How Coronavirus Is Affecting the Technology Industry?

The coronavirus outbreak this year has drastically affected tons of industries. The technological scene has especially been affected. While not as and as transport industries and international sales, the tech industry has also been largely affected. Business disruptions and zero manufacture capability are just some of the issues that tech manufacturers are facing

In this article, I’ll run through some of the major challenges faced by the tech industry during this pandemic and some remedies that are being implemented.

Major problems faced by the tech industry during the coronavirus outbreak.

SECURING FUNDING – the pandemic brings one absolute problem – uncertainty. No one knows when it will end or when production will resume; this means that funding may be less available while the uncertainty persists. Investors will hesitate to take investing risk; most of them will hold back funds in reserve in case their existing investments need extra funds.

SUPPLY CHAIN DISRUPTION – the closures on manufacturing plants have completely disrupted productivity. Majority of the world tech giants rely a lot on their china based factories, with production on standby in china, many companies will suffer from this long delay. Even after the pandemic ends, these supply chain issues will still negatively impact all economies.

STOCK MARKET CHALLENGES – the uncertainty of this period really affects share prices. Investors can no longer be sure if stocks will crash or bounce back. Consumer sales have also shrunk; people no longer go to stores for fear of infection

TECHNOLOGY CAPABILITIES – Large numbers of companies are being forced to work remotely; and this really tests their technological ability. Companies that were otherwise unprepared will have to worry about setting up facilities for their employees.

CANCELLATION/POSTPONING OF CONFERENCES AND TRADE SHOWS – Many important business gatherings have to be cancelled or postponed this year; this affects a lot of companies because key business decisions are made during these gatherings.

BUSINESS DISRUPTION – the sudden impact of the coronavirus will be the downfall of struggling companies due to the erratic business environment.

Defensive measures to be taken by tech companies

Communicate with Critical Suppliers

Tech companies should check the potential impact of any delays or disruptions to delivery of mission critical materials and parts.  They should endeavor to contact suppliers to determine what level of inventories they are carrying and what actions they are taking to ensure the least amount of disruption to deliveries of parts and/or components. 


Review Contracts.

 Companies should review contracts that have a “force majeure”. A force majeure is a legal concept where a party may be relieved from liability for non-performance if circumstances beyond the party’s control prevent the party from fulfilling its obligations under a contract. While not all force majeure contracts will apply to the coronavirus pandemic, Companies should still be sure to carefully review the force majeure provisions in their contracts to determine whether they apply; this will help them ascertain which of their operations take priority. While the force majeure doesn’t always apply, in China, every setback by the coronavirus has been deemed passable as a force majeure. Also, in India, the National Solar Energy Federation issued a request to the Ministry of New and Renewable Energy that the coronavirus be declared a force majeure event. This only applies if the manufacturers have absolutely no way of continuing their usual functions.

Companies should also endeavor to determine What “Material Adverse Change” Rights and Requirements May Apply. A typical Material Adverse Change (“MAC”) clause goes something like this “any event, circumstance, development, condition, or change that, either individually or in the aggregate, has had or could reasonably be expected to have a material adverse effect on the business, financial condition, results of operations, or other aspects of the business of the target and its subsidiaries, taken as a whole.”  This will be very helpful in stabilizing a business after this whole thing blows over. However, the effects of the virus are still generally unclear and so it’s still too early to assess whether a MAC provision has been triggered.

Keep track of Customer Demands

During this pandemic, companies should try to monitor customers to ensure that they will comply with their contractual obligations, including timely payment for parts supplied to the customer. They should find a compromise between the declining demand and supply chain. Companies should analyze contractual payment terms for those customers with a greater risk of not paying during this period.


The various insurance policies should be reviewed to determine possible coverage in the event of a business disruption in case the situation is covered by the insurance company (obtaining business interruption insurance). Most insurance companies have kept viral outbreaks from being included in their standard business interruption policies. Companies should scan through the policies that do apply to this situation ensure that their insurers will strictly comply with those provisions in the event coverage is sought. 

Workplace Concerns

Handling their existing work force should also be priority for companies during this period. A section in the US Occupational Safety and Health Act states that “companies have a duty on companies to provide a workplace free from recognized hazards that are causing or are likely to cause death or serious physical harm” other countries have similar laws imposed on companies. Companies should use work from home policies to keep their workforce intact. Also, , companies should consult legal counsel before disciplining or terminating an employee who misses work out of fear of contracting the virus 


Cyber security

As offices and company HQs are closed to prevent or slow the spread of the coronavirus, many companies may decide to implement or expand employee work-from-home programs. While most of these programs will work efficiently during this pandemic, they also open more channels for unauthorized access to company systems and information. With this in mind, companies should review their cyber security controls and whether they must be enhanced prior to initiating or significantly expanding remote working technology. The inclusion of two factor authentication and the use of VPNs are things that should  be added to remote networks to ensure adequate physical security and access controls for information technology assets during preparations for extended office closures.

Lastly, tech companies and firms should be mindful of applicable privacy laws when collecting information about employees or clients they might not have previously collected, such as health information and travel itineraries.


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