India’s disastrous second wave of Covid-19 has become the ultimate reality stress test for the global service industry as companies are struggling to keep their back-office operations running normally in the widespread infection and overwhelmed healthcare system.

India is the world’s leading back office center. Nearly 4.5 million people are engaged in everything from answering customer service calls to software development to mortgage processing, far surpassing its peers with 1.2 million employees such as the Philippines.

Global banks and technology companies from Goldman Sachs to Google also operate their own internal businesses there, and have also undertaken more contracting work with outsourcers such as Infosys and Tata Consultancy Services.

However, the country has already been hit by the second wave of pandemics. The reported seven-day average number of infections is 270,000, and the average daily death toll is 4,100. These two figures are considered severely underestimated. A crisis exacerbated the humanitarian crisis. Severe shortage Hospital beds, oxygen and vaccines.

India has become an indispensable part of global companies, but executives say the crisis poses a risk to the model. Companies are forced to move jobs overseas, postpone projects, and even establish their own remuneration facilities for employees.

Vishal Sikka, former CEO of Infosys and a member of the board of directors of the American technology company Oracle (Oracle), said: “I think that with the second wave in India, it will have a significant impact on the industry.” The company has 45,000 employees in India.

India’s sudden national blockade last year forced the industry to Transfer to remote work Almost overnight. “But now, as the chaos comes, it seems to be more serious. It feels worse.” Sikka said. “It’s just the number of people who are sick.”

Executives and analysts say that many companies report that as many as 10% of their employees use Covid-19. But this number does not include workers who are busy caring for sick family members.

Vinod AJ, secretary-general of the IT Employee Forum, an industry organization, said that for many employees, the burden has become uncontrollable. He said: “The problem is that not only them but their families are affected.” “Many companies are seeking 24-hour support. [clients in] America and the rest of the world. They cannot provide that much support. “

Consultant Sid Pai said that no company is immune. He said: “Whether you are Goldman Sachs, Accenture, TCS or Infosys, all companies, regardless of size and nationality, will be affected.”

Bangalore hit by pandemic

Bangalore, the main technology and IT center, has been one of the worst-hit cities, although the situation has shown some signs of improvement.Although experts worry that the virus is Spread across the country Has fewer test functions.

Arvind Krishna, chief executive of the American technology company IBM, who has more than 100,000 employees in India, said that if the second wave is near the peak, the burden can be controlled.

He said: “This is a worrying issue, rather than five alarms.” “I am more worried about the long-term impact on some families. We went back to many anecdotes in our 20s and 30s, but did not recover. Compared with the previous year, this is really shocking.”

Pravin Rao, the chief operating officer of Infosys with more than 250,000 employees, said that India’s IT department has weathered many storms and has sufficient capabilities to overcome this difficulty.

He said: “From the burst of the Internet bubble to the global financial crisis, this industry has demonstrated its resilience time and time again.” “There have been discussions about whether the industry can survive, especially in the first wave of Covid last year. “

High-skilled, low-cost business model

India becomes a hub for outsourcing by Western companies Call Center He has been engaged in IT work since the 1990s.

The country has a large number of highly skilled, low-cost workers, which encourages banks and software companies to delegate more and more key functions to India. Indian IT industry group Nasscom claims that the industry generates approximately US$180 billion in revenue each year.

Last year’s travel ban and lockdown Shake A business model that relies on dispatching workers overseas and across campuses. According to Nasscom’s data, IT service spending fell by 4% in 2020.

However, as business activity in Europe and North America picked up, cash-rich industries began to rebound. According to data from the rating agency CARE Rating, net sales growth increased from 2.7% in the quarter ending in June 2020 to 6.4% in the first quarter of 2021.

If the government’s second wave of threats to India is greater, then the second wave of threats will constitute a more fundamental threat. Poor handling The consequences of the crisis-the inability to prepare the health system and purchase enough vaccines-damaged the country’s reputation as a reliable outsourcing destination.

For example, in the UK, regulators have been consulting With the lender Regarding the possible impact on operations.

“It denies people’s confidence in resilience [companies] Said DD Mishra, a senior analyst at research and consulting firm Gartner. “The response did not bring good comfort to everyone.”

The medical crisis puts pressure on employers

A particular challenge is that the second wave placed a heavy burden on India’s medical system, which made India Wealthy indians Unable to get treatment. This forces the company to leave things in their own hands. British bank NatWest is one of many companies that purchase oxygen generators for its employees in response to a severe shortage of medical uses.

With the full opening of the hospital, companies including Infosys and TCS have also established their own Covid treatment facilities.

In order to maintain normal operations, some companies have also moved work outside of India. Shanmugam Nagarajan, co-founder [24]The customer service outsourcer 7.ai is transferring calls from India to centers elsewhere.

Nagarajan said: “The waves hit different parts of the world at different times.” “When India cannot answer the phone, Colombia and the Philippines will answer the phone.”

Rao said Infosys is still hiring subcontractors and negotiating with customers to postpone “this is not critical” projects.

TCS stated that the ability to maintain its workforce productivity and provide services to customers is a testament to “how powerful and effective this model is.”

Pai added that the latest outage will increase costs and hurt productivity. He said: “So far, customers have understood this, but at some point, the economic situation will start to improve and customers will ask questions.”

One of the challenges the company is trying to solve is vaccines.India revised its rules this month to allow the private sector to directly purchase prodding, but Severe shortage It is expected to last for several months, which complicates their capabilities.

Apparao VV, head of human resources for Delhi-based outsourcer HCL, said the company was able to obtain a limited number of vaccines through a partnership with a private hospital, but was still working to obtain more vaccines.

He said: “No one can provide you with the timetable and quantity you need.” “We contacted all the manufacturers. They were very noncommittal…. We couldn’t get promises at all.”

Approximately 3% of India’s population has received a full vaccination, compared to over 30% in the United States.

One advantage may outweigh all other advantages: people

Executives said that despite all the turmoil, India’s biggest long-term advantage is likely to outweigh any pandemic: the labor force.

With fierce competition from programmers and software engineers around the world, they argue that nowhere else in the company can they find so many workers at the right price.

JPMorgan Chase and Credit Suisse, which already have considerable operations in the country, announced this month that they plan to hire 4,000 and 1,000 Indian employees respectively in 2021 to upgrade their technology.

Sangeeta Gupta, senior vice president of Nasscom, said: “The company will go where the talent is.”

Nicholas Megaw’s other reports in London