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How will Covid-19 affect the current placement season?

Even if companies do survive and manage to sustain amidst this period, with the current circumstances, fresh hiring will take a backseat. But these sectors could see new opportunities

Published: Jul 6, 2020 11:06:22 AM IST
Updated: Jul 6, 2020 11:45:09 AM IST

How will Covid-19 affect the current placement season?Image: Shutterstock

The Covid-19 pandemic has brought the entire world to a standstill, affecting businesses across the globe. The crisis has impacted student placements. The lockdown has resulted in the closure of many industries, resulting in companies struggling to keep their employees. In these difficult times, organisations are trying their best to balance humanitarian needs with cash flows.

Adversely affected are those that are highly leveraged. The Government of India has given only a small extension in repayment of bank loans. Though even a single tablespoon of water is helpful, it won’t be able to save companies who face real prospect of insolvency. Even if companies do survive and manage to sustain amidst this period, with the current circumstances, fresh hiring will take a backseat.

But all is not lost.

1.    Online companies have seen their businesses skyrocket. The US video conferencing company Zoom Video Communications share price “zoomed” from $71 at the end of January 2020 to $150 by the end of March. Over the same period, the share price for the US online retailer Amazon, moved from $1820 to $1963. The retail Goliath is set to hire 100,000 employees for full-time and part-time positions to meet customer delivery demands and has invested $350 million to increase pays for the teams. Consider this against the backdrop of the Dow Jones index that fell from 28,000 to 21,000.

Undoubtedly, the clear winners are online players. Besides retailing, education has moved from on-campus to online across the world; entertainment has moved from cinema halls to homes; and the world of sports has moved to gaming. It is definite that as a result these companies would be hiring new people.

2.    PE and VC firms have also been affected by the pandemic; however, there is a fair bit of hope from this sector. According to a report by PitchBook and the National Venture Capital Association, 62 VC firms in the US raised $21 billion despite the disruption caused by the pandemic. Even in India, sectors and businesses that can outlive social and financial instabilities can prosper by seizing the right opportunities. Experts believe that once the blow of the pandemic softens down, there will be ample opportunities for investors, and a few cash-rich companies also view this as a chance to pick up bargains of a lifetime. If they are well-funded they may now be able to find distressed assets and that they would be hiring to leverage this amazing opportunity.

3.    Manufacturing companies have been permitted by the Indian government to continue operations. Companies in various sectors such as FMCG, healthcare, food, automobiles, and electronics have resumed activities. Despite the economic slowdown, these companies will increase production to meet consumer demands and will certainly hire post the lockdown impositions are minimised. Major companies may also decide to shift its manufacturing units away from china to India, creating newer opportunities.

4.    Forward-looking companies know that the current doom would be followed by a period of extended boom. Hiring top talent for the future invariably pays off. In 2009, it took the Dow Jones 185 days to recover for a 10-year straight-line bull run right up to Feb 2020. The Covid-19 crash has had a 45-day run so far, and it may, in all likelihood, extend to another 140 days or so if we were to consider what happened in 2009. So, those companies that have the foresight to invest for the future would become multi-baggers. Some notable examples are Walt Disney at the height of the Great Depression in 1929, Hyatt hotels in 1957 during the Eisenhower Depression and Wikipedia in 2001 post the 9/11 recession. I am sure that new winners, especially in the online space, are being created as we speak.

5.    Big-data and Fintech are also areas that will witness an unprecedented growth as markets shift towards predominantly online modes. The current situation will also create a surge of jobs in fields like logistics, artificial intelligence, data science and cyber security to name a few, and recruiters will scour for tech-savvy candidates. With the right skills, these candidates can acquire lucrative offers owing to the scarcity of talent in such industries. Companies like Google are also investing in newer technologies to compete with existing giants.

It is pertinent to point out that when we emerge from the storm, there may be new winners. The economy around the world is sure to suffer and would never be the same again. While this may result in temporary pause in hiring, it is also true that once the pandemic recedes, the country will require spinning the wheel faster in order to get back up on its feet. This will definitely open up a plethora of placement opportunities for students.


-    By Nitish Jain, President, S P Jain School of Global Management

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