Business Sentiments Amidst COVID-19

(January – February 2020)

AN INDSIGHTS RESEARCH REPORT SUMMARY 

Business Sentiments survey by IndSights Research ascertains how ICT companies in Singapore are adjusting to the current global and domestic economic environment. For a better frame of reference, it is useful to note that the study was conducted in January and February 2020, and straddles events such as the onset of COVID-19 reported in China, as well as the announcement of Singapore’s Budget 2020. At the time of writing, the world is still battling the COVID-19 pandemic. This is likely to further impact business sentiments.

Economic outlook

Sentiments about the current economy were average and remained consistent with our previous survey in 2019, though the net perception of Singapore’s current economic situation dipped 2 percentage points compared to two quarters ago.

Among the ICT companies polled, more were relatively optimistic (31 percent) about the economy in the next 12 months, compared to the survey in 2019 Q3 (12 percent). This was possibly buoyed by Budget announcements and an overall sense of optimism about the ICT industry. In total, 67 percent of the companies think that Singapore’s economy will remain the same or improve in a year’s time. While more are positive about the outlook in a year’s time, 55 percent were moderately/extremely concerned about the current economic situation in Singapore.

Industry and business outlook

Sentiments on Singapore’s ICT industry’s business situation are slightly more positive than on Singapore’s economic situation. 78 percent of Singapore ICT companies think that the ICT’s business situation will remain the same or improve in a year’s time. This is in line with the Singapore economy seeing its highest annual job growth in 2019, and the ICT industry is likely a key driver of this growth. That said, there may be companies feeling the effects of high operating costs and tech talent shortage.

Manpower change 

Through our coffee sessions with ICT business leaders, IndSights Research learned that many felt that recruiting and retaining Singaporean tech-talent is challenging. It seems that there is a higher demand than supply in general, but especially so in niche segments of the ICT industry, such as cybersecurity and artificial intelligence. From the business sentiment poll, we see that 6 in 10 companies saw a net increase in their Singapore-based employment in the last quarter, with most being tech-heavy positions. In additional, 61 percent of companies had new positions created last quarter.

The findings from the polls seen in the context of anecdotal feedback suggests that while the manpower demand outstrips supply, the situation might be improving. It might also mean more tech positions are being created than can be filled, explaining the sentiment on the ground despite the increase in Singaporean talents. This might be an interesting area to study.

Company strategy 

In March 2020, it was reported that nearly half of SMEs struggle with digitisation’s high costs. When IndSights Research polled ICT businesses, we found that despite the slowing economy, 80 percent of the companies allocated budgets for training, research and development (R&D) and/or digitalisation plans.This might indicate that businesses in the ICT industry are more aware of the importance of, and/or are more willing to invest in digitisation and training than the SMEs in other industries.

IndSights Research also asked companies the likelihood of companies deploying various business strategies in the next quarter.

The strategies which most companies mentioned were:

1. Half of the companies looking to increase their business offerings,
2. 1 in 3 companies planning to increase investment in R&D, and
3. Almost 4 in 10 companies plan to increase their budget for digitalisation.

Companies were also polled on their possible plans to re-organise existing workforce, relocate business lines or lay off staff. 

IMDA programmes 

In mid-January 2020, Singapore Business Federation reported that only 36 percent of businesses turn to the Government’s Industry Transformation Maps (ITMs) for ways to improve their manpower needs and talent pipeline. ICT companies intending to expand their business portfolio can consider support programmes offered by IMDA to supplement their strategies. Awareness of various programmes such as SME Go Digital, GoSecure, or TechSkills Accelerator (TeSA) programmes may not be ideal and companies stand to gain by finding out more about them.

COVID-19 and businesses 

Within a span of weeks, COVID-19 has evolved into a global pandemic, significantly impacting the global economy. The DORSCON level in Singapore was raised to “ORANGE” on 7 Feb and the Government has since implemented a financial relief and support package. In Singapore, increasingly tighter control measures were introduced in phases to mitigate COVID-19’s impact on businesses. A second stimulus package is to be announced on 26 Mar 2020.

At the time of our survey, 66 percent of ICT business reported that they were already impacted by COVID-19. Most businesses operations were impacted by slowing demand, affected supply chains, and coupled with disrupted manpower. On a positive note, 7 in 10 of the polled ICT companies said they were at least somewhat prepared for the situation. Companies were also implementing control measures to deal with the situation such as Business continuity plans.

As of the time of writing, much of the world is in the throes of the start of a long battle with COVID-19. The situation is certain to have a much larger impact than reflected in this study, which concluded in mid-February. IndSights Research will continue to monitor the sentiments in our subsequent surveys.

Budget 2020: Stabilisation and support package

IndSights Research is cognizant that some of the sentiments reflected above may be due to the announcement of Singapore Budget 2020 on 18 February 2020. This announcement came at the tail-end of this Business Sentiment survey. The assistance for businesses in the support package can be summarised in 4 areas:

Note: This report does not include items from the Supplementary Budget to be presented on 26 March 2020.

About the study

This quarter’s survey collected views from 463 business leaders of ICT companies from January – February 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. It would be interesting to see the findings from our next business sentiment survey, which starts in mid-April, where the economic impact of the pandemic would start to become more apparent.

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