Traditional IT vendors are expected to experience more "economic pain" as staff layoffs, pay cuts and furloughs look set to continue, says analytics firm Global Data.
According to the data, as of the end of May, the number of active jobs in the technology and communications field had plummeted by 36.2% when compared with the same period of 2019.
Despite this, many vendors that have turned their business to the cloud have seen a considerable increase in business, Global Data says.
"Times are tough for enterprise IT vendors. The economic downturn as a result of the COVID-19 pandemic has hit them hard," explained Steven Schuchart, Principal Analyst at Global Data.
"Some IT vendors, particularly the ones involved in cloud or collaboration, have seen great increases in business, but the traditional vendors and start-ups are taking a beating."
As countries around the world begin to relax their COVID-19 combative measures, Global Data says there "is a feeling the pandemic is passing" as people begin moving about more freely again.
While the economic downturn has been tough for IT vendors, the analyst firm says the stock market has managed to remain firm, with the tech industry’s equity index on the road to recovery from its lowest point in April. Despite the equity index showing a decline of 1.4% for the year-to-date, it is up 4.7% month-over-month.
"Pandemics typically have a second wave and there are more challenges from COVID-19, which may include more shutdowns and further economic damage," Schuchart cautioned.
The analyst firm also says that high unemployment and low consumer confidence are presenting additional economic difficulties for IT businesses. As a result, some IT vendors have implemented furloughs, pay reductions and even layoffs to counter the effects.
Partner organisations such as the VARS that deal will customers have also taken the same measures, Global Data said.
“Job losses represent not only a loss of institutional knowledge at vendors and partner organisations, but also a loss of capability and capacity," Schuchart continued. "Sales and productivity will suffer more than it already has as adjustments are made, work redistributed or discontinued entirely."
