'We are looking at how we can optimise cost and if there is something that can be pushed to next quarter we will do that. But the focus will be purely on doing it through programmes and processes and not by laying off people'
NEW DELHI: People are spending more time online than ever before and that is resulting in more data generation. Since the storage of such data will play a critical role for enterprises, it is to been seen how the industry shapes up amid the covid pandemic. Supria Dhanda, vice president & country manager, at leading storage company Western Digital India, said with operations resuming as lockdown curbs are eased, the new reality will probably impact product pricing, though overall storage demand is likely to rise. Edited excerpts:
Has the covid-19 pandemic brought any big shift in Western Digital's business?
Due to covid-19, people are doing almost everything from home. The transition of data is touching many more devices today than it was three months back. All the data that is being generated online needs to be stored somewhere. As a result we are seeing an increase in the overall storage demand be it on server, cloud or end computing device. So, we are expecting to grow in near to mid-term. However, we will see decline in some pockets due to suspension of retail channel. Our last mile retail network has taken a dip of 30-35% in this quarter and we expect it to continue to the next quarter. Our upside is that we deal in multiple segments including mobile, laptops, and enterprise storage. Also, we are part of a critical infrastructure that is so basic to the world going mobile and connected.
Recent reports by Gartner and IDC have showed that IT spending is going to plummet in 2020 and devices will be significantly affected? How will that impact storage companies like WD?
We are expecting 2-3% dip in IT spends. To understand this you have to do a sector-based analysis. So for an airline or hotel, revenue is not going to come as their industry has been impacted. As a result their IT spending is bound to go down. The reason devices is being impacted is because of retail channel getting suspended. Even if that opens, it will take time, for it to pickup.
Going forward cost will play a more critical role in what a company would spend on. What will be strategy to deal with these new challenges?
India is a very price sensitive market. Cost was always important. Yes, it is true that covid-19 will put more pressure on cost factor as companies are going to be stressed. That is where it is our responsibility, to price our product more judiciously and if there is an optimisation we can do with our portfolio and processes and pass on the benefits to our customers I don’t think it is asking too much.
WD has offices and R&D centres in Bengaluru with about 3,000 employees. What are the measures being taken to get the workforce back to offices while complying with the new social distancing norms?
When there is a crisis it requires an alternate structure to emerge. We are allowed to operate with 33% of the workforce by Karnataka government. Even operating with that much of workforce is a significant responsibility. We need to ensure there is infrastructure for temperature screening, social distancing, and sanitisation of workspace. When we analysed these we realised we would want to move back in a phased manner even if it was less than 33%. So we constituted a return to work (RTW) team to figure out who needs to come in and when. For jobs which can be done remotely we are mobilising workers to work from home. For jobs like designing and developing a product that requires a testing environment available in our labs, the validation teams were allowed to come to office in the first batch. Our RTW allowed 10% workforce to return to offices after May4 when we returned to work. We will analyse the situation again post May 18, to decide if we should move to phase 2 and allow more than 10% employees.
India is being seen by many as an alternative manufacturing destination to China. Has WD got any such plans to start manufacturing in India?
We do multiple kinds of manufacturing. We have a joint venture with Kioxia for fab manufacturing (in Japan). Looking at fab manufacturing in India at this point of time is not a possibility. It is a business decision and a government incentive is not something that is going to help us. For other kinds of manufacturing like assembling products, we need to analyse it from time to time. We all know that world is looking at fail-safe to reduce manufacturing dependencies on one region. We have manufacturing in China, Malaysia, and Philippines. We already have Malaysia as fail-safe. We are tracking the incentive that the Indian government is giving for manufacturing so if the time comes to make a call we will move fast.
Any plans to trim workforce in to cut costs in India?
We have absolutely no such plans. Our employees have asked us this question and our transparent answer is no. In the time of covid-19, we are looking at how we can optimise cost and if there is something that can be pushed to next quarter we will do that. But the focus will be purely on doing it through programmes and processes and not by laying off people.