“If anything kills over 10 million people in the next few decades, it's most likely to be a highly infectious virus rather than a war. Not missiles, but microbes,” Bill Gates stated five years ago in his 2015 TED talk regarding the dangers of an impending pandemic.
Now the world is waking up to the reality that Gates’s pronouncement may come to pass. As countries grapple with the human and economic costs of COVID-19, the pandemic is shifting the global landscape in many ways. It has catalysed new ways of doing things — the way business works, communicates, and markets products — that could be here to stay.
For management accountants, it’s crucial to know which sectors are struggling and which ones might actually benefit. While it’s too early to know for certain, there are indications that the following categories of businesses are worth a deeper look to observe trends that could impact business operations and strategy in countries around the world.
1. Remote working tools and software
With governments implementing more serious measures such as full or partial lockdowns, and businesses struggling to find ways to maintain adequate levels of productivity, many are turning to remote working apps and software.
Even as many other tech companies fell in value, Zoom’s shares rose as the pandemic spread. Microsoft Teams reached 44 million users — a 37% gain equivalent to Slack’s total number of users — in just one week.
In China, Alibaba-owned DingTalk and Tencent’s WeChat Work — two of the most widely used workplace collaboration software platforms — temporarily crashed on the first day Chinese office workers began working from home. The desire to have more flexibility of operation and contingency for disruption will also drive businesses to rely more on cloud and virtual office solutions.
Looking ahead: This sector could benefit even more in the long run as businesses prepare for the next epidemic. Mobile app data analyst Sensor Tower reports heightened mobile app downloads for work-from-home services across the board. Zoom alone saw 109% download growth. “Many businesses are making their first moves into remote work and gravitating toward the biggest players, like Zoom or Microsoft,” Randy Nelson, head of mobile insights at Sensor Tower, told Bloomberg News.
As of this week, school and university closures have impacted 1.5 billion learners in more than 180 countries. Readily available remote learning technologies meant many programmes could instantly be reformatted for online, with colleges shifting to distance learning and many teachers trying their hand for the first time at Google Classroom or web apps like Seesaw for students as young as kindergarten. Many parents are also making their first foray into home-schooling.
Meanwhile, massive open online courses (MOOCs) and webinars are seeing renewed interest amongst adults and business owners around the world as they seek answers about self-development and how to survive financially, in order to create new streams of income and side jobs to pull them through the crisis. Coursera offered support by making its entire course catalogue free for universities worldwide. Bloomberg’s philanthropic arm in March launched an online coaching programme with Johns Hopkins University’s public health school to provide mayors on the frontlines of the coronavirus crisis with virtual technical advice.
Looking ahead: Expect a short-term demand surge as schools are closed but classes aren’t. This trend also could continue in the long run for both on-site and off-site learning as e-learning technologies continue to advance. For example, a Times Higher Education article titled “Will the Coronavirus Make Online Education Go Viral?” stated that in India alone, industry experts predict 10 million additional enrolments by 2021.
The home entertainment sector is the beneficiary of all the travel bans, mandated self-quarantines for returning travellers, and social-distancing measures. Online streaming has come to the rescue as sports venues and movie theatres are shuttered.
For example, average weekly app downloads in China leapt 40% against 2019’s average during the first half of February as the entire country underwent isolation measures, and traditional TV viewership also surged, the World Economic Forum reported. Netflix app downloads have risen in coronavirus-hit areas — South Korea, Spain, Hong Kong, and Italy; Southeast Asia’s iflix and China’s iQIYI and Youku could also see gains.
Social media influencers, immersive games, and dating apps are also gaining new groups of users as people look for more ways to interact with the outside world from home. In February, social video app TikTok was the most popular nongaming app; Business Insider reported that it outperformed WhatsApp, Instagram, and Facebook and is now nearing 2 billion installs partially due to the consequences of the coronavirus pandemic.
Looking ahead: Short-run growth is likely due to the demand surge; the trend already began prior to the pandemic and will continue to grow in the long run. The pandemic has also pushed previously inconspicuous social apps into the public eye. TechCrunch reported group video chat app Houseparty, which wasn’t even in the top 1,500 apps a month ago for Italy, is now the number one social app for the locked-down country (and second only to Zoom).
