Laptop leasing skyrockets as more work from home

To cope with increasing numbers of remote workers, many companies are leasing laptops and other equipment to support their employees under an outsourcing model known as devices-as-a-service (DaaS).

Hiring of such types of services was already on an upward trend in Brazil, but it has skyrocketed since the COVID-19 crisis erupted.

“We've seen simultaneous, sudden demand [for PCS] from the industrial, retail, financial sectors, in a very horizontal manner I would say,” Vittorio Danesi (pictured), CEO of equipment outsourcing firm Simpress, told BNamericas.

Before the pandemic, market research firm IDC was estimating that outsourcing of equipment would grow 12% in Brazil this year compared to 2019, surpassing 2bn reais (US$464mn) in revenues, but those numbers will now surely have to revised upward.

“Our commercial department – which is also in work-from-home mode – is in full swing,” said Danesi.

Last week, Simpress signed contracts and leased around 4,000 laptops to over 60 companies, which represents virtually the normal volume of PCs for an entire month. In the first few days of the week, demand soared 500%.

There are requests for the outsourcing of another 4,000 computers that Simpress is unable to meet at this time due to lack of equipment. 

"We're waiting for information from the factory to find out when we will have new equipment available and can resume the process of serving customers,” said Danesi, adding that the company has prioritized current customers. 

As a subsidiary of Hewlett-Packard, all equipment offered by Simpress is exclusively HP-branded.

Simpress currently has about 10,000 pieces of equipment leased every month among its customers, including desktop and laptop computers and printers.

One of these customers is Generali Brasil Seguros, a subsidiary of the Assicurazioni Generali Group, one of the largest global asset management and insurance groups in the world. Like many corporations, the insurance company put 100% of its employees into telework mode and leased 50% more Simpress laptops to serve those who worked at the company using desktops.

“We're very committed to fighting this virus. The company values the health and safety of its employees, so it reaffirms its commitment to ensuring a safe place for them to work. This is a global concern for Generali,” said Camila Asenjo, people and organization director at Generali Brasil.

Recently, the board of directors of Assicurazioni Generali approved the creation of an extraordinary international fund for up to 100mn euros dedicated to the fight against the COVID-19 emergency.

VPNS

As BNamericas has reported, work-from-home is driving the use of unified communication apps and impacting demand for audio and video equipment for teleconferencing, as well as adding extra pressure on telecom networks.

Carlos Eduardo Sedeh, CEO of corporate telecoms service provider MegaTelecom, connections via virtual private networks (VPNs), systems that securely integrate remote devices into corporate networks, have increased significantly in recent days.

The company also said it is making free licenses available for softphone, a software program that allows users make phone calls over the internet, to its customers of IP PBX services.

"Since the crisis began, our total traffic has increased by around 40%. In addition, all of our CDNs [Content Delivery Network] and PNIs [Private Network Interconnects] are operating on average at a 60% higher capacity throughout the day compared to previous weeks,” the executive said.

Danesi at Simpress does not believe the crisis will last for many months, but depending on its duration and its impact the executive sees more negative than positive effects for the business.

“This demand [for PCs] is a one-off. If there's a long-term shutdown of the economy, it will be much worse. We have more than 160,000 printers installed with our customers. If the client’s doors are closed, he won't be printing pages, won't be issuing invoices, won't be issuing documents… The impact for us could be huge,” he said.

In a report, Fitch said it expects increased pressure on asset performance for lease of equipment. 

"The slowdown in business activity is expected to pressure the financial strength of some companies, especially of small and medium enterprises (SME), which are obligors in portfolios backing rated Equipment Leases securitizations, which, in turn, might lead to an increase in delinquencies," the ratings agency said.

Fitch said rated the equipment leasing portfolio is primarily located in Mexico, where it has observed an increasing unemployment rate (3.7%, the highest level since 2016). 

The compound effect of coronavirus and local employment conditions are additional challenges for these transactions, Fitch said.