The Covid-19 shock has had a devastating long-term impact in several aspects. It has not only wiped out several lives but also fractured the back-bone of economies globally. Countries have been forced to close borders, indefinitely cease international trade thereby resulting in economic and social self-isolation. This has strengthened emergency measures and fortification of systems to continue trade and activities digitally (Hernan Saenz et al., 2020).
Countries that have managed the crisis effectively are likely to be the new influencers to the world for example: New Zealand, Australia, Canada, India, Korea, Taiwan, Vietnam. China's mishandling of the Covid-19 pandemic has resulted in substantial disruption of trade, governance and resources. It is speculated that China will lose tremendous business as countries wish to pull back their manufacturing units from China to other Asian counterparts (India and Vietnam). Will countries form newer alliances and shift their units to India from China? Can India be the 'heart of manufacturing' by 2025 and the 'largest exporter' of the post-Covid era?
Companies, big and small, are compelled to rethink their work methodologies, restructure and revise policies. Changes bring discomfort. Are they welcome? Yes. The 1918 influenza pandemic, comparatively short-lived, changed the dynamics of the economy (Garrett, 1998). Governments are expected to embrace e-governance, ease compliance and launch massive long-term infrastructure projects. Companies must balance cost complexities and customer relevance, focus on quicker innovation & automation (including IoT, AI, robotics, data analytics) thus re-tool strategies to bring a resilient future (Allen, 2020).
This article discusses various effects on several domains like travel & tourism, international trade, events, offices, real estate and their emergence post-pandemic. The question is to which degree human behaviour, social lives and economic recovery will take place across the globe? Could this bring about a post-pandemic (r)evolution? How life might look post-pandemic?
Travel, Tourism & Hospitality
As discretionary spending dries up, long distance pleasure trips and expensive vacations will freeze in the short and long term.
Aviation has been one of the most adversely hit sectors by Covid-19. International Civil Aviation Organisation predominantly hypothesizes, two scenarios (figures 1 and 2): an optimistic view or the 'v' curve (yellow triangle), recovery is expected quickly following the recession and the other is a pessimistic perspective (red triangle), indicating a delayed recovery. (ICAO, 2020)
Figure 1: ICAO figures on the post-pandemic impact of air traffic: International routes (ICAO, 2020).
The airlines are estimated to face revenue loss between $302bn-$400bn, reduction in passengers by at least 40%-60%. Airport revenues to drop by 55%-60%. It predict about -3% to -5.2% contraction to the global economy (ICAO, 2020).
Figure 2: ICAO figures on the post-pandemic impact of air traffic: Domestic flights (ICAO, 2020).
Although many projections are of the view that people are likely to drive to nearby vacation spots instead of flying to one, vacationing in sanitised rental property preferably those privately owned and isolated instead of crowded hotels, also seems plausible (Kenneth Kiesnoski, 2020). This means that local businesses including restaurants, cafés and rental properties may recover sooner until people are comfortable to travel farther away. Customised mobile vans could be the new trend of investments where people travel and stay in the same vehicle.
Airlines make money when they fill a minimum certain number of seats in every flight. Having the middle seats empty in view of social distancing will increase fares. Balancing affordability for consumers and sustenance of the air carriers is critical. Compulsory use of PPE gear will further increase travel cost.
The travel demands will pivot towards railway coaches where high speed trains will be able to compete with domestic flights. The railways on the other hand would need to introduce better air filter systems, improvements in sanitation and hygiene, seating arrangements similar to airlines.
Post-covid-19 businesses will utilise cutting edge drone technology/UAV solutions to deliver locally and to remote areas. Aviation could also see a new wave of transition where companies would optimise their operations with these devices thereby boosting their finances.
Currently, drones are being used to disinfect tall buildings and containment areas where the activities of sanitary workers need to be reduced. They are also used to detect coronavirus symptoms and to transport test samples from individuals to the Covid-19 laboratories. Diverse domains where drones could be a game-changer include surveillance, security, media, marketing, health, law enforcement, communications, navigation and monitoring.
Just like 9/11 bombings changed international and domestic air travel and also brought in "permanent" changes in the way we approach security, this pandemic will also introduce many "permanent" changes. The crisis of tourism industry is likely to continue for an unprecedented time until a permanent solution like a vaccine for Covid-19 is found.
While the aviation and tourism industry make a major chunk of the global economy (Garrett, 1998), employment is also directly dependent on how soon they are able to recover. This is dependent on diverse factors including containment, governments assistance, economic conditions and consumers trust to travel farther away from their 'safe zones' (ICAO, 2020).
