The demands of Covid-19 on the workplace — on account of employees being forced to work from their homes because of the lockdown — have accelerated the course of digital adaption among companies with as much as 80 per cent of their incremental expenditure in the near term being utilised on this count, a Nasscom report said.

The report, titled “Future of Technology Services – Navigating the New Normal”, prepared by McKinsey for Nasscom, said there had been an extensive acceleration in digital adaption by enterprises and that there was a potential increase in outsourcing intensity because of remote working.

The report said digital transformation deals had seen a 30 per cent jump; cloud spending by 80 per cent; along with a 15 per cent rise in customer experience. The outsourcing budget, especially in digital and cloud, is expected to increase in the next 12-18 months as enterprises look to rebalance their technology priorities.

These are contributing to the faster than expected recovery for the technology services industry, and top Indian technology service providers have performed better than analyst estimates in the second quarter of 2020-21.

A class of operators, referred in the report as Tech Natives and Digital Reinventors, with revenue of over $3 billion, have driven 65 per cent of the about $6 trillion growth in market capitalisation between January and July 2020, highlighting that technology is now core to future business recovery.

Nasscom president Debjani Ghosh said “the next 10 years will be different from the past and require all stakeholders to develop strategies and insights to identify new opportunities and mitigate the risks. To ensure faster recovery, companies need to develop a two-part response to the evolving landscape: near term plan of action and long-term strategic rethinking.”

“The report suggests that the world has leapfrogged on digital adaption by 3-5 years in the last 9 months. We are seeing an increased emphasis on digitisation across verticals and our analysis shows that 80 per cent-plus of the near-term spending may be driven by Covid-19 resilient digital offerings,” McKinsey & Company Senior Partner and Global Leader (Analytics) Noshir Kaka said.

The strategic gameboard has changed tremendously in the last nine months and agile companies have made the most of this by reimagining the way they look at growth (micro verticals, customer segments, geographies etc.) and are re-wiring their operating models for the new normal, he added.