called MyGov Corona Helpdesk where people can text with questions about the virus. In turn, they can receive instant responses, including information about where they could receive assistance. 

With government implementing these initiatives, its hope is that by the end of this period, much of the immediate threats from the virus will have blown over.  

As the body continues to rise then, it may seem trivial to talk about the state of the tech sector as I am going to try and do, but the reality is that tech employs a wide swath of people, including Uber and Ola drivers and delivery personnel. With potentially nothing in their bank accounts to rescue them, their livelihoods are directly at stake with business closures arising from COVID-19.

Here's a short account of how various parts of the tech sector have fared with the ongoing crisis.

ONLINE GROCERIES

A few days ago, I wrote an article about how edtech firms in India are experiencing an upswing with schools being shut down during the exam period. Similarly, the revenues of internet-enabled grocery outfits such as Grofers and Bigbasket have gone through the roof, growing by double according to Quartz, as Indians go through a surge of panic buying. Average basket values have also gone up by as much as 20%. 

Experts say this will continue to have stickiness as new users discover the convenience of online shopping where they would not have otherwise. However, online shopping has taken a big hit in general, with Amazon to stop shipping non-essential products.

STARTUPS

For many tech companies that are still in their infancy, this pandemic will probably come as a bitter blow. February already registered a 19-month low for investments and although this was primarily due to fewer big-ticket acquisitions, it is no doubt be a harbinger for things to come. 

Sequoia recently sent out an email to its companies to "question every assumption" about their business and to start thinking about how to cut spending and jobs. Firms that have focused mainly on customer acquisition rather than generating profits will also find that the game has dramatically changed. According to Livemint, fundraising has already ground to a halt, with many companies only having control over their burn rate.

One promising startup sector that has already been hard hit is logistics, which had been booming until now. Shipsy, a Gurugram-based company that uses a digital platform to connect exporters and importers, has already seen their business plummet 25%, and with global shipping and transport having ground to a halt, this looks like the tip of the iceberg.

ENTERTAINMENT

Just like it did in Europe a few days ago, Netflix announced that it would throttle its traffic over Indian telecom networks by 25% in order to alleviate the data congestion that has arisen from cooped up people binge-watching their content. Youtube and Amazon have also made similar announcements.

MANUFACTURING

One of the biggest potential impacts to India's employment and economy could be the shuttering of manufacturing plants and assembly lines in the tech sector. For example, Xiaomi has eight factories that churn out smartphones, smart TVs, and power banks. One can only imagine the ripple effect that this would have on revenues, handset supply, and jobs if it were forced to close the doors on all of its factories.

So far, Xiaomi, Lenovo-Motorola, and Lava have already been impacted, with some of their smartphone factories being forced to shut down following a diktat by state government. 

ONLINE TRAVEL

Needless to say, no one is even thinking of travelling so you can imagine the implosion that is currently taking place for online-enabled homestays, hotels, and travel websites like the rapidly growing Oyo. Leading travel aggregator Yatra.com said that 35% of bookings that include travel and hotel to international destinations have already been cancelled.