Hotels could favour ways to deliver 'contactless' services and reducing touch points on premises - a shift from 'aesthetically clean' to 'clinically clean' where the focus is entirely on hygiene, thermal check-ups and regular sanitising (Pillai, 2020; Singh, 2020). Other changes include mini bar installations and lesser seating arrangements. Cloud kitchens could become more common as investments could just be in 'food preparation' and 'delivery' by drones. Large banquet halls are most likely to be partitioned into smaller rooms to accommodate compact groups for weddings and celebrations or into smaller department stores.
The pandemic has forced all to rethink about organisational structures and adapt to a new normal.
Housing and Office layouts
Workplace layouts will be re-oriented to maintain social distancing. Reduction in seating capacities in conference rooms and cafés are amongst other important measures. Automated dispensers, voice-activated elevators, door sensors, automatic taps high-end UV lights for disinfection, air filtration systems cum ionisers to improve the air quality are amongst the upgrades offices are expected to evolve with. Video-conferences and profiles that can work remotely are expected to be encouraged. Mini cabins are likely to reappear in offices.
Employee benefits and perks
Employees health will get prioritised. New benefits may include online fitness, professional e-skill development coupons, Wi-fi reimbursement and allowances for home work stations or co-working spaces. Some companies have experienced more productivity since employees are now comfortable in their own locations, reduced hassles of commute and the flexibility to complete their work - a shift from traditional 9-5 timings.
Effective online meetings will eliminate significant travel and accommodation costs. Virtual consultations, e-Shopping, e-Events and e-Mentoring is the new normal (Hernan Saenz et al., 2020; Marr, 2020). Critical digital infrastructure (network, cloud storage) is the foundation to accommodate e-platforms. Security is the biggest challenge faced by companies where their work revolves around client data and financial transactions.
With many now considering investing in the required infrastructure and a move towards digitisation becoming more pronounced, exposure to cybersecurity breaches, cybercrime and financial frauds will increase. Naturally companies would invest in hiring cybersecurity experts and digitally skilled employees.
Consumers who were likely to buy housing properties have delayed or cancelled their plans because of job insecurity. Construction businesses are struggling with shortage of labour and supply chain of materials. Real estate scenarios have been daunting for those affected, sales have halted, and delivery of on-going projects have been long delayed.
Closure of co-working spaces, malls, cinemas, gyms, retail outlets and restaurants have heavily impacted their future. Perhaps, companies won't need large physical office spaces around the world, resulting in substantial savings.
Investments in warehouses especially in areas located at the outskirts of the cities could be a new norm since showrooms could be just "show-rooms" for products, re-directing customers to e-commerce sites. Tier 2 and 3 cities will see significant developments in real estate, hospitality and entertainment infrastructure due to reverse migration where people will choose to live in less populated and less polluted areas. Remote workers and e-commerce penetration make real estate development widespread and affordable.
The future could include 'work from home' centric cubicles in houses and co-working spaces in apartment buildings. 3D printing of buildings, offices and houses could bring a revolution in this industry. Virtual Reality (VR) and immersive 3D real estate tours would transform customer experience.
Cinemas have faced a substantial impact; online streaming facilities have added to the ongoing pressure. The film industry, movie theatres and the global box office has dropped by billions of dollars. The number of users for 'Over The Top' (OTT) platforms have enormously increased from 15.8 million to 182.9 million paid subscribers for Netflix alone in the first quarter of 2020. These platforms allow the users to watch un-censored content directly in the comfort of their homes. There has been a behavioural shift of consumers opting to binge watch movies and series that pose threat to the cinemas. Often referred as the 'Third Age TV', OTT platforms offer quality content in diverse areas making it a perfect choice for all kinds of audiences.
Some of the films that were to be released before the pandemic as well as upcoming movies are choosing OTT release route instead of theatres. Entertainment as a habit has changed beyond recognition as people have "discovered" new comforts and choices. On the other hand, OTT platforms are facing troubles in replenishing their content. The number of hours people allotted for entertainment were restricted before contrary to the plentiful time we have now. Earlier, people took at least 8-9 sittings to complete one show, now it takes hardly 1-2 sittings. Alternatively, low budget movies and series seem to have their doors open.
Health facilities will become more conscious, more recruitments will pour in to bridge the gap between incoming patients and the number of healthcare workers. Medical schools are expected to see a rise in number during admissions. Virtual dissections with Virtual Reality and Artificial Intelligence could be implemented alongside practical sessions to make learning more intricate and reduce college hours. Touristy and populated locations are likely to invest heavily in medical facilities.
Telemedicine would see an upswing. Doctors as well as patients will switch to technology for consultations on basic ailments to reduce transmissible infections from hospital visits, relieve geographic borders and optimise health support.
Virtual hearings would become conventional and systematic. Participants won't need to travel to the court, the process would be swifter and comfortable. The use of blockchain technology to track transactions and smart digital systems could be encouraged in the legal system. E-mediation thereby obtaining significant results in lesser time (Surana, Rawat and Goyal, 2020) will gain preference. It will involve use of virtual conferencing applications including Teams, Meet or Webex and e-signing applications like DocuSign or Clio.
Education sector is a critical determinant of a country's future. Institutions have tried hard to survive the pandemic by adopting e-learning and e-examination protocols. The education system could become more streamlined due to the availability of online resources. Access to "learn from the best" has become easily obtainable. Adoption of technology as well as associating with pioneers of teaching will become inevitable for institutions.
For low income schools or alternative counter-parts the Government would probably explore the possibilities of having a centralised learning management platform to enable their sustainability. Student exchange and international higher education will experience a sharp decline for various reasons including crossing borders, medical support, financial capabilities and e-learning.
An Ernst and Young report states that the trade flows have subsided and supply chains of domestic and international production networks have disrupted. Economists have compared the financial crisis with that of 2008-09 (Sen, 2020). China's existing supplies with other countries are at stake. Many companies from America and Europe are indicative of shifting their manufacture fully or partially from China to other Asian countries. India, keen on opening its doors for international investments, can emerge stronger than its competitors.
Countries are looking at ways to increase "on-shore" production for self-reliance: an increase in import duties, trade policies and other licencing formats will change the cross-border trade scenarios (Sen, 2020). 'Make in India' initiative will make India the hub of many technology-driven advancements including drones and flying air taxi manufacturing, high-tech electronics and exports.
Supply chains are brought closer to home guarding against future disruptions. The focus could be to make the entire system more resilient and independent focusing the production within their borders so that the country's ecosystem can survive future shocks. International trade may see decline for the short term as almost all countries are looking at decoupling and diminishing interdependence with other countries.
According to World Economic Outlook, the global economy is expected to decrease by 3% in 2020 and likely to grow by 5.8% in 2021 when the economy tries to unwind the pandemic's impacts (2020). Figure 3 shows country-wise projections for 2020-2021. 2019 based projections are broadly divided into advanced economies, developing economies and low-Income generating economies.
Figure 3: Worldwide economic growth projections for 2020-2021 post Covid-19 pandemic (International Monetary Fund, 2020).
Advanced economies have had negligible growth in 2019 followed by a drastic fall (-6.1%) in 2020. The data shows signs of recovery in most advanced economies led by Germany with maximum potential, whereas Asian economies are expected to grow by roughly 1% despite the pandemic. Projections show a sinusoidal curve where they grow, drop and grow aggressively in the years 2019,2020 and 2021 respectively.
The human perceptions could change in all aspects, be it travel, events, schools, work or shopping. People's social lives would change with lesser human interactions. Fatigue, frustration and mental health could be adversely affected as human touch and physical interactions could become negligible. The world will need newer ways to reduce stress, their engagement with nature and themselves will increase in the form of meditation, yoga. Events could be closer-knit and resources thoughtfully utilised (Allen et. al, 2020).
A shift from crowded and cramped housing from tier 1 cities is very likely to happen. People would prefer living in tier 2 and 3 cities with lesser crowd. Additionally, scope for infrastructural development in these cities is high due to availability of abundant resources and less pollution. Companies will sharpen focus on consumers, remove products that fetch lesser profit and simplify management of the profitable deliverables (Hernan Saenz et al., 2020). Virtual sales and product demonstrations could be the new way in which marketing is foreseen .
The paranoia with sanitisers, cleaning agents and hygiene is expected to increase. Technology, innovation and online communication platforms are expected to be our constant companions.
Geo-economic shift and opportunities from China to India
China has been host to the biggest Foreign Direct Investments (FDI) since 2000. Cheap products and labour made China the destination for many European and US based companies who pumped billions of dollars into the country. Post-pandemic, China has emerged with a trust deficit. Many companies want to move out of China and India is one of their top choices. The Indian government started their comprehensive global 'Make in India' outreach with the vision to bring in foreign investments while stepping up in the economic game internationally.
Several other initiatives of Government of India (GoI) include 'Skill India', 'Digital India', 'Ease of Doing Business' (EoDB). Key points on why India can rise to become the largest manufacturer and exporter to the world as compared to other countries like Vietnam are given below (Alem Tedeneke, 2020; Business-Standard, 2020; Surana, Rawat and Soundararajan, 2020):
- The historic cut in corporate tax rate (22% from 30% for existing companies, 15% for new manufacturing companies) attracts private investment from across the globe.
- Abundant human resources ranging from unskilled labour to outshining talent pool, Skill India program assures to provide trained manpower.
- Goods and Service Tax (GST) rollout that would make business easier for multinationals in India.
- Average entry level salary in India is between 157 USD to 196 USD.
- Third largest and fastest growing economy projecting 9.5% growth by 2021 (Fitch) (Business-Standard, 2020). Third largest consumer market by 2025 behind US and China (Alem Tedeneke, 2020).
- Low shipping costs, geographic and demographic wavelengths, the capacity to produce raw materials domestically are amongst other favourable conditions.
- Rule of Law, democracy, independent judiciary, abundant and affordable high-quality managerial and technically qualified talent.
Delhi and Chennai are amongst most sought after geographic locations. Industrial ecosystem, inter-state connectivity, international ports and airports, availability of land are commending reasons that ease out challenges to setup manufacturing units in these cities.
Virtual Reality (VR), Artificial Intelligence (AI), Internet of Things (IoT)
Human lives could be driven by fully immersive computer-generated scenarios where humans can interact and navigate in real-time. Entertainment and cinematic experiences could be powered by the use of 3D technologies and mixed reality experiences. Will Virtual Reality replace traditional cinema? It would be interesting to witness ambitious developments like 4DX experiences including special effects of rain, winds, bubbles to the VR shows. We could witness smart cities, smart agriculture, smart health scenarios with IoT integrate contactless interaction within their designs.
Before the lockdown in most parts of the world, major IT companies were not in a position to support "total" work from home due to limited critical infrastructure and the risk of data breaches in critical sectors like banking, healthcare, insurance, and IT. Nonetheless, the pandemic has made everyone realise that they can 'work in several other ways'.
While remote working has become "permanent", the transition from traditional coworking to isolated work from home could challenging for both employees and organisations. Issues of maintaining work-life balance, concentration, restricted access to resources and the flexibility of working hours could emerge. Even though video conferencing is sustainable in every aspect, the fatigue from attending endless e-conferencing meetings is real.
It would be essential for the organisations to monitor employee's progress, their mental and physical health. Here, human relation management skills will be highly sought after. India seems poised to emerge stronger post-pandemic due to significant reasons discussed above. International companies have realised India's potential. India is laying the red carpet for Japanese, Koreans, Americans and Europeans.
The Covid-19 pandemic has dramatically risen like a wildfire in the bush and the effects are deep and large-scaled. It is foreseen that the physical footprints of business would be extremely reduced, resulting in remote work stratagem. Immersive technologically driven ideas like drones, air taxis, VR, AI and IoT are expected to bring about a social revolution. With a small office unit in houses, showroom products could traverse their ways to e-commerce ecosystem. It is vital to channelize the development of these technologies to breathe the concepts of 'smart city' and 'smart life' post-pandemic.
On an International level, Government of India initiatives are fostering new changes in how the world will perceive India in the next few years. Statistically, India is favoured for foreign investments having one of the lowest corporate tax rates and abundancy in resources. The manufacturing determiners could form a paradigm shift from China to India bringing in business opportunities and employment to Indians.
With incomes plumetting, costs have to naturally fall. Products and services have to become cheaper, simpler and more durable. Innovation has to increase especially the "frugal-innovation" type. Information Technology and automation will lead Industry 4.0. Many lasting changes will be introduced in trade, practice of law and medicine, manufacturing, tourism and socio-economic development.
Thus, post-pandemic (r)evolution will greatly impact the social lives of people, the way business is carried in the future and customer centric relevance. The behavioural change will affect many businesses, it will be a boon to some and bane to the others. How quickly one adapts(?) - will define the future.
The article is authored by Dr. Vinod Surana, Managing Partner & CEO, Surana & Surana International Attorneys and Dr. Malvika Mehta, Forensic Analyst.
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