POST-COVIDTRANSFORMATIVE PRIORITIES INENGINEERING SERVICES& YOUR GUIDE TO ENSURINGBUSINESS CONTINUITY

Are business prioritiesshifting due to the pandemic? The world looks and sounds a lot different these days. The coronavirus disease (COVID-19), which, in a few months assumed the status of a pandemic, has turned the world on its head, bringing in changes to our work and lifestyles in unimaginable ways. As we move towards a new normal, “work-from-home,” “cash crunch,” “employee redundancy,” and “disrupted supply chains” have become common terms. With hints of a global economy that may go into hibernation, the global workforce grapples to figure out how to respond to this new normal.

Business priorities are changing, which may impact positively in the short run, but only time will tell the positive or negative impact of the decisions made now. This report includes a survey conducted by Tech Mahindra, whose respondents include almost 100 engineering VPs and other senior executives. The responses indicated a consensus on the following:

This shift in attitude will create waves of changes in the way business is conducted and will dent the industry competition in the long run. As interactions between businesses are altered, companies will pursue M&As and offer carve-out opportunities to partners, so they can streamline their focus solely on essential operations.

While COVID-19 has far-reaching impacts across all industries, we take a deep-dive in four segments—aerospace, healthcare, automotive, and manufacturing, and explore the impact of the pandemic on them. We chose these segments for the simple reason that they are essential to the movement of humans, goods, and services across borders. Not only do they keep the global economy running but are also vital for the continuity of businesses all over, not to mention one of them is at the frontlines in the pandemic.

While the virus wreaks global havoc, the aerospace industry is buried in a storm of its own. Revenue and cash flows have plummeted not only for airlines, but for OEMs and other aircraft production suppliers as well. Considering the disrupted supply chains and wide-scale unemployment,

Investment strategies will steer towards the core business only. Any investment in non-core/critical activities will be avoided.

1

Although technology plays a vital role in combating the crisis, investments will be made only in intelligent and plug-and-play technologies.

2

With the workforce severely impacted, roles will evolve to become more flexible and remote. There will be a push for upskilling the workforce as new roles emerge.

3

Aerospace

Considering the disrupted supply chains and wide-scale unemployment, the International Air Transport Association (IATA) predicts losses to the tune of US$113 billion in 2020. Should the industry get back on its feet again, a cash infusion of a mammoth US$200 billion would be required, according to IATA.

the International Air Transport Association (IATA) predicts losses to the tune of US$113 billion in 2020. Should the industry get back on its feet again, a cash infusion of a mammoth US$200 billion would be required, according to IATA. The future of aerospace seems bleak even when the pandemic has run its course as people would take a while to become comfortable travelling in the skies.

Being at the epicenter of the pandemic, the healthcare industry has become more important than ever. Governments across the globe are realizing the utmost necessity for enhanced healthcare services. The crisis has called for increase in the development of tests, drugs, and vaccines, manufacturing of high-quality critical medical equipment and supplies, long-term care facilities and patient capacities, and a demand for medical professionals. While largely safe from recession, there will be a temporary hike in the price of drugs, according to a report released by Zinnov. Priva te healthcare providers with 80% of their costs fixed will expect losses for the foreseeable future. Profit margins of the medical devices industry will take a hit as international trade comes to a standstill. The industry, however, will undergo a rapid digital transformation with technologies including AI, blockchain, IoT, automation, and such being deployed at a speed faster than normal. The silver lining is in the re-evaluated government budgets that will give due importance to healthcare.

Healthcare

Integrated global supply chains being at the core of the auto industry, it is one among several industries that will bear the brunt of the pandemic. Moreover, the automakers’ dependency on China along with a slump in trade and production will cost the industry US$2 billion revenue loss, from which it is expected to recover only in 2022. A report by Zinnov states that traditional OEMs, Tier I manufacturers, ride-sharing services, and brick and mortar stores

AutomotiveThe manufacturing industry, which is currently labor-intensive, has till date had little to no scope for remote work—features that the pandemic has no room for. A survey by the National Association of Manufacturers reported that 53% of those in this sector expect an impact on their operations. Sluggish demand, supply chain bottlenecks, and nosediving oil prices do not fare well for the industry. With the welfare of the workforce in mind, the manufacturing industry must look for new technologies such as automation and Industry 4.0 to reduce the worker density in its operations, while simultaneously upskilling their workforce, familiarizing them with new tools and machinery.

