Economic impact of coronavirus worse than 2008 financial crisis: Tech Mahindra CEO CP Gurnani

Tech Mahindra MD and CEO CP Gurnani said the economic impact of the coronavirus pandemic is much worse than the global financial crisis of 2008-09. The CEO of the $5 billion-plus company said that the pandemic would bring down revenues of the Indian IT industry as international orders dry up. He, however, sounded hopeful and said that from October onward there would be a recovery in Indian and global IT spends.

Speaking at an event by The Times of India, Gurnani said that on-site personnel deployment outside India would also decrease. He expects software teams to increasingly work out of India.

Gurnani acquiesced that the slowdown is inevitable. "There will clearly be a slowdown. The question is how long and how much," he said.

The Tech Mahindra MD believes that there would be a lag and one that would hit the economy. He said he believes that this lag is already hurting the Indian economy and expects a drop in revenues.

He pointed out that if a motorcycle manufacturer is not manufacturing motorcycles, then he or she would not sign a new transformation project and if no one is flying then the airline industry would not sign a new project and so on. "I don't want to be negative, but everyone knows that the businesses are impacted," he said adding that it is evident that there would be a slowdown.

The CEO of Tech Mahindra said that there is likely to be two-quarters of stress if the second wave of coronavirus is not very strong, however, he is hopeful about the recovery. He said that his best estimate at this stage is that from October onward, there will be a recovery in Indian IT and the global IT spends.

Gurnani added that there are some areas where the companies might find things getting tougher for a few quarters. He said that the focus on network and services, and media and entertainment would keep the situation under control for Tech Mahindra.

Tech Mahindra is a subsidiary of the Mahindra Group and provides IT and BPO services to companies. It currently has over 1.2 lakh employees.

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