Business Sentiments of ICT companies (FY20Q2)
Business Sentiment | 17 Sep 2020
Business Sentiments of ICT companies in FY20Q2
(Jul – Aug 2020)
AN INDSIGHTS RESEARCH REPORT SUMMARY
The Business Sentiments Survey by IndSights Research ascertains how companies in Singapore are adjusting to the current global and domestic economic environment. The survey was done from July to August 2020, with over 900 business leaders from various industries. In this report, we zoom into the responses from 464 ICT (Information & Communications Technology) businesses.
You can also click here to read the full report with the 911 business leaders from the Wholesale trade, Retail, Food services, ICT, Environmental services, Logistics and Security industries.
The COVID-19 pandemic has increased uncertainty in the global economy and impacted all businesses significantly, including those in the ICT sector. However, the ICT sector seems to be in a relatively better position. Partly due to strong urgent demand for digital payment related services and other digital solutions in the wake of social distancing measures, the sector is projected to expand this year. Despite (or perhaps because of) the disruptions, some SMEs are seizing opportunities to pivot by leveraging technology and adapting business models with new partners. Companies will continue to be forced to rethink, reinvent, and adapt to the new normal.
While current perceptions of the economic and business situation remain poor, ICT companies are expecting a much-improved situation in a year’s time, especially for the industry. This is in line with our previous findings where we expected to see continued impact of the COVID-19 pandemic on business sentiments in the months ahead.
Despite the negative impact, we found that nearly half of the ICT companies were still optimistic about the economy’s position in a year’s time. Slightly more than half (52%) had a more positive outlook of their business situation in a year’s time.
We note the sentiments here may be buoyed by the various forms of government support. Sentiments may change more drastically after the next quarter, where some of the support schemes start to taper off for certain industries. According to Trading Economics’ forecasts, Business Confidence in Singapore is expected to be negative all through to 2021.
While sentiments may be buoyed by the various forms of government support, the ICT sector seemed to be relatively less affected by the pandemic. Support for this sector will also be among the first to end, and with the support quantum to drop the most (e.g. the adjustment of extended JSS support), compared to other sectors who may be more adversely impacted. Several ICT companies that we spoke with, while very appreciative of the support, seem less dependent on the schemes compared to those that may be harder hit.
IMPACT OF COVID-19 AND BUSINESSES
We saw that 66% of companies were at least moderately impacted by the COVID-19 pandemic.
This proportion of ICT companies is less than the 73% of the companies from the broader survey report, which included other sectors.
The sector saw 29% of ICT companies with net job creation. Compared to the previous quarter, this was a smaller percentage but most companies were keeping their workforce numbers steady despite the challenges.
Amidst the COVID-19 pandemic, many companies were turning to cost-cutting measures including reducing remuneration and re-organising their workforce. On the positive side, relatively fewer were considering lay-offs or winding down.
In June, the Government Technology Agency (GovTech) announced that Singapore will spend an estimated S$3.5 billion to boost the economy and support businesses recovering from the COVID-19 outbreak. This targeted investment is 30% more than last financial year’s projected spend and aims to accelerate the digitalisation of the sector, which will also see recruitment of fresh graduates and experienced technology professionals. It remains to see the impact this push will have for the ICT sector.
BUSINESS STRATEGY IN JUL-SEP
COVID-19 has spurred digital transformation as businesses adapt to cope with office closures and global lockdowns. Of the companies polled, 66% had allocated budgets to digitalise their business processes and one-third were looking to further increase their investments. Business strategies of the surveyed companies included a push for more digitalisation of business processes (35%). This is in line with a recent Straits Times report that 75% of firms are planning to accelerate digitalisation due to COVID-19.
This feedback affirms the recognition of technology and digitalisation during the pandemic. Anecdotally, besides working-from-home arrangements, we hear of other changes to processes such as online interviews of potential staff, and online onboarding for new hires.
Slightly more than 20% of companies were planning to increase their spending in R&D and/or in training.
For companies in the ICT industry, as well as those looking to digitalise, IMDA has various programmes such as the Open Innovation Platform, SME Grow Digital, Advanced Digital Solutions, and TeSA Company-led Training.
In response to the COVID-19 situation, the Government has devoted around $100 billion dollars over 4 Budgets to help people and businesses amidst the unprecedented COVID-19 crisis. With the fluid nature of the pandemic situation worldwide, measures have been introduced and implemented in a manner that allows flexible adjustments.
You may read more about the additional support in the infographics. In addition, visit our one-stop resource page to browse assistance schemes grouped according to business stage/function, or search for relevant schemes via GovAssist.
About the Study
This quarter’s survey collected views from 464 business leaders from the ICT industry, in the period of July to August 2020.
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