Companies working in the information technology (IT) and information technology enabled services (ITES) sectors are feeling the impact of the Covid-19 pandemic; these companies fear that they will have to lay off staff in order to survive the impact.

In a report ‘Effects of Covid-19 Crisis on the IT/ITES Sector of Pakistan' recently published by the Pakistan Software Houses Association (PASHA), it was revealed that 68 percent of companies were uncertain about retaining their current employees for the next three months and that number might jump to 89 percent over the next six months.

In the report, the PASHA released a survey report that aimed at analyzing the impact of the coronavirus pandemic on the IT and ITES companies of Pakistan. The survey for this report was conducted from March 25 to 28 and a total of 205 companies participated in the survey.

The report said that regardless of their size, businesses had been affected severely by the Covid-19 across the globe. “This situation has severely affected employee retention. Moreover, delayed payments, halted projects, and contract cancellations are some of the examples IT companies are facing due to this crisis across the world. Amidst the current situation, loss of talent and brain-drain are some major issues upon which the survival of the IT industry is highly dependent," it added.

The report takes into account both product and service-based IT companies and along with their export and domestic revenues while studying the negative impact on them caused by Covid-19 over the next three and six months.

The study also observed that the work-from-home arrangement is working well for most IT companies. “However, ‘business process outsourcing' (BPO) and call centre businesses are facing major challenges of connectivity and the work-from-home arrangement is not favourable for them. Low bandwidth and unstable internet connections are the major obstacles in their operations since they cannot afford any interruption in the voice calls. The use of VPN typically requires a stable 8-10 megabytes connection, which is not readily available to most of the employees at home," it added. The report shares the strategies the IT and ITES companies will be taking into consideration to address the financial crisis for the next three and six months.

“Companies are evaluating their options for survival by reducing office expenses by continuing work-from-home arrangement and cuts on bonuses, perks and other benefits as few of the options. However, two-thirds of the expense of a typical IT/ITES company is payroll and survival with the current number of employees or payroll may not be possible for them after a couple of months. Therefore, they will have to do payroll cuts or in the worst-case scenario, opt for lay-offs," it added.

Copyright Business Recorder, 2020