4. Virtual reality (VR)
Growth possibilities were already on the horizon for VR, but they could get a boost with so many people looking to improve the quality of their stay-at-home time. Use of VR also will rise from those who move to offer virtual experiences such as museums, art galleries, and historic sites — the Guggenheim, the Sistine Chapel, and the Great Wall of China have joined those offering virtual experiences — and real estate companies are also expanding VR’s role due to the coronavirus.
Work that currently has to be carried out on-site, such as supervision of construction, mining, and repairing power plants, could also possibly be shifted to virtual, while VR toys like Oculus Quest, PlayStation VR, or HTC Vive, and iQIYI’s newly launched Qiyu 2Pro VR gaming console could receive a boost. Industry experts are also touting VR as a solution to some cancelled events.
“Because companies are taking a cautious approach to the spread of coronavirus and what it could mean for their employees and partners, many are pulling out of conferences and cancelling events. However, I believe this presents an interesting opportunity for many of the telepresence and conferencing solutions out there, and one of the technologies that is ready to address this is immersive computing with [augmented reality] and VR,” mobility and VR analyst Anshel Sag wrote for Forbes.
Looking ahead: The consumer VR hardware and software market size will nearly triple over the next three years, to more than $16 billion by 2022, up from $6.2 billion in 2019, according to a Statista projection. Short-term demand may be up, but the sector’s growth could also be held back by supply chain disruptions, as with Apple iPads and Facebook VR headsets, which are now in short supply due to COVID-19.
5. Pharmaceutical and medical devices
The crisis has increased demand in medical supplies and care. No medications or vaccines are yet available for coronavirus, so huge amounts of resources continue to be poured into trying to find vaccines or treatments. For example, Canada alone has budgeted CAD 192 million ($136 million) to develop and mass-produce vaccines.
Looking ahead: Demand will be up in the short term, but also likely in the long run due to society ageing in general. Deloitte predicts prescription drug sales will reach $1.18 trillion by 2024. There will also be higher activity from medical technology companies. For example, under Beijing’s “Made in China 2025” initiative, the country wants to increase use of domestically produced medical devices to 70% by 2025.
While supply chains have been upended due to the virus’s spread, logistics is a sector that has experienced a crisis and a boost at the same time as food deliveries and online shopping come to the rescue of people who cannot leave their homes. It is likely that through this crisis many companies are being forced to rethink their supply chains and logistics.
“We expect customers to pause and consider the resiliency of their supply chain models while they navigate both the short-term lack of activity and the inventory surge to follow,” said Chris Caton, Prologis’s senior vice-president of global strategy and analytics, in an article in Logistics Management. “In the medium term, one of the easiest ways to build more resiliency into supply chains is to reassess ideal inventory volumes, which adds to logistics demand. We saw similar patterns in demand following recent trade-driven disruptions such as Brexit.”
Looking ahead: In the short term, winners include those that can effectively deal with collapsed air freight capacity due to airlines’ route suspensions while meeting shipping demand spikes, especially from supermarket suppliers and e-commerce players. Long-term demand will grow as e-commerce continues to grow, and especially if social distancing becomes a widespread practice in society.
7. Virtual healthcare
The global outbreak has made every country painfully aware of the limits of its own healthcare systems. As many people are losing jobs in this global recession, it becomes even harder for them to afford healthcare and to fight the virus. Potential lies in virtual healthcare services, especially portable, artificial intelligence-reliant medical devices and apps that will make individual healthcare and diagnosis more immediate and accessible to the general public.
The need to scale is also a gap that virtual care providers such as Teladoc Health, or providers like Xuhui Central Hospital in Shanghai, now licensed by the Chinese government as a “cloud hospital”, can fill. TechWire Asia asserts that the coronavirus could help propel the virtual healthcare market into the mainstream. Since January, Alibaba reported, its Ali Health app is receiving over 3,000 consultation requests per hour, while Tencent’s WeDoctor had serviced 1.5 million consultations by the end of February.
In the US, Providence Express Care Virtual also reported a significant increase on its calls in March with concerned callers phoning in mainly from the US state of Washington and Southern California, while VirtualHealth, provider of software-as-a-service care management platform HELIOS, has deployed complete end-to-end capabilities for identifying and managing suspected and confirmed cases of COVID-19.
Looking ahead: A short-term demand surge is expected; possible long-term growth is possible if governments shift their focus to investing more into preparing for the next pandemic event. Hybrid sectors also warrant a look, such as the global virtual reality healthcare market, which is anticipated to reach $3.44 billion by 2027.
8. Contactless technology
To reduce the probability of spreading the virus, no-contact practices will be championed by some in society — and that creates room for innovation and creativity in products that support no-contact and make less contact more bearable for humans.
This could range from automatic sanitisers to voice-activated technologies and even supermarkets like Amazon Go. The global voice- and speech-recognition market is expected to top $18.8 billion by 2025, while researchers claim to have created offline speech recognition that is 97% accurate. Walmart has already launched voice-activated grocery shopping, which is becoming even more relevant in times like these.
Robotic medicine is also on the rise, with many hospitals experimenting with robotic capabilities to increase no-contact services and reduce the spread of germs. At a converted sports centre in Wuhan, China, a field hospital is staffed by robots from cloud robotics systems firms Mobile and CloudMinds. In related news, China and Spain employed drones to monitor people during their lockdowns; South Korea deployed robots to disinfect Daegu; Antwork, part of Japanese industrial drone maker group Terra Drone, flew medical samples and quarantine materials to China.
Looking ahead: Short-term demand for readily available products is expected, but it will take some time for producers to develop new technologies and products. Xenex, a California-based company that makes full-spectrum UV germicidal robots, told Crunchbase News that “hundreds” more orders are filtering in from around the globe for its $125,000 disinfecting robot, in particular from hard-hit zones in Asia and Italy.
9. Freelancing/gig economy
More demand for contract services could result from corporations downsizing and reducing permanent payrolls and could lead to more purchasing of commoditised services from gig sites like Fiverr, Upwork, and Remote.com. A desire for no-contact could also drive this as fewer humans in the office means less potential transmission of contagious diseases. Chronically ill and immunity-compromised individuals could seek more remote work in order to distance themselves through sites like ChronicallyCapable.com — which helps find remote work for those with chronic illness. The gig economy is also experiencing growth driven by increased demand for food delivery and online shopping.
Looking ahead: There could be a short-term demand surge and long-term demand growth as this is already an ongoing trend in many countries that has little to do with the pandemic itself and is more related to structural change in economies. Freelancing aggregator Truelancer currently pegs the global freelancer market at $2 billion to $3 billion with a growth rate of 14%.
10. Electronic transfers
Notes and coins carry germs, and this crisis has only made people more aware that hard cash can be a vehicle for pathogens. The pandemic has led some countries to take measures to prevent people from physical exposure to cash, even quarantining money. At the peak of its outbreak China disinfected, isolated, and burned banknotes from infected provinces. South Korea superheated banknotes to get rid of coronavirus, while Thai banks also temporarily suspended foreign money exchange booths nationwide due to COVID-19 fears.
Now solutions to avoid the use of notes and coins altogether are seeing more use — the same case as when Paytm’s user base surged during the 2016 demonetisation of INR 500 and INR 1,000 notes in India. With the World Health Organization and other experts actively encouraging contactless payments, the pandemic could be a catalyst to move us one step closer to digital exclusion and a cashless society. These technologies would also help to eradicate the travel needed to make money transfers and reduce human contact.
Looking ahead: Short-run demand growth is expected to accelerate the transition from paper to paperless in the long run; once people get used to paperless, it will be hard to go back. Peter Gordon, executive vice-president and head of emerging payments at U.S. Bank, told CNBC that he expects the crisis to boost companies like Zelle, PayPal, and the online banking sector: “I think this is an opportunity for a move to digital. I believe this crisis will accelerate and move people to utilise all forms of digital financial services.”
In every crisis there will be unexpected beneficiaries and companies rushing in to seize what they perceive as new opportunities. As advertising firm Ogilvy stated in its recent Making Brands Matter in Turbulent Times report, “The longer it goes on, we get used to living differently, choosing differently, shopping differently. [There are strong possibilities] these changes will become the new normal.”
— Anne Somanas is a freelance journalist based in Thailand. To comment on this article or to suggest an idea for another article, contact Alexis SeeTho, an FM magazine associate editor, at Alexis.SeeTho@aicpa-cima.com.