The coronavirus pandemic has affected industries across sectors and geographies. However, the technology sector has remained a bright spot and has led to the recovery of US stock markets thanks to the new surge of growth during the pandemic. Some of the crucial drivers of growth that we will explore here are due to the rise of e-commerce, work from home policy, and cloud migration.
The pandemic has accelerated the growth of e-commerce in leaps and bounds as malls shut and customers shopped from the safety of their homes. The recent Adobe Digital Economy Index report (May 2020) which tracks and analyzes eCommerce trends in the United States shows that e-commerce shopping levels rose significantly higher than the usual high holiday season where retailers typically see increased buying. Customers spent upwards of $153 billion in April and May 2020, which is 7 percent more than the $142.5 billion spent online in the holiday season of November-December 2019. This is again $52 billion more than what retailers generally expect in customer spend during the months of April and May.
The report further suggests that the pandemic will have longer-term implications for customer behavior. Online sales via smartphones increased compared to pre-COVID and customers who purchased online for the first time did so using their smartphones and not desktop during the pandemic. This also means that businesses are likely to focus on experience-driven e-commerce to attract customers, leading to a greater demand in tech services.
Remote Work everywhere
The pandemic has necessitated remote work which then extends to remote learning for students from K-12 to higher education, to telemedicine, offering growth opportunities for tech services in these areas. Corporations large and small are using videoconferencing and project management platforms more than ever to connect employees remotely. Zoom Video Communications shares rallied to record highs on the Nasdaq since the pandemic, up by nearly 250 percent this year as it dominates the video conferencing space globally.
Schools and universities have been grappling with the learning curve of remote learning during the pandemic and this has led to huge growth for the education technology industry. In March, education app downloads globally increased by 90 percent compared to the weekly average in the last quarter.
Tech unicorn Byju’s which offered free access to its subscription service during the initial stages of school shutdown saw an increase of more than 25 percent to get 50 million registered users. Engagement across the app grew to 100 minutes per day and the company saw 85 percent renewal in its annual subscription. All these factors indicate that companies that specialize in delivering ed-tech are going to see increased demand for their services.
The pandemic has disrupted healthcare services as patient-doctor-medical center protocols are being revised to reduce the chances of spread. Patients for non-emergency health visits are now often advised to schedule virtual appointments to ensure safety. This means that medical practices have had to quickly pivot to more sophisticated communications systems platforms and telemedicine to facilitate healthcare delivery while ensuring social distance.
Frost & Sullivan’s report on the telehealth market in the United States predicts that it is estimated to display a “tsunami of growth” in 2020, with a year-over-year increase of 64 percent, and a seven-fold growth by 2025. Additionally, the report predicts that growth in telehealth will continue for IT vendors who can deliver AI and robotics apps for the telehealth, remote diagnostic applications, and platforms that can securely analyze big data to help research.
Cloud migration on the rise
Covid-19 has greatly accelerated the pace of cloud migration by companies globally. The pandemic has shown why the cloud is a vital asset for large and small enterprises to enable business continuity, operate remotely, and foster innovation. Companies are now investing in digital transformation more than they did pre-COVID with a remote workforce and increased cloud usage. Software as a Service is the largest segment in the services market followed by Infrastructure as a Service which is also the fastest-growing segment. A new report by LogicMonitor interviewing 500 global IT decision-makers indicates that nearly three-quarters of the respondents believe that, within the next five years, 95% of all workloads will be on the cloud.
The technology sector has shown remarkable resilience in the wake of the pandemic-induced disruption. As people are forced to stay home, adoption of technology in all areas of life, work, and economy to the benefit of the tech sector.