Business Sentiments Amidst COVID-19

(April 2020)

AN INDSIGHTS RESEARCH REPORT SUMMARY

The Business Sentiments survey by IndSights Research ascertains how ICT companies in Singapore are adjusting to the current global and domestic economic environment. The COVID-19 pandemic has impacted the world economy and while the situation appears grim, many companies are hopeful of a recovery by 2021.

The findings from this poll are presented in a similar structure as our previous report. You may view the findings on previous Business Sentiments poll in the period between Jan-Feb 2020, HERE.

Economic outlook

IndSights Research found that ICT business leaders’ perception of Singapore’s current economic situation contracted sharply compared to the previous quarter, with more than half having a poor outlook.

We also found that many were optimistic about the economy in the coming year, where almost half of the businesses had a better outlook expectation in the next 12 months. In particular, we observed that the optimistic outlook followed the Resilience and Solidarity Budget announcements. However, we are likely to see continued impact of the COVID-19 pandemic on business sentiments in the months ahead.

Our findings corroborate with the overall business sentiment of Singapore’s SMEs, conducted by Singapore Business Federation (SBF) and information services company Experian, which saw declining expectations, with deeper contraction expected in the coming weeks.

Industry and business outlook

IndSights Research also found that the sentiment on the ICT industry was aligned with that on the Singapore economy. Compared with the previous quarter, almost twice as many companies felt that the current business situation was poor but most remained optimistic. 79 percent of Singapore ICT companies think that the ICT’s business situation will remain the same or improve in a year’s time.

We also saw that 60 percent of companies were negatively impacted in Jan-Mar due to the change in global economic performance, while more are predicting a year on year contraction.

Interestingly, several companies (18 percent) saw opportunities and increased revenue in January-March due to the change in global economic performance.

Manpower change

Even at the start of the COVID-19 crisis, employment figures were already seeing a dip with fewer companies seeing a net increase or creating new positions in their Singapore-based employment in the last quarter. Most companies maintained their headcount while redundancies stayed around the same. This figure is likely to dip further as we see the further impact of COVID-19 on the economy.

In Jan-Mar, 43 percent of companies created new positions, with increased demand for tech-heavy jobs. This was a drop from 61 percent in the period of Oct-Dec’19. In addition, only about one-third of the positions were filled.

This is in-line with anecdotal data from our coffee sessions with ICT business leaders. IndSights Research learned that many companies feel recruiting and retaining Singaporean tech-talent is challenging, where there is higher demand than supply, especially in the niche segments of the ICT industry, such as cybersecurity and artificial intelligence.

Interestingly, some companies shared that because of the travel restrictions, they have turned to exploring hiring local talents more. Companies also shared innovative ways of recruiting and onboarding overseas staff over video conferencing. It remains to be seen how the changing habits may affect hiring processes and the impact it will have on local talents.

Company strategy

IndSights Research asked about the business strategies in areas such as Digitisation, Research and Development (R&D) and Training. Looking ahead, we found that fewer companies planned to increase their budgets in the 3 areas, with most planning to maintain status quo.

In March 2020, Singapore Business Review reported that 41 percent of SMEs said their top barrier to digitisation was the high investment costs. In contrast, we found that among the firms who are not currently investing in these strategies, there was an indication that a growing number (28 percent) who intended to invest more in digitalisation in the next quarter.

Encouragingly, we found that in the next quarter, more companies were planning to reorganise their workforce to reduce costs, as opposed to laying off staff. Fewer firms were looking to relocate their business lines as global economy disruptions worsen. Other plans included reducing staff compensation.

IMDA programmes

The poll asked about the awareness of various programmes such as TeSA Mid Career Advance Programme, SME Go Digital, Open Innovation Platform, Stay Healthy Go Digital and SME Start Digital. We found that there was generally good awareness among ICT business leaders of these programmes which target the ICT industry.

IndSights Research also did a previous poll on the TeSA programme. Read more about it HERE.

COVID-19 and businesses

The COVID-19 pandemic is an unprecedented event, not just to the healthcare system, but also to the global economy, where not even the two giant world powers – China and the United States – are unscathed. At the time of writing, countries are clamouring to restart their economies, even amid advice from health experts warning about the danger of opening too quickly.

We found that 67 percent of companies reported being moderately to extremely impacted by the pandemic. Most companies had implemented measures to mitigate operations and revenue impact, with human resource interventions and adjusted business spending topping the list.

Companies that require assistance in navigating the isolation economy can refer to SGTech Isolation Economy for a curated list of software and solutions that might help during this period.

Budget 2020: Resilience and solidarity packages

At the time of our report, Deputy Prime Minister and Finance Minister Heng Swee Keat had just announced the fourth round of budget named the Fortitude Budget, aimed at supporting businesses and workers, among other schemes. The Fortitude budget is not included in our poll, as it was conducted in April.

Regarding the Resilience and Solidarity budgets, companies found the various support programmes such as the Job Support Scheme, the Wage Credit Scheme, and the Foreign Worker Levy assistance to be useful and most were aware of these schemes.

About the study

This quarter’s survey collected views from 548 business leaders of ICT companies in April 2020.

Addendum

The Business Sentiment surveys are conducted periodically at a regular frequency with similar questions for timely and actionable data. These studies allow us to track data trends and make comparisons over time. Coming on the heels of this report, the World Trade Organisation’s (WTO’s) chief said that projections show the economic downturn and job losses caused by the coronavirus pandemic would be worse than the 2008 recession. Experts seem to agree, as countries report estimated negative growth in the coming year. Singapore’s GDP too is expected to shrink between 4-7 percent.

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Click for full abridged version of the findings.