The US is headed towards a recession in the wake of the fast-spreading coronavirus, but the Silicon Valley CEOs are optimistic about the growth of the tech industry, a leading Indian-American venture capitalist has said.
Founder of Indiaspora, a platform to unite Indian-Americans and to transform their success into meaningful impact in India and on the global stage, M R Rangaswami said the coronavirus crisis was more difficult than the global economic recession of 2008 because of virus' uncertainty and invisibility.
"There's definitely a recession happening in the country. No doubt. In terms of the tech industry CEOs, they're still quite bullish and optimistic on growth," the top Silicon Valley venture capitalist and software executive told PTI.
The coronavirus crisis has a combination of 9/11 as people are not travelling, the airlines industry has come to a standstill and people are not staying in hotel, he said, adding that people are getting sick and afraid to go out and afraid to do things.ALSO READ: Coronavirus pandemic has already put global economy into recession: Poll
"So, it's, much bigger impact this time. And it's a global impact. It's a far greater impact. But I'm hoping that the recovery will be quicker. Let's say the virus dissipated in two months.
Then the recovery can be faster," he said.
Rangaswami - who had just attended the Enterprise Retreat, a conference for the top CEOs of software companies, which was the last major conference in the Silicon Valley before everything came to a standstill due to coronavirus - said the mood of the conference was very challenging.
One fourth of the attendees did not come this year, he said.
"The recession was predicted by the attendees themselves," he said, adding that, however, the CEOs were bullish on the tech industry.ALSO READ: Tokyo Olympics 2020 may fall victim to coronavirus: What is at stake?
"Attendees still forecast and predicted that the tech industry can grow this year," he said.
But the caveat is how does the current quarter ends and if the companies are able to get new contracts and signed agreement by March 31.
"So that's the big question mark. My personal feeling is the deals that are closed for these companies, would it be ones where they're able to clearly quantify the return on investment and clearly point to savings. Those kinds of companies with those solutions will probably be able to do business," he said.
"But if you're selling technology that makes life better or does basic stuff, but they already have existing systems that can limp along for another quarter or two. Those kinds of things are not going to happen. It's easy to say, let's look at it next month, next quarter," he said, adding that there will be obviously huge delays and closing deals which means then it moves to second quarters and then they have to try the same thing again.ALSO READ: Coronavirus impact: Fitch cuts India growth forecast to 5.1% for FY21
Rangaswami, who has seen the previous crises of Y2K and 2008 economic slowdown said that the 2000 bubble burst primarily impacted the tech industry and it did not result in recession. The 2008 one was a more pronounced and it had a huge impact.
"This one has a very serious impact where it happened so suddenly and with such great force, I think this is even more problematic than the previous two I've seen," Rangaswami said.
A total of 218 people have died in the US due to the fast-spreading coronavirus pandemic, while there are 14,299 confirmed infected cases in the country. Globally, the death toll from the virus has risen to over 9,800 with more than 232,650 cases in 158 countries and territories.