The coronavirus is bound to impact the HR technology business, analysts and industry executives believe. However, where that impact will be felt isn’t yet clear.
The situation surrounding the pandemic is changing quickly and constantly, and vendors say they’re focused on supporting customers as HR departments scramble to enable their companies to navigate the crisis.
Still, leadership teams are keeping an eye on business conditions and considering possible outcomes. Some vendors are concerned about delayed implementations and purchasing decisions, while others wonder about the course of per-employee and subscription revenue.
The coronavirus is bound to impact the #HRTechnology business, executives believe. However, where that impact will be felt isn’t yet clear. Click To TweetStartups in particular will have difficulties, said George LaRocque, founder and principal analyst of HRWins. Early stage companies without much revenue are “going to have a really tough time,” he told TechTarget.
“There’ll be a lot of IP [intellectual property] that gets acquired for pennies on the dollar by larger startups acquiring smaller startups,” he said.
A New Landscape
As early as last week, IDC said IT buyers and vendors were adjusting to “a new set of assumptions and a new global economic reality” because of the coronavirus. The firm expects to see a significant slowdown in hardware spending during 2020’s first half. In turn, that will affect software and services spending. One “pessimistic scenario” cited by IDC could result in technology spending growth of 1 percent, compared to the originally forecast 4 percent.
“The situation is extremely fluid,” said IDC Vice President Stephen Minton. While the company’s data is “clearly pointing in one direction … it’s still early to understand the full impact of the coronavirus crisis across all sectors of the economy.”
IDC originally forecast worldwide IT spending would grow by just over 5 percent (in constant currency) during 2020. The drivers would have been smartphone upgrades, infrastructure spending and digital transformation projects. However, IDC’s February Black Book downgraded growth to 4.3 percent, and the company now expects its March estimate to end up closer to 3 percent.
Helping Customers Cope
In the near and medium terms, customer support may be the only game in town for HR tech vendors. Many of the companies that now have significant numbers of employees working from home were caught flat-footed, without complete policies, procedures or even technology in place to support remote work.
Their attempts to adapt has been complicated by a number of factors. Among them: Many employees find themselves trying to work while surrounded by children. Schools around the world have closed as authorities try to limit the virus’s spread. “We’re looking for resources to help customers help employees figure how to keep their kids busy,” said one person.
According to Gartner, nearly 90 percent of employers around the world have either encouraged or required employees to work from home.
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