Local IT jobs are safe

Analysts predict that, while international IT companies cut jobs amid the global economic recession, local jobs are safe for now.

“The US, Europe and Asia are in deep recession and have to look at all their international operations in order to cut costs and to survive. In many ways, SA has been buffered up until now, but the effects of the recession will, without a doubt, affect SA within the next six months,” says Steven Ambrose, analyst from World Wide Worx.

Ambrose says 2008 was a good year for technology development and innovation and expects this year will see a considerably slower progression in innovation.

He adds that times are going to be tough, but not as tough as they could have been without the foreign investment coming into the country.

However, while most local jobs seem to be safe, some global companies have shed local employees, as is the case with Symantec.

The software giant confirmed yesterday it intends to achieve a 4.5% cost savings by retrenching local staff in order to offset the effects of the global economic crisis, as reported by ITWeb. It's expected that as many as 800 Symantec employees could be affected globally and that five South African employees have already been retrenched.

When IBM was approached about rumours that it would be cutting jobs in 2009, the company responded that it would not comment and this was merely market speculation.

On a local level, Microsoft SA dismissed rumours it would be cutting jobs locally. “While the global economic downturn has, without doubt, impacted the outlook for many companies in 2009 and beyond, Microsoft remains optimistic about the future.

“While we may be a little more cautious in our hiring process, we will continue to employ people in key positions in our South African team, and we'll remain completely committed to the local market,” says Mteto Nyati, MD of Microsoft SA.

Nyati explains: “To be honest, we see this downturn as an opportunity. Our focus is, therefore, on helping customers, partners and our own internal teams to do more with less, and to use technologies in ways that make the most sense in a market like this. So virtualisation, voice/video conferencing and other cost- and time-saving tools are high on our agenda right now.”

Ambrose adds: “2010 will create a buffer for SA from feeling the effects of the economic downturn. The net effect overall won't be as bad as the US, Europe or Asia. New broadband infrastructure will result in a lot of activity in the telecommunications space. Infrastructure developments will significantly soften the impact of the recession.

“The South African IT industry will restructure itself and, while we will be feeling some financial pain, it will not be at the same level as the US and Europe. There's a large amount of investment and expansion into Africa in the telecommunications space. This can be seen with Zain and MTN, which have been aggressively buying some of the smaller players.”

IDC analyst Richard Hurst says: “Job cuts are a result of global economic slowdown. It is something that was to be expected. What we are seeing though is cuts in the resources sector, such as mining, and this is a logical extension of the slowdown.”

He adds: “SA and Africa are not quite in the eye of the storm yet. Because we are on the periphery, it will probably take another 18 months for the effects of the slowdown to hit our shores. I think that most companies will wait for the effects of the slowdown to hit them before they start implementing job cuts.

“In the ICT sector though, Africa is still set for growth. So, ICT should be better off because of the demand in the market. But right now it is not possible to say how the slowdown will impact the local industry across the board, until the ripple of the global slowdown is felt.”

Irnest Kaplan, MD of Kaplan Equity Analysts, claims that in the South African IT market local companies will strive to use their current employees more effectively, and retrenchments will not be as severe as their international counterparts.

“The economic recession is having a direct impact on international companies such as Symantec and IBM, which have local subsidiaries in SA,” notes Kaplan. “Generally speaking, these companies will cut back on jobs across the board where the markets are slowing down. The offshore market is going to be hit harder by the recession. SA is facing a skills shortage in the IT sector and companies will take this into account and utilise their employees more effectively through projects and additional work.”

Kaplan points out that the merger between Gijima and AST saw the strategic decision to retain all staff instead of conducting mass retrenchment, which Kaplan believes was a positive move that resulted in successful projects being rolled out.

Related story:
Symantec cuts local jobs