IT professionals better off in SA
Telecoms and IT businesses have been harder hit by the global credit crunch than businesses in seven other major sectors of the British economy. But in South Africa it is the opposite, with the local IT sector emerging as one of more resilient sectors.
This is according to Karen Geldenhuys, MD of ICT-focused recruitment company, Abacus Recrutiment. “The IT industry is taking strain, but we are still witnessing a demand for jobs, which is unlike the situation in the UK – where IT jobs are being shed.”
In the UK, however, the IT sector is not as resilient. There is growing evidence that the global credit crisis has moved on to the IT sectors as well, where borrowing costs for ICT companies were now the highest outside of the financial services sector.
One of the companies agreeing on this is Siemens. Siemens was quoted in UK-based on-line publication, contractorUK, where it concurred that borrowing costs for IT firms were now the highest – except for the financial services sector.
The company interviewed a total of 734 companies, which ultimately highlighted that there is a “dual challenge” emerging.
Said Geldenhuys: “UK-based IT firms have not only been hit by tightening credit conditions, but clients to whom they sell – outside of the IT sector – are delaying contracts and projects due to cash constraints. This is happening in South Africa as well, but not to the same extent.”
The latest research, in fact, shows that, British businesses will cut investment in machinery and ‘ICT’ goods, such as software, hardware, training, telecoms and management systems, by £1.5billion before 2009.
Translated this means that British operations, during the second half of the year, will cut back on IT investment by 2%.
“Of course,” said Geldenhuys, “this means that UK banks are less likely to bail out IT companies, or offer them soft loans. Loan figures are going to be tougher.”
According to contractorUK, during this year 19% of IT and telecoms companies have seen their banks adjust their credit level downwards. This is far worse then the 9% average for UK businesses, the Siemens research revealed.
“South Africa is a long way from being out of its economic downturn. This will spread into 2009 and into 2010. While I believe the IT sector will be one of the best performing sectors, there are going to be a lot of hardships, particularly in the IT distribution sector. This is because already thin profit margins are being stretched, more and more.”
IT job cuts – give your views
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