With more than 16 million Americans out of work and more layoffs expected, and financial executives taking an increasingly sober view of COVID-19’s impact on their business, some HR technology vendors may have reason to hope.
While most employers are looking for ways to cut costs, and many CFOs are targeting their IT budgets as a place to slow down spending, others may increase their technology spend to support newly remote workers.
A survey by Enterprise Technology Research predicts that technology spending among global companies will drop to drop 4.1 percent this year. However, the decline would have been worse without the corporate need to support those working from home.
While most employers are looking for ways to cut their IT budgets, others may increase their technology spend to support newly remote workers. #HR #HRTech Click To TweetETR Director of Research Sagar Kadakia told Reuters that spending on “work from home infrastructure” has increased from an initial 1 percent to more than 30 percent of annual IT budgets.
Such spending could end up being a long-term investment. According to Gartner, 74 percent of CFOs plan to shift at least 5 percent of their employees to remote work permanently. Nearly a quarter will move 20 percent or more of their workers to remote positions.
Technology Spend Still Pressured
Unfortunately, it seems the workforce will continue to be battered by the ongoing pandemic. For one thing, executives and economists expect layoffs to continue. More than a quarter—26 percent—of CFOs now anticipate workforce reductions, up from 16 percent two weeks ago, according to PwC’s third COVID-19 CFO Pulse Survey.
Some 81 percent of the executives expect COVID-19 to decrease their company’s revenue and/or profits this year, said PwC. Seventy-five percent expressed concern about the crisis’s effects on operations and liquidity.
And while ETR’s data hinted at some good news for HR technology providers, several of PwC’s data points indicated continued challenges ahead. For one thing, 82 percent of CFOs are now focused on cost-cutting, and 67 percent may either defer or cancel planned investments.
Where, specifically, are those investments? More than two-thirds—67 percent—of financial executives may cut workforce investments, while 53 percent are looking at IT and 25 percent are eyeing digital transformation.
PwC said the pandemic’s impact on workforce investments varies by sector. Only 13 percent of financial services leaders expect layoffs, compared to 36 percent for industrial products executives and 30 percent for consumer markets CFOs.
“Companies are cutting costs and putting planned investments in technology, workforce and capital expenditures on hold while they try to weather an unprecedented economic storm,” said PwC Chief Clients Officer Amity Millhiser. “Before this pandemic hit, many businesses were focused on long-term growth. Now they are being forced to think short-term and protect liquidity.”
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