Manufacturing and Industry

The crisis has called for increase in the development of tests, drugs, and vaccines, manufacturing of high-quality critical medical equipment and supplies, long-term care facilities and patient capacities, and a demand for medical professionals. While largely safe from recession, there will be a temporary hike in the price of drugs, according to a report released by Zinnov.

will be impacted by low consumer demand and layoffs, causing a shift towards online dealerships and vehicle subscriptions. Comparatively, technology OEMs and software providers for connected vehicles will be less affected by the pandemic. The industry will see a shift in consumer preferences that will foster re-prioritization of R&D initiatives and emphasize on using technology to enhance auto manufacturing productivity.

Automakers’ dependency on China along with a slump in trade and production will cost the industry US$2 billion revenue loss, from which it is expected to recover only in 2022. A survey by the National Association of

Manufacturers reported that 53% of those in this sector expect an impact on their operations. Sluggish demand, supply chain bottlenecks, and nosediving oil prices do not fare well for the industry.

Businesses must reshape their strategy for business continuity by assessing risks and evaluating short-term liquidity. They must postpone non-critical tasks and prioritize emergencies. While identifying the workforce essential to the operations, they should automate tasks to minimize human contact, and establish risk mitigation programs for them. As businesses seek alternatives to sustain their operations and co-create solutions, they must build relationships with the right partners to continue and initiate vital projects.

Operational progression

Constantly monitoring the impact on supply chains is the first action that business must take. This helps them find weak links in the chain and proactively identify alternate suppliers. Robust partner strategies that can be ramped up or down across different locations must be devised to ensure seamless supply. Quick scaling and approvals of drugs and vaccines and maximizing their access while controlling price is paramount to tackle the disease and its effects.

Supply chain continuity

Even as global demand falls, there is an increase in customer uncertainty about the seemingly hazy future. Businesses must centralize their messaging and proactively respond to misinformation to ensure clear communication. They must review and optimize production and carefully evaluate the opportunities and risks associated with government-backed stimulus, with a strong focus on short-term cash flow and working capital.

Addressing customer uncertainty

The business environment is changing every day as the pandemic unfolds. Accordingly, business plans must be updated to reflect these changes. The pandemic has brought about new ways of working that will change the way businesses interact and transact with each other. Resources are suddenly scarce; thus businesses must leverage technology to keep their core operations at an optimum level. Centers of Excellence (CoEs) are the answer to focus on strategic, long-term decisions, while delegating non-essential tasks via carve-out programs and considering potential mergers and acquisitions.

Exploring new business models

Businesses need to decentralize their workforces by investing in remote work and collaboration infrastructure such as cyber factories and robots in manufacturing to ensure continuity. Transforming to a digital workforce will help businesses meet the demands of those affected by the disease. Digitized clinical trials,

Transforming to a digital workforce strategy

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Top 5 priorities thatbusinesses must focus on While businesses come to terms with the profound effects of the pandemic, they need to address the immediate challenges of COVID-19, manage short-term cash flow challenges, create a plan to return to business-as-usual, redesign their business models in the new normal, future-proofing them against any kind of risk, and be aware of the changes in the regulatory and competitive environment. On the subject of business continuity in the pandemic, Tech Mahindra’s survey findings concur with the top five priorities that businesses must consider:

68% of Engineering VPs areoptimistic that the economic and businessenvironment will bounce back to normalwithin six months to one year.

telemedicine, and robot technology will enable an effective response to the pandemic.

95% of Engineering VPs feel it isimportant to restructure businessoperations to diffuse current and futurerisks from the pandemic.

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Technologies that will steerbusinesses through the pandemic

Industry-specific insights: Steps to be taken

AEROSPACE HEALTHCARE AUTOMOTIVE MANUFACTURING & INDUSTRY

AEROSPACE HEALTHCARE AUTOMOTIVE MANUFACTURING & INDUSTRY

Automation

Blockchain

Big data

3D printing

AR/VR-guided designing

5G Robot process automationSelf-service portalsAI for drug discoveryAI-based imaging diagnosticsIntelligent devices withremote monitoringDigitized clinical trialsTele-medicineCloud-based data managementCyber security

AI-driven connectivity

Centers of excellence

Automation

Industry 4.0

AR/VR-guided designing

Driverless vehicles

Cloud-based ERP

PLM systems

AutomationIoTAI5GIndustry 4.0AR/VR-guided designingBlockchainCloud/edge computingWearable exoskeletons

