The IT staffing sector is feeling the effects of the Covid-19 pandemic, with many clients needing their consultants to work from home and everyone being concerned about staying healthy. Covid-19 is hitting client industries, although some are faring a bit better than others. Among IT staffing firms, they are seeing reductions in demand and some clients are taking longer to pay. Concerns have also arisen about IT operations in India, which is on lockdown.

For now, the full scope of the damage of Covid-19 remains unknown, as does its duration. Then there are the legislative relief packages emerging from Congress, with their own unknowns.

“Obviously it’s going to have a significant adverse impact.” said Mark Roberts, CEO of the TechServe Alliance, a trade association of the IT and engineering staffing and solutions industry. “A lot of folks are engaged in planning for various scenarios and continuing to assess the situation on a day by day basis.”

IT staffing firms are responding to the situation with internal workers working from home and helping client companies move more of their consultants to remote work — all while dealing with the impact of Covid-19 on the bottom line.

The full effects of Covid-19 are hitting now, in March, which traditionally tends to be one of the busier months for IT staffing, says Harley Lippman, CEO and founder of Genesis10, an IT staffing provider with locations throughout the US. Some openings that were supposed to start in March have been pushed back into April for now, he says.

“Things are going to be back to normal; what no one knows is exactly when,” Lippman says.

Genesis10’s own workers are working from home, and the company is making safety the top priority for employees, contractors and clients. And it issued guidance for working from home given all the potential distractions. That guidance includes such things as setting up a specific room in a home to work, not waking up later just because it’s easier, and setting a regular program to follow. Fortunately, IT consultants tend to be more agile and flexible as well as more used to working from home.

Mixed Bag

Still, Covid-19 is hitting many client industries hard.

“Some contractors are allowed to work remotely and are continuing business as usual,” says Derek Bullen, president of S.i. Systems, a Calgary, Canada-headquartered IT staffing provider. The entire country of Canada currently is on lockdown because of Covid-19.

There are contractors who have seen their work cut in half or more, and others are being furloughed until further notice, Bullen continues. Some contracts have been cancelled. A few clients are also reducing their pay rates, and there are  firms paying their invoices more slowly.

Companies such as telecommunications firms are doing better than others because everybody is working from home, he says. Grocers and pharmacies are also doing OK. However, nobody is doing that great.

Bullen says S.i. Systems is planning for a scenario where the Covid-19 disruption continues for 16 to 18 months. “This isn’t a problem you can fix economically; this is a virus,” he says. “And we’ve got very few choices between now and a treatment or vaccine.”

Right now, all