WFH - the perfect storm for the Rural Economy

Its been 18 months since my last international business travel and I have mixed feelings about it - I do miss the buzz, the hum and the energy of meeting clients and partners in person. And yet the WFH and lack of travel has brought a lot more "face-time" with our customers given the virtual video business meetings. This is all the more true for the IT / Tech Services industry, with customers across the globe.

Most industries have adapted well to this new normal and it is encouraging to see green shoots with business travel picking up again, albeit with guarded optimism. It's still "two steps forward and one step backward" with 2nd/ 3rd waves, localised lockdowns and new variants springing in pockets and geographies.

And the hybrid model is here to stay - Cvent, one of our customers, recently concluded their very successful annual #CventCONNECT event in a hybrid format. Kudos to the teams, and their unparalleled hybrid Events solution - Cvent Attendee Hub.

Back home in India, a sizeable portion of the skilled workforce that works in the IT, BPO and knowledge industry continues to work from home, even as organisations are toying with hybrid work models and yet others are making plans to woo employees back to the work-desk. Among this population is a subset that has moved back to their smaller home-towns and villages, and are staying with their families (in Indian context read as: with parents, joint families). These are typically the younger millennials and Gen Z, but some are families with children as well - who can well afford to be away from the city where the schools are. Yes, schools have also perfected their WFH (read as: online schooling)! On a side note, this makes me wonder if restarting physical school sessions will be a compelling trigger for such families to return back to cities (or free them from baby-sitting) and bring about better adoption of the good old workplace model.

Coming back to this scenario of younger city-bred population that has moved back to smaller towns and villages and are working from home - their lifestyle and WFH needs is a perfect storm in the making for some sectors and industries.

While the more pronounced effect of this reverse migration will be in the unorganised sector that commands the lion's share in the rural economy, here are some indicators of the same across industries.

• The millennials and Gen Z moving back to smaller towns not only continued to demand their favourite brands, but hopefully also introduced and influenced the adoption of packaged foods into the broader rural house-holds. All key players in the FMCG / CPG space attributed their phenomenal growth this year to the rural sector and the reverse migration. After a relatively flat year ending in March 2020 (pre-pandemic), Hindustan Unilever reported an annual sales growth just shy of 20% YoY for the year ending March 2021.
• WFH demands a stable and fast broadband infrastructure that is lacking in many small towns in India. Providers like Airtel are betting big on 5G to help quickly solve this last mile connectivity problem in smaller towns. Airtel's QoQ sales grew over 10% for the quarter ending June 2021.
• Smaller towns and villages do not have airports in close vicinity - leading to more of a driving culture. With the influx of funds in smaller towns and to accommodate larger families, domestic car sales are on the uptick. This could potentially explain the fact that Tata Motors reported its best quarter ever in terms of sales at end of March 2021. This was 40% higher over their sales for quarter ending March 2020 (just before the pandemic hit)
• And what may also be contributing and fuelling this spend, is a category of potential employees who can now opt to work from home, who were otherwise constrained to pause their careers to be home to care for small children or ailing parents.

While we wait for this pandemic to become an endemic, and reminisce the working lunches and chai breaks with customers and colleagues, there is indeed a silver lining in this otherwise solitude WFH. And is an interesting puzzle for the organised sector to solve!