back to article 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 …

  1. Pascal Monett Silver badge

    That's one point of view

    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.

    1. Anonymous Coward
      Anonymous Coward

      Re: That's one point of view

      >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.

    2. BigAndos

      Re: That's one point of view

      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.

      1. Nunyabiznes

        Re: That's one point of view

        We are looking at getting some projects moved up because we speculate that there will be vendors with lots of time on their hands. Hopefully it helps keep some businesses in business. Having a decent emergency cash fund on hand has its advantages.

        1. Fatman

          Re: That's one point of view

          <quote>Having a decent emergency cash fund on hand has its advantages.</quote>

          Are you sure that it is still there??

          Perhaps Manglement raided it in order to increase C-suite bonuses.

    3. Cliffwilliams44 Silver badge

      Re: That's one point of view

      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.

  2. theExecutive


    Yay IR35 postponed a year... Let the good news commence.... please!!!!

    1. Doctor Syntax Silver badge

      Re: IR35

      Postponed, not yet cancelled. This might be a good time for freelancers to write to their MPs pointing out what should now be the obvious flaws between the official tests of employment an the reality of being engaged off pay-roll.

      1. BebopWeBop

        Re: IR35

        Do it now, and do it again when things calm down.

        1. Anonymous Coward
          Anonymous Coward

          Re: IR35

          If you do it now, your MP will be stashing it under the 1 million letters about covid and the NHS.

          1. Mike 137 Silver badge

            Re: IR35 -do it now

            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.

    2. John Brown (no body) Silver badge

      Re: IR35

      "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.

  3. rwill2

    Big outsourced contracts will fail but the right startups won't

    We are used to working from home and boostrapped, never worked so hard!

    1. sebbb

      Re: Big outsourced contracts will fail but the right startups won't

      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...

    2. Doctor Syntax Silver badge

      Re: Big outsourced contracts will fail but the right startups won't

      There might be quite a few startups in the pipe-line. People stuck at home who had that idea they've had for ages and never got round to dealing with.

    3. Mark 37

      Re: Big outsourced contracts will fail but the right startups won't

      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

  4. Warm Braw

    There is a potential upside in most sectors

    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?

    1. The Oncoming Scorn Silver badge

      Re: There is a potential upside in most sectors

      Thanks now I fancy sausage & chips in a basket, in a pub beer garden (Preferably Devon or Cornwall).

      1. Azium

        Re: There is a potential upside in most sectors

        One of our local pubs has re-opened as a 'pub food' take away / home delivery. So sausage & chips still available, not sure if you still get a basket though.

  5. theExecutive


    “Doublethink means the power of holding two contradictory beliefs in one's mind simultaneously, and accepting both of them.”

    ― George Orwell, 1984

    1. BebopWeBop

      Re: 1984

      Does it count if you change your position so frequently that to an external observer nothing appears to change?

      1. Anonymous Coward
        Anonymous Coward

        Re: 1984

        At the speed some think at, it does count as the same moment in time.

      2. Andy Landy

        Re: 1984

        We have always been at war with Eastasia...

    2. Don Casey

      Re: 1984

      The Schroedinger Think System.

  6. big_D Silver badge

    Hardest hit?

    Harder than small shops forced to close, with no income and no capital reserves?

    Small businesses not allowed to visit their customers? Gyms and fitness centres?

    I can think of many sectors that will be at least as hard hit.

    1. MiguelC Silver badge

      Re: Hardest hit?

      Tourism sector anyone? Whole nations depend on it, and it's now flatlined...

  7. cantankerous swineherd

    consumers are going to have significant accrued debts whether from deferred mortgages or simply having to borrow to survive

    a lot of creditors are going to have to write off bad debts.

    1. BebopWeBop

      Ot pursue those debts more agressively (guess which they will do).

      1. Cynic_999

        Only those debts that are probably recoverable will be pursued aggressively. There is no sense in throwing good money after bad.

        1. InNY

          Have you ever met someone who works in debt recovery?

          I've never met any who would not aggressively pursue an "owed" penny.

  8. a_yank_lurker

    Real Effect?

    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.

    1. Doctor Syntax Silver badge

      Re: Real Effect?

      Manufacturers might also start paying attention to avoiding single-sourcing of components and easing up on the JIT approach.

      1. Anonymous Coward
        Anonymous Coward

        Re: Real Effect?

        Learn from life and biology? Animals go into hibernation when injury or food is scarce. Then get back into gear after. However both require a stock pile of fluid, flexible and non committed resources.

      2. Boris the Cockroach Silver badge

        Re: Real Effect?

        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.....

  9. anthonyhegedus Silver badge

    Smaller MSPs will flourish

    It's not all bad. Smaller MSP business should be OK, as there's still an infrastructure to support for their clients. If the MSP has a diverse enough client base, they shouldn't lose too many clients.

  10. Russell Chapman Esq.

    With the world in lockdown.

    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.

    1. druck Silver badge
      Thumb Up

      Re: With the world in lockdown.

      Going out without money to buy food, you are commended on such an understated way to describe mass looting and destruction of every commercial premises in the land.

    2. a_yank_lurker

      Re: With the world in lockdown.

      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.

      1. Cynic_999

        Re: With the world in lockdown.

        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."

        1. Anonymous Coward
          Anonymous Coward

          Re: With the world in lockdown.

          Eat the rich.

          Is he cheese flavor all the way through, I wonder?

    3. codejunky Silver badge

      Re: With the world in lockdown.

      @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.

  11. Stork Silver badge

    Harder hit than other industries?

    Try tourism. We will be happy if we see any guests this year, and expect 2021 to be sluggish at best.

  12. Anonymous Coward
    Anonymous Coward

    Time to move everything home from India.....

  13. mark l 2 Silver badge

    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.

    1. John Brown (no body) Silver badge

      "shiny new cars on finance,"

      For many, it's not even that. It's "Car as a Service" on a lease agreement. When the lease is up, you don't even have a car to sell.. It's been getting popular over the last few years and probably explains why there are so many big flash cars on the road.

    2. AndyD 8-)&#8377;

      So I started putting money aside for a rainy day just in case checked the stockmarket lately?

  14. IGotOut Silver badge

    Never read such self centered bullshit in my life.

    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.





    Sports and leisure facilities


    Construction and maintenance (and related services)



    Estate agents (no cheering please)

    Car dealers


    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.

  15. Anonymous Coward
    Anonymous Coward

    Look at the upside

    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

  16. YetAnotherJoeBlow


    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.

    1. hoola Silver badge

      Re: Contracts

      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.

  17. FlamingDeath Silver badge

    Bigger picture

    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

    1. ParasiteParty

      Re: Bigger picture

      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.

      1. codejunky Silver badge

        Re: Bigger picture


        "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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