June 21, 2020//-There has been widespread evidence of layoffs, pay cuts and furloughs at IT vendors, and there is more economic pain on the horizon, says GlobalData, a leading data and analytics company.
GlobalData reports that, as of the end of May, the number of active jobs in the technology and telecommunications field was down 36.2% as compared with the same time last year.
Steven Schuchart, Principal Analyst at GlobalData, said: “Times are tough for enterprise IT vendors. The economic downturn as a result of the COVID-19 pandemic has hit them hard. Some IT vendors, particularly the ones involved in cloud or collaboration, have seen great increases in business, but the traditional vendors and startups are taking a beating.”
At this point in the COVID-19 pandemic, there is a feeling that the pandemic is passing as countries are relaxing restrictions on movement and travel, and businesses are opening up again.
Economic data has been grim, but the stock market seems to be hanging tough. GlobalData reports the technology industry’s equity index has been recovering since its lowest point in April. As of May 29, the equity index year-to-date is down 1.4%, but up 4.7% month-over-month.
Schuchart continued: “Pandemics typically have a second wave and there are more challenges from COVID-19, which may include more shutdowns and further economic damage.”
Savings and bailouts have held many together to date, but with unemployment so high and consumer confidence down, there are economic difficulties yet to be navigated.
As a result, some IT vendors have been engaging in furloughs, pay reductions and layoffs. The same has been happening at their partner organizations, the VARs that in most cases deal with customers.
Schuchart concluded: “Job losses represent not only a loss of institutional knowledge at vendors and partner organizations, but also a loss of capability and capacity. Sales and productivity will suffer more than it already has as adjustments are made, work redistributed or discontinued entirely.”
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