Top South African tech companies – Salary cuts, retrenchments, and work-from-home policies

South Africa’s strict and prolonged lockdown has caused havoc on the local economy, with current estimates suggesting a GDP decline of between 7% and 17%.

The National Treasury further predicted that between 3 and 7 million jobs will be lost because of the extended lockdown, pushing the unemployment rate to record highs.

The impact of the COVID-19 pandemic and subsequent lockdown is already seen in many industries, with businesses going into business rescue or even closing their doors.

Two of the high-profile casualties of the lockdown include Comair and Edcon, which have entered voluntary business rescue.

Many small and medium-sized businesses, like Caxton Magazines, Associated Media Publishing, and Rebel Tech, were forced to shut down.

The struggling economy and financial strain on businesses have had a knock-on effect on South African IT companies.

Apart from losing clients because of businesses going under, others cannot pay their suppliers during the lockdown because they could not operate and generate revenue.

This had a knock-on effect on IT providers, which are now faced with mounting bad debts and potential cash flow problems, which forced them to react.

EOH was one of the first to respond to the economic downturn and implemented stringent measures at the beginning of April to dramatically cut costs and manage liquidity.

EOH CEO Stephen Van Coller said their key focus is to manage the business in an environment where they can expect a substantial drop in revenue.

He anticipated a drop in cash receivables from their clients and significant future uncertainty on the full impact of COVID-19 on the economy and EOH.

Many others have followed suit in the coming weeks by implementing salary cuts, short time, forced leave, and staff cuts.

Work-from-home, salary cuts and retrenchments

MyBroadband spoke to South Africa’s largest ICT companies and it was clear that all businesses face an uncertain future.

Adapt IT told MyBroadband because its clients in the hospitality sector were negatively impacted by lockdown, 20% of its employees were unable to work or perform their regular duties.

“We are currently in consultation with 4% of our permanent staff who may be negatively affected,” the company said.

“Through this consultative process, we aim to be as transparent as possible, and to ensure that the process is fair.”

Dimension Data said it is focussed on “responsible fiscal management and will ensure that our revenue to cost ratios are correctly balanced at all times, making necessary adjustments as required”.

“For example, we have frozen all new hiring, stopped property refurbishment projects, curtailed all discretionary spend, and placed all salary reviews and interim salary adjustments on hold,” Dimension Data said.

The good news is that some ICT sectors, like telecommunications, were not as severely impacted by the lockdown as others.

This means companies like Vodacom, MTN, Rain, Blue Label Telecoms, and Telkom did not have to cut staff or reduce salaries during the lockdown.

Blue Label Telecoms told MyBroadband it continues to support all its subsidiaries and has not implemented any retrenchment or pay cuts to date.

“Many of the products we distribute across the country are fairly defensive including electricity, airtime and data and we are doing everything possible to innovate to get these products to our customers digitally so they don’t have to leave their homes,” Blue Label Telecoms said.

“Clearly, should the lockdown persist indefinitely, and economic conditions continue to adversely impact ourselves and our customers, hard decisions regarding retrenchments will have to be made.”

Summary of the impact of the lockdown on top ICT companies

The table below provides an overview of the impact of the COVID-19 pandemic and the extended lockdown on South Africa’s top ICT companies.

It should be noted that some of the companies opted not to comment on their work-from-home policies, salary cuts, or retrenchments.

Impact of COVID-19 on ICT Companies
Adapt IT
Work from home Yes – “Most of our employees were able to perform their duties from home”.
Salary cuts Yes.
Staff retrenchments Yes – “We are currently in consultation with 4% of our permanent staff who may be negatively affected”.
Future staff cuts No – “We do not anticipate further staff cuts”.
Altron
Work from home Yes – “We have a work-from-home policy, which is currently in full effect.”
Salary cuts Partly – “To assist in ensuring the sustainability of Altron we have had to reverse all salary increases granted as of 1 March.”
Staff retrenchments “In our Business Process Outsourcing unit, we have had to effect temporary layoffs due to the inability of some customers to pay for services”.
Future staff cuts “Retrenchments are a last resort, and will be limited as far as possible.”
Alviva
Work from home Yes – “The majority of our staff are working remotely”.
Salary cuts Yes, but only in a few isolated cases.
Staff retrenchments No.
Future staff cuts “It depends on the economy and we further impact of the pandemic”.
Blue Label
Work from home Yes – Most employees work from home.
Salary cuts No.
Staff retrenchments No.
Future staff cuts “Should the lockdown persist indefinitely and economic conditions continue to adversely impact ourselves and our customers, hard decisions regarding retrenchments will have to be made”.
Cell C
Work from home Yes – “We have had some staff that could work from home and continue to do so”.
Salary cuts Yes – “We are making use of the COVID-19 TERS Relief Funds to cover the shortfalls”.
Staff retrenchments Not COVID-19 related. Cell C previously initiated a section 189 consultation process affecting senior managerers and executives.
Future staff cuts Uncertain.
Datatec
Work from home No comment.
Salary cuts No comment.
Staff retrenchments No comment.
Future staff cuts No comment.
Dimension Data
Work from home Yes – “Employees who can work from home, do work from home”.
Salary cuts Uncertain.
Staff retrenchments No.
Future staff cuts “Should the need arise to reduce our workforce, it would be done only after exhausting all possible alternatives”.
EOH
Work from home Yes.
Salary cuts Yes – 20% for employees and 25% for CEO and executive committee.
Staff retrenchments Yes.
Future staff cuts No comment.
Liquid Telecom
Work from home Yes – Most employees work from home.
Salary cuts No – “We made use of a special leave allocation for those that were not able to work from home”.
Staff retrenchments No.
Future staff cuts No – “We don’t expect any COVID-19 related staff cuts”.
MTN
Work from home Yes – Post COVID-19, those who can work from home will be encouraged to work remotely, forever.
Salary cuts No.
Staff retrenchments No.
Future staff cuts Not currently on the cards.
MultiChoice
Work from home Yes – 60% of MultiChoice employees have been working from home.
Salary cuts No comment.
Staff retrenchments No comment.
Future staff cuts No comment.
Rain
Work from home Yes – Virtually all of their staff continues to work from home.
Salary cuts No.
Staff retrenchments No.
Future staff cuts No – “Rain is in fact recruiting more staff to better serve our customers”.
Telkom
Work from home Yes – 90% of its employees continue to work from home.
Salary cuts No.
Staff retrenchments No COVID-19 staff cuts.
Future staff cuts “We are still studying the impact of the virus and the lockdown on the business”.
Vodacom
Work from home Yes – The vast majority of employees continue to work from home, which is now Vodacom’s default position.
Salary cuts No.
Staff retrenchments No.
Future staff cuts Not currently on the cards.
Vumatel
Work from home No comment.
Salary cuts No comment.
Staff retrenchments No comment.
Future staff cuts No comment.

Now read: Here are the new level 3 lockdown rules 

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Top South African tech companies – Salary cuts, retrenchments, and work-from-home policies