Defend existing position to customers

Explore AI opportunities across the healthcare value chain

Invest in connected technologies

Turn to engineering supply chain management solutions

Consider alternative options (ex. Smaller narrow body aircraft)

Automate sales, customer service, and operational processes

Utilize automation/Industry 4.0 for enhanced productivity

Consider strategic M&As and Carve-Outs

Consider offshoring with remote work becoming the new normal

Turn focus on intelligent medical devices

Consider carve-outs R&D, back office & support operations

Create COEs for autonomous capabilities

Digitalize sales with remote tools

Invest more in cloud journeys Create COEs for autonomous capabilities

Utilize automation/Industry 4.0 for enhanced productivity

Look out for account-specific M&A opportunities and carve-outs

Focus on telemedicine and remote patient monitoring

Deprioritize EV related investments

Invest in connected technologies

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What’s keeping Engineering VPsup at night?Tech Mahindra conducted a survey of nearly 100 engineering customers comprising of VPs and Directors across segments such as Automobile, Manufacturing, Aero, Industrial, Telecom, and Industry 4.0 in locations across North America, Europe, and Southeast Asia. The results yielded valuable insights on the top 10 things that VPs are losing their sleep over, which included how the pandemic has impacted their businesses and workforce, and their strategic financial and business decisions to mitigate the risks, and ensure the safety of the workforce and business continuity.

With a cash crunch felt across industries, investment strategies have become parsimonious with the top priorities of VPs being: concentrating only on core business (35%), and avoiding any investment that is not critical to the business (25%). As profitability takes a hit, companies look towards sharing resources and expertise in the form of business partnerships to stay afloat, with 24% of the respondents willing to explore M&A opportunities.

To Invest or Not to Invest?That’s the Question1

Considering the unwillingness to make non-business-critical investments, it follows that there will be no new investments in technologies unless they are of a plug-and-play, ready-to-leverage kind (30%). Adapting to social distancing norms, companies across the globe are devising ways to minimize workforce requirements while ensuring smooth operations. 36% of the respondents are willing to make a move with intelligent and futuristic technologies that enable efficient, remote work.

Tech or Treat:Finding the Right Fit2

The pandemic is reshaping the workforce as we know it; workforce 2.0 won’t be the same. Work-from-home, once an optional human resource policy, has become the norm, and in many cases, a compulsion. Several respondents believe that, as a consequence, roles will be reinvented to become more flexible (27%) and more remote (22%), and new roles will emerge that will require investing in the reskilling of the workforce (25%). A quarter of the respondents will leverage technology to collaborate with the workforce to ensure higher productivity.

Building aWorkforce 2.03

In times of crisis, service providers are the family one turns to for help in the business environment. As service providers ensure continuity and business-as-usual, VPs expect them to be quick to respond to operation risks (21%), proactively formulate strategic business plans (20%), and build resilience through strong partnerships (20%). While these form the top three priorities, a service provider that uses new technologies to ensure project continuity (19%) and houses a team or center to mitigate immediate risks from different crises (19%) is what businesses require.

A Comprehensive ServiceProvider for Business Continuity4

25% of Engineering VPs feel thatnew roles will emerge that will requireinvesting in the reskilling of the workforce.

More than 9 out of 10—91%—survey respondents believe that the viruswill have a significant impact on theworkforce.

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Notwithstanding the grim nature of the status quo, VPs are bullish when asked about their predictions for the return to (a new) normal. A combined 68% of the respondents expect the economic and business environment to bounce back in a time frame of six months to one year. In the air of uncertainty, VPs are optimistic, hoping that businesses will begin to witness an upturn by January 2021.

However, while medical experts forecast the increasing possibility of a second surge of COVID-19, businesses that have smartly invested in the right technologies will be prepared for its impact, if it occurs.

Countdown to a New Normal5The need for technology is stronger than ever as it pulls out all its cards in the fight against the virus. Technology has already been deployed in various forms in various fields, including healthcare, transportation, and education, to name a few. If there is no business continuity, there will be no economy to return to. Thus, deploying technology to keep businesses (that contribute to the economy) functioning even in sub-optimal conditions is vital, which is what 43% of the VPs surveyed feel.

