Global Companies Retool as Covid-19 Surge Hits India’s Tech Talent

“It was hard to watch,” said Dave Sawatzky, 3Pillar’s chief delivery officer. “Such a big group getting hit all at once.”

The company had shifted its entire global operations to remote work in late March 2020, including tech teams in India, Mexico, Costa Rica, Guatemala and Romania.

The India office, near Delhi, develops software and provides quality-assurance engineering for 3Pillar, which sells digital product and user-experience design and management tools and services, primarily to communications, media and technology firms. This past March, workers at the India office took the lead on a project for an important client, Mr. Sawatzky said.

“Having this hit in April in India threw us off,” he said. “We got a little behind track.”

The company’s priority throughout the crisis, he added, was on the safety and well-being of its workers and their families—sending the team emergency oxygen and Covid-19 vaccines, whenever possible.

India has an estimated 4.5 million IT workers, most of them working from home due to the pandemic.

While many companies say their India operations were unscathed by the crisis, some corporate outsourcing consultants say the impact on some firms is worse than they let on.

The consultants say Indian workers who provide IT and other tech services for employers or corporate clients abroad face mounting challenges, from unreliable internet and cellular networks to family illnesses and tight quarters at home, among other obstacles. The result has been stalled projects and lost revenue, they say.

Dion Hinchcliffe, a vice president and principal analyst at enterprise technology consulting firm Constellation Research Inc., said one U.S. corporate client reported that as much as 70% of its India-based team was out due to the pandemic. He declined to name the company. Most clients are reporting absenteeism rates closer to 10%, he added.

“Between the workers themselves and their family members, almost everyone is impacted,” Mr. Hinchcliffe said.

Last week, India recorded more than 4,500 deaths from Covid-19 in a single day, surpassing a previous global high set by the U.S. in January, and marking the ninth time this month that the number of deaths surpassed 4,000 in the space of 24 hours.

Nearly all Fortune 500 companies in the first quarter of the year had some level of exposure to India’s Covid-19 crisis in their IT operations, according to consulting firm Hackett Group Inc. Application maintenance was the most commonly outsourced IT process, Hackett said.

Many global companies procure tech workers through India’s giant outsourcing firms, including Tata Consultancy Services Ltd. , Infosys Ltd. and Wipro Ltd. , along with smaller IT service providers.

India’s IT and business-processing industry generates more than $180 billion in annual revenue, accounting for about a fifth of India’s exports of goods and services.

Many companies last year collaborated with their Indian service providers to ensure they had business continuity and security controls in place, said Jaideep Thyagarajan, a principal analyst at IT research and consulting firm Gartner Inc. He estimates the current crisis will prevent only about 5% of India’s outsourcing labor force from working.

Charlie Giancarlo, chief executive of data-management and storage firm Pure Storage Inc., said his company is monitoring developments in India closely, but doesn’t expect “any significant risk of disruption to our business.”

The Mountain View, Calif.-based company designs and engineers its products in house, but uses outsourcing services, including firms based in India, for IT functions like systems integrations and cloud-based software, Mr. Giancarlo said. “We have established business continuity plans with our primary vendors that provide resource flexibility across the globe,” he added.

Spreading out third-party IT support among global providers can help companies guard against sudden shocks to operations, said Jon Butler, principal at consulting firm StrategyShore LLC. He said relying on a single location for critical IT services—even in the U.S.—is playing with fire.

“Things can and will happen, and when they do those in singular locations are always seen scrambling and rarely meeting their prior commitments,” he said.

Mr. Sawatzky said 3Pillar rallied its global offices to pick up the slack. In India, nearly all the company’s workers who had Covid-19 are back on the job, working from home.

“The good thing is that a lot of people were willing to work extra hours,” he said. “At the moment things are much better, they have been for the past week or so.”

Write to Angus Loten at [email protected]