IT services sector faces armageddon as COVID-19 lockdown forces project cancellations – analysts Analysts are painting a particularly bleak picture for IT services companies and application software vendors as they struggle to pick up business in the face of the global coronavirus lockdown. Researchers at Global Data argue that, in the IT economy at least, the economic strain resulting from COVID-19 and government …
Another possibility is that companies are going to want that project completed double-time, since they've had to wait for it to get done.
I'm not convinced project cancellations are going to be all that legion. Sure, there will undoubtedly be some, but I think there will be more that will request urgent finishing, or undertaking.
We'll see.
>I'm not convinced project cancellations are going to be all that legion
India has just sent everyone home for at least three weeks. For companies of a certain scale - and those companies make up a significant plurality of the market - that means nothing is happening in the first half of this year. Even those few companies set up for near-100% work-from-home are working to a planning assumption of no more than 75% usual staff availability, at a time of total international crisis and bare minimum revenues. Projects have *already* been cancelled left, right and centre in our customer base.
Our board are currently reviewing our estate of projects and a lot will be cancelled or deferred to 2021. We use the a few of the big Indian outsourcing firms for project "resources" so I expect us to be scaling back the spend we make with them where contracts allow, quite significantly in the short term.
Agreed, we are currently moving forward with several initiatives and have not scaled back scheduling. All the work is being done remotely as 95% of it would have been done if the lock down did not happen. As a company that spans the entire US, working remotely is just our daily routine.
And there may be an upside, if companies start looking at the downside of relying on IT support based in India as a potential problem in these situations they may want to move that back home just like many are now considering the folly of basing their critical supply chains in China.
IR35 came up in passing while I was discussing another matter with my MP. He expressed an interest in getting the mess sorted out and told me he'd be back in touch to discuss it as soon as he could find the time. Who could do better than that? So why not get it on the agenda now? No MP is going to bin your letter.
"Yay IR35 postponed a year... Let the good news commence.... please!!!!"
Maybe it's time for insourcing? I don't mean hiring in staff, I mean contracting in locals since most countries are in the same situation, are handling it in their own ways and won't necessarily have the resources or ability to deal with foreign business over domestic business.
I've been also working from home since three weeks ago and I've never had so many customer calls remotely... Everyone want automation now and the fact that we are not ONLY India based, but global and sparse, make everything easy and we can just keep going business as usual, just doing it from home. Maybe IT companies should start thinking again that saving the penny today doesn't save the pound tomorrow...
Amazingly, the number of customers who didn't prepare for the vast majority of their workers to work from home are now raising emergency projects to cope with the sudden upswing in demand.
We've never worked so hard - utterly swamped with work to fix things that weren't broken, just not configured for such demand.
And the support doesn't stop for health workers, broadcasters and the like.
Loving my shiny new lease car
There really isn't.
Assuming the economy is in stasis for the period currently projected, practically all sectors bar food* are going to struggle not only to carry on but to reboot. Vast investments will have been lost and consumers are going to have significant accrued debts whether from deferred mortgages or simply having to borrow to survive. There will be a real problem with both demand and supply across the board and we're likely looking at an economy on government life support for some time.
*Remember bar food?
The real effect on dumbsourcing might be to pay more attention to the overall infrastructure available in a location in case of a disaster. Some areas are better prepared for work at home of many for the duration than others. If Indian contractors struggle because of local infrastructure issues but European and North American cope better it might make sense to bring the projects either inhouse or hire a local shop.
You've got a fat chance, for a lot of companies they'll be driving their supplier prices down in order to make up for the lack of cashflow right now.
However for the stronger suppliers who can ride out the storm, better times will be ahead as those suppliers who've gone to the wall will have shrunk the market somewhat enabling suppliers to push back on prices.
As the the effect on JIT methods... give it 18 months and the virus will be forgotten about and the tier 1 companies will be back to having no stock and 15 chasers chasing the suppliers all day.....
From the 3rd paragraph. Who expected to read that in their lifetime? It is funny how we humans adjust to the new normal and continue, when things really are not normal at all. I'm just wondering how long it will be till there is civil unrest, with huge numbers signing on for Universal Credit, and many more not able to get through because the system can't handle the load, I wonder how long large numbers of people will be able to go without money to buy food.
My impression is most governments are keenly aware of the medium to long term issues. What they will do is hard to tell right now as many are still in scramble mode and haven't probably fully thought thru the next couple of steps. There is talk of needing to easy some of the restrictions in the near future so businesses can start back up over here. But I think many places are still in lock-down mode for the time being.
As Lenin said, "Every society is three meals away from chaos”
As I mentioned before, I know families in less developed countries who are already rationing themselves to one meal every two days. Which is *just about* sustainable. Any less and the only way to survive will be to break the law. And once you start down that route - "In for a penny, in for a pound."
@Russell Chapman Esq.
"I'm just wondering how long it will be till there is civil unrest, with huge numbers signing on for Universal Credit, and many more not able to get through because the system can't handle the load, I wonder how long large numbers of people will be able to go without money to buy food."
That would be economic damage. At the beginning of the UK reaction where Boris and experts decided that overreaction would be worse than managing the problem this was the issue in mind. Unfortunately some people saw that as putting the economy over people which shows stupidity because the economy is people.