Technology, a Medicinefor Business Continuity8

The workforce will undergo extraordinary changes as a result of the pandemic. Although VPs are still hopeful that humans will continue to be part of the workforce after the pandemic dies down, 91% of those surveyed believe that the virus will have a significant impact on the workforce. However, the impact is likely to vary across industries and sectors depending on workforce requirements.

A Force More PowerfulThan the Workforce 9

The world was not prepared for the coronavirus disease, which has brought along unprecedented risks and uncertainty like never before. Economic recession, supply chain disruption, unemployment, and cash crunches have compelled companies to rethink and redesign their business models to adjust to the new normal. Of the VPs surveyed, 95% stand by the importance of restructuring business operations to diffuse current and future risks from the pandemic.

Smart investment decisions, clever thinking, and judicious use of technology will enable businesses to mitigate these risks. While some may not require a complete remodeling of their operations, businesses that have been severely impacted will have to go back to the drawing board.

Reimagining BusinessModels to Tackle Pandemic Risks10

Having heard stories of the Great Depression of 1929 and experienced the Great Recession of 2009, it is no surprise that 29% of the VPs surveyed feel that economic recession is an emerging consequence of the pandemic. The public health crisis has also given rise to a world without borders, although with a negative connotation. As international travel (of humans and goods) is slowly becoming a thing of the past, supply chain disruption (29%) is seen as a consequence of the crisis as well.

Remote, flexible work has become more of a necessity than a buzzword in recent times. Consequently, only 19% of the respondents feel that the pandemic will affect work productivity, as people are quickly adapting to the new working style, while some even welcoming the change.

Perils of the Pandemic6

69% of the survey respondents believe that the impact on their investments due to the pandemic is “very likely.” Taking a cue from their preference to not invest in new technology unless it is a meaningful, plug-and-play solution, COVID-19 will also impact the kind of investments that companies make. Smart investment decisions will play a crucial role in this dire situation, as companies make their core businesses the primary focus.

How Sound areSound Investments?7

36% of Engineering VPs arewilling to invest in intelligent andfuturistic technologies that enableefficient, remote work.

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Tech Mahindra brings in its expertise and experience encompassed in 40+ patents and 100+ new product introductions. Furthermore, it has led clients to save more than US$30 million annually through cost savings and more than US$200 million in cumulative savings through value engineering. What gives Tech Mahindra the edge is its acquisitions of Pininafarina and Bio Agency, which have enabled it to apply new technologies such as AR and VR to build physical design and product touchpoint experiences to come up with innovative solutions.

Success in the newnormal with Tech MahindraWith roots firm in its three pillars—accepting no limits, alternative thinking, and driving positive change, —Tech Mahindra brings with it industry experience, expertise, and worldwide connections in a world scarred by the coronavirus.

Design and developmentusing AR/VR

By integrating IoT and data analytics into manufacturing supply chains, Tech Mahindra goes beyond the shop-floor and catalyzes the digital transformation of the industry. To help with disrupted supply chains, Tech Mahindra brings in engineering expertise, domain knowledge and its extensive vendor database to ensure that the whole process is not just seamless, transparent and scalable, but help reduce dependencies to help business continuity.

Supply chain management

Cyber factories consist of an array of technologies such as robotics, process automation, remote asset monitoring, digital twins, geo-tagging and AR/VR-based engagement for floor workers, supply chain analytics, and enterprise dashboards, which enhance shop-floor performance. With the help of seamless cyber-physical integration, Tech Mahindra improves the predictability, visibility, and productivity of factory operations both on and beyond the shop-floor.

Cyber factory and robotics

Healthcare has now become a top priority for technology companies across the globe, who are now looking to explore the field of health-tech in depth. Tech Mahindra firmly believes in the importance of 5G in healthcare backed by a capability of providing a number of services. Real-time remote diagnosis in emergencies, proactive patient monitoring, drone-based delivery of medical supplies, robot-aided surgery, hybrid operation theatres, and medical equipment and personnel tracking are some of the service offerings of Tech Mahindra that leverage 5G technology.

Remote patient monitoring anduse of robotic nurses

The top three responses that Engineering VPs expect from a service provider: quickto respond to operation risks (21%),proactively formulate strategic businessplans (20%), and build resilience throughstrong partnerships (20%).

1 in 3 Engineering VPs will limitinvestments only to core business functions,while 1 out of 4 will avoid anyinvestment that is not business critical.

