Hope on the horizon Features 18/12/2020 Reece Webb speaks with AVIXA’s Sean Wargo to explore how the Indian market is performing and identifies how AV professionals can pivot to avail opportunities now and down the roadThe world finds itself in a precarious economic position, plunged into decline and recession due to the Covid-19 pandemic. Before steps can be taken to address the situation, the situation needs to be quantified. For India, Sean Wargo, senior director, market intelligence, AVIXA, says: “We tend to look at GDP outlooks as a starting point for our forecasts. In normal times, it’s a fairly stable data set, but if you look at the fact that India, sadly, is among the hardest hit nations by the pandemic, you would expect that that would have a real muting effect on economic growth, as it has on so many other economies.” Covid-19 has obviously had a strong impact on the Indian economy. But it has not completely extinguished growth. Wargo says: “In India, you have a really strong polarisation effect: there’s the ‘have’ economy and the ‘have not’ economy and these are incredibly separate and distinct. GDP estimates are showing India in 2020 growing by 2%, despite massive pandemic outbreaks. There is this kind of bifurcation in the economy where you’ve got decline but a massive growing area that helps stabilise it overall to 2% growth. In the United States by comparison, and most of the developing economies, we’re looking at between 6% to 8% declines this year in GDP.” While GDP estimates might predict growth, the AV industry in India has declined. Wargo says: “We’re showing the [AV industry in the] APAC region at -6%, and in the case of India alone, around the same at -5.6% so that’s a big point difference between GDP outlook right now and the outlook for the pro AV industry. I think there’s some justified cause for that. That’s by nature of the categories in which we excel. These markets, the solution areas, etc. have been hard hit by endemic shutdowns, businesses closed, and live events cancelled.” However, it is not all dark skies. Wargo postulates: “Both China and India are showing a pretty pronounced bounce back in 2021. In normal times, our industry outlook would mirror pretty closely what GDP is doing. The exception is really 2020. We’re estimating that pro AV is hit harder this year than the normal economy.” Focus points With the pandemic not going away anytime soon, even with potential vaccines in the works, it is entirely possible that the pro AV world and indeed the world of working in general may be changed forever. But that is not necessarily a bad thing. Technology has a role to play in the transition of spaces as we look to address the new needs of users. Wargo says: “You could look at that two ways, glass half-full or glass half-empty. You could also say it’s an opportunity on the fringe that may be allowing new and agile providers and channel partners across economies to benefit.” According to Wargo, the chance to reimagine spaces and the opportunities that presents for AV might be very applicable to India: “Maybe that’s even more true and possible in emerging markets like India, China and APAC, where you’ve got a rising class of companies coming in and harnessing the opportunities that pro AV represents, approaching it from a very different perspective than a traditional firm might in a developed market. There may be more upside potential here for pro AV in these emerging markets like India, because they’re able to pivot and adapt to these spending trends.” Wargo continues: “There’s a lot of talk of investment flowing into conferencing, collaboration, content distribution, learning systems, and more to try to support everything remote. I think what the industry is scratching its head over is how much of that is in our space, versus a true IT spend.” For those looking to currently weather the storm, diversification is a possible route. Wargo says: “Solution areas such as security, surveillance and life safety, are some of the only areas that are actually growing in India in 2020, with about 3.6% growth right now and growth as we go forward for the next few years as well. It tells me that there’s perhaps less separation between the two areas of pro AV and security surveillance, there may be more blending of solutions in those kinds of markets. That’s presenting tremendous growth. It’s not the largest solution area but at that rate of growth, it really starts to become a big factor in this industry.” Wargo continues on the topic of diversification: “As we see these kinds of solutions emerge, it’s been a story we have seen in a lot of the more emerging markets that are driven by a few sectors perhaps government backed, sometimes corporate backed markets, but certainly with an emphasis on one particular solution area. It’s one where we as traditional pro AV, we scratch our heads a little bit because we’ve been very deliberate about making sure that surveillance and life safety was treated as a separate industry. Security systems really have been, historically, a separate industry, even though the fundamental technologies overlap tremendously. The cameras at the basic level, all the server stuff in the background that’s capturing the content and then serving it back, allowing it to be distributed is also partly in our wheelhouse as well as the IT wheelhouse. It’s an interesting blurring of the lines. “Content distribution is, another one of the small growth areas in 2020 for India, with the need to reach employees remotely and the need to engage audiences or engage customers. That sort of stuff is another strong growth area.” For those AV professionals who are looking to plan for the future, Wargo also gives insight on where opportunities might arise: “As we go into 2021, the area of opportunity where we first rebound is infrastructure investment. Energy and utility, transportation really jumped out at me as well as venues and events such as stadiums or other entertainment types of facilities. Investments are expected in grid, control or smart building and energy efficiency initiatives. I also expect transportation updates to hubs following the pandemic to make sure that we’re allowing for safe travel. Those two market areas in particular show pretty good growth.” How rosy can we expect the future to be in India? Wargo concludes: “Next year, we’re expecting 13% growth in pro AV revenues associated with transportation and 11% growth in energy utility. Those are smaller sectors overall but still rising stars. Venues and events could pick up with 11% growth for 2021. These are big areas of spending as we go forward, dwarfed by corporate as that just continues to be a strong vertical with investment excepted in headquarter office space and infrastructure. "Then there is the return to work as companies start to come back and even adapt to a more remote workforce and that brings into conversation the topic of surveillance and collaboration and a lot more. Good rebounds in hospitality, in retail, pretty much across the board. The top line we’re expecting for India in terms of pro AV revenues is 7.1%. For 2021, that puts it pretty much right in line with what the IMF was expecting for growth next year. There’s pretty significant upside potential for 2021, but that could be offset in some categories, so we’ll see how that plays out.”