Is Work From Home here to stay? A remnant that will be left over from the COVID-19 crisis once it is long forgotten?
Yes. Remote working will be a more common way of doing business. And that means you should be buying up names that support the new work-from-home (WFH) reality.
So says Richard Tse, analyst at National Bank Financial, who in a report to clients on Tuesday pointed to a number of Canadian tech names set to benefit from the WFH trend.
COVID-19 has done more than shut down whole sectors of the economy and forced millions to turn their spare rooms into offices, it’s accelerated a movement which had already been gaining speed pre-pandemic: remote work.
Tse spoke to companies in National Bank’s coverage universe and found that while their reactions to WFH has been mixed —productive for some and not so much for others— those who have had positive responses to WFH have seen in some cases meaningful productivity increases.
“We believe some enterprises have actually been surprised by how capable they are to operating remotely, [which is] not new. The idea of WFH had already been a trend even before this pandemic,” Tse said.
And while there has been the obvious explosion in usage of online collaborative platforms like Microsoft Teams and Zoom, both of which have seen exponential growth in lockstep with the rise in social distancing, there are many facets to infrastructure supporting remote work, from cloud providers and IT servicing to cybersecurity and endpoint management.
All of these elements will be key to supporting the trend, Tse said, pointing to a recent poll by Gartner which found that 54 per cent of HR leaders listed poor technology and/or infrastructure as the biggest barrier to effective remote work environments.
“It’s our view that Technology will be a major beneficiary on the other side of this crisis,” Tse wrote. “Why? Based on discussions with our companies and industry contacts, it’s pretty clear this crisis has uncovered flaws and weaknesses ranging from infrastructure, applications to processes.”
“We’ll see a pickup in Digital Transformation on the other side as many enterprises have been caught flat-footed while even the most progressive ones will likely double down on their efforts as a way of further future proofing their businesses,” Tse wrote.
Tse said a number of the big American tech names such as Amazon, Microsoft, IBM and Cisco will be beneficiaries of the new digital transformation.
On the Canadian front, Tse pointed to companies like Absolute Software (Absolute Software Stock Quote, Chart, News TSX:ABT) in cybersecurity, BlackBerry (BlackBerry Stock Quote, Chart, News TSX:BB) in cybersecurity, content collaboration and endpoint management, CGI Group (CGI Group Stock Quote, Chart, News TSX:GIB.A) in IT Services, Docebo (Docebo Stock Quote, Chart, News TSX:DCBO) in e-learning and Carbonite (to be acquired by OpenText (OpenText Stock Quote, Chart, News TSX:OTEX)) in data backup and recovery.
Tse noted that despite the upside market move over the past week, the broad group of WFH-supporting names are down about eight per cent on average year-to-date, whereas the S&P 500 is down 13 per cent.