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Digital workplaces are part of the new normal and are here to stay. Tech Mahindra leverages its strong understanding of IT systems, industry expertise, and 30+ years of system integrator experience to help enterprises maximize their digital workplace investments, specifically in G-Suite. Tech Mahindra broadens the ways enterprises use G-Suite by providing configuration, deployment, and post-deployment support, data migration, administration, training, and management support, and enterprise integrations, among other services to ensure a seamless migration to a digital workplace.

Digital workplace setup(G-Suite migration)

Resource management in a pandemic is paramount for business continuity. A delivery engine that combines the latest technologies to design and deploy products and services in a cost- and time-effective manner is the need of the hour. Tech Mahindra’s NewAgeDELIVERY Engine is an industry-agnostic platform that is based on the principles of reuse, collaboration, design thinking, and automated governance.

AI-enabled delivery engine

To weather the pandemic, the manufacturing industry has to become smart, aligning new technologies with human capital. With automation and robotics at its core, Tech Mahindra’s Factory of Future (FoF) is a package solution that consists of project roadmap and deployment services, factory layout services, support and maintenance, digital manufacturing, connected machines, AI and analytics, VR and AR, and MES recommendations. The combination of these enables better utilization of resources, flexible manufacturing lines, quality output, and reduced time to market.

Industrial digital solutions

Carve-out is a method by which a business outsources non-essential work to other companies so that they can focus on big-picture activities such as design and innovation. The pandemic has put a strain on both financial and physical resources, calling for smart delegation of work to ensure optimum utilization of limited resources.

Tech Mahindra has operational excellence in quality effectiveness, productivity enhancement, robust governance, and training management. With its domain knowledge and expertise spanning eight industries including automotive, aerospace, healthcare, and manufacturing, to name a few, it is well-poised to host carve-out programs, while ensuring quality outcome, on-time delivery, cost savings, and increased revenue.

Carve-outs

A CoE boasts of sound visibility and laser focus, freedom from the risks associated with the day-to-day operations of the business, easy monitoring of costs and is not limited by the typical process overheads. This enables it to have a dedicated team working towards one goal, channeling its expertise in a single activity, and the freedom to innovate and fail fast.

Tech Mahindra has more than 50 engineering excellence hubs across various technologies including 5G, cloud engineering, IoT, AI, ML, automotive, and manufacturing innovation. It is well-equipped to meet the demand for fast innovation from all industries during this global crisis.

Center of Excellence (CoE)

Tech Mahindra leverages virtualization, enterprise, mobility, and context-aware security to build a hybrid workspace delivery model that has the highest level of security. By consolidating end-user computing services, enterprises can avoid duplicating investments and improve user experience. The Workspace-as-a-Service solution (WaaS NxT) is based on the principles of simple work environment, reducing IT operation overhead, lowering maintenance cost, and enhancing productivity and user experience.

Hybrid workspace delivery models

Tech Mahindra’s Enterprise NaaS offers LAN managed services, enterprise transition and transformation, enterprise network security solutions, and more to enhance the enterprise network ecosystem with automation and software-defined technologies. Tech Mahindra’s solution is different in that it enables revenue generation possibilities, provides platforms that are vendor-agnostic and have pre-built service catalogues, and allows for hassle-free adoption of new technologies like 5G with its modular build.

Enterprise Network-as-a-Service(NaaS)

Built on micro-services architecture, it aims to revolutionize delivery for customers, partners, and academia.

To know more on how Tech Mahindra can help your company please contact

References

https://www.mckinsey.com/business-functions/risk/our-insights/covid-19-implications-for-business

https://www.pwc.com/us/en/library/covid-19/coronavirus-impacts-automotive.html

https://economictimes.indiatimes.com/industry/auto/auto-news/auto-industry-stares-at-2-bn-loss-as-factories-and-dealers-shut-shop-to-stem-covid-19-contagion/articleshow/74782274.cms?from=mdr

https://auto.economictimes.indiatimes.com/news/industry/fy21-auto-sales-likely-to-decline-by-5-20-due-to-covid-19-concerns-recovery-expected-in-fy22/75020012

https://www.industryweek.com/supply-chain/supplier-relationships/article/21972312/5-key-trends-impacting-the-aerospace-sector-and-what-they-mean-for-growth

https://www.pwc.com/us/en/library/covid-19/coronavirus-impacts-aerospace-and-defense.html

https://www.economist.com/business/2020/03/15/coronavirus-is-grounding-the-worlds-airlines

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