There’s more trouble to come for the global IT industry with startups joining the big tech vendors in laying off staff, despite working from home giving higher profile tech companies a boost.
London-based GlobalData reported widespread evidence of layoffs, pay cuts and furloughs at IT vendors around the world, with more economic pain on the horizon.
At the end of May, the number of active jobs in the technology and telecommunications field was down 36.2 per cent compared the same period last year, the report claimed.
The survey also found sentiment among listed IT vendors’ market updates had slumped from being 25 per cent positive to 5 per cent negative.
GlobalData’s report follows Seek reporting Australia’s tech job advertisements slumping 55.2 per cent during the peak of the COVID-19 shutdowns in March.
"Times are tough for enterprise IT vendors," Steven Schuchart, Principal Analyst at GlobalData, said of the report. "The economic downturn as a result of the COVID-19 pandemic has hit them hard.However,
“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.”
Pandemics typically have a second wave and there are more challenges from COVID-19, which may include more shutdowns and further economic damage, Schuchart added.
“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” the report noted.
“As a result, some IT vendors have been engaging in furloughs, pay reductions and layoffs. The same has been happening at their partner organisations, the value-added resellers that in most cases deal with customers.”
Schuchart also noted the layoffs will have a wider impact on organisations beyond the immediate loss of staff, saying “job losses represent not only a loss of institutional knowledge at vendors and partner organisations, 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.”