The economy is what provides everything from food, shelter, clothing, etc and of course pausing the economy is going to badly affect people to the point of causing deaths. So the correct approach to this is the deaths of the virus vs the deaths of no economy and mitigation strategies.
As I keep reminding people the gov cannot do anything to fight the virus, there is no vaccine. All it can do is manage the population and the population is responsible for basic hygine and common sense.
What this virus pandemic has shown is how many people live beyond their means, shiny new cars on finance, big debts on their credit cards and no saving to fall back on.
Last year a friend fell ill was unable to work or even look after themselves and had to move back in with their parents for months until they were well again. I realised then that things can change dramatically over a short period and it can soon go from good times to bad. So I started putting money aside for a rainy day just in case. And I think we are going to see more rainy days before we finally see the sun coming back out after this.
I'd say IT is going to one of the LEAST hit. I'm not seeing Oracle, Google, MS and Amazon crying they have no work.
Can't see the clients? If you don't know how to use video conferencing, file shares or even a phone then I wouldn't trust you to run my fucking IT.
Let's see who are a teeny bit more affected.
Shops
Pubs
Restaurant
Engineering
Sports and leisure facilities
Gyms
Construction and maintenance (and related services)
Tourism
Charities
Estate agents (no cheering please)
Car dealers
Cafes
Then there are all those that feed into those. Random businesses you don't even think about. Box makers, window cleaners, vending machine stockists, beer mat makers, printers, repair personell.
So quit the bleeding heart. IT is going to be one of the least hit.
So much negativity around these days, it really is BAU for some:
- 1978: first 'foreign' contract, a Yorkshireman sent to Glasgow a few weeks after STC shut their East Kilbride factory
- 1982: arrived in Riyadh, a few months later the Falklands War took place followed by the death of King Saud
- 1992: in Belfast contracted to RUC, on a 'site visit' our post came under fire
- 2010: a year later the Arab Spring reached Oman/Bahrain, my weekly visit to Manama saw me driving over the Pearl Roundabout escorted by armoured cars
- 2019: in Oman for new contract meetings when the Sultan Qaboos passed away
- 2019: got out of Spain before it shutdown and over to The Gulf before the visa ban
Currently working remotely on an accelerated Teams/Yammer roll out for a massive enterprise. OK, none of the above involved the death of 1000's people but the danger to me was way more than me contracting COVID-19 even though I am in the at-risk age group.
The point of this post? We are all born to die sometime so take your IT contracts when/where you can and a crisis is a fantastic opportunity. Or you can self-isolate posting 'woe is me', 'the world is doomed' crap.... The choice is yours.
The down vote button is the one on the right *sigh
I have a couple of government contracts - one in the US and and another in Asia. I sent an email to my contact in Asia saying I understand their situation and offered them an out. " Na - you can continue - we are still setting sail." I also have several active contracts in the US and elsewhere that are business as usual. Life will still continue.
There may be a slowdown but you can be absolutely confident that there will be plenty of companies cashing in on this crisis. I am not suggesting people should turn down work BUT you just know that a small number of already "too big to fail" outfits are going to benefit.
Earlier posts are correct, IT is not going to be the worst hit (not directly at any rate). All those smaller sectors that have had their business cut instantly will start to have a knock-on effect. Many will not use huge amounts of IT but provide liquidity in the system. If the likes of Deliveroo and Uber take a monumental hit then that is possibly a service to mankind in the long run from an employee/operator (not sure what the term is for these shyster outfits).
What are the cloud providers going to do with spare capacity? There will be a big push to put more into "the cloud" because it is seen as "flexible" and "resilient". Manglement will love this without realising the consequences because they are barely capable of looking forward to next month, let alone a year. As for the past, that is gone, no point in worrying about that, nothing to learn there.
This is fine until the next catastrophe when we end up with some core Internet failure or one of the big boys goes boom with some mega IT failure. At that point what we are seeing now will be a drop in the ocean. Society will simply stop, there will be nothing in place to recover, all you can do is pick the phone up and scream. The trouble is that nobody will be listening because it is all in "the cloud" and uses the Internet.
How resilient is our socioeconomic system?
Is it safe to describe the monetary system as conceptual?
Can the World pause itself for potentially 3 months?
Is this a good opportunity to rethink & reengineer our civilisation?
If the world does react to this coronavirus, and it seems to be doing so, does this show that we have the ability to change our collective behaviours?
One thing is certain in my mind, and that is we cant go on like we have been, trashing the planet and being unkind to eachother
Yes, this. One of the consequences of Globalisation is a faster spread of diseases like this. If everyone bought locally, considered where their cheap clothing or out of season food came from. we might have a slightly less globalised society. That's fewer flights, less reliance on international shipping, less chance for diseases to spread. Oh and a happier mother earth.
@ParasiteParty
"One of the consequences of Globalisation is a faster spread of diseases like this"
Balance that out against the benefits. There is no contest that globalisation not only provides greater benefits but with a devastated economy by virus there are still supplies through global trade.
"Oh and a happier mother earth."
Unlikely. Reforestation is a privilege of the rich countries. Being rich enough not to need to take as much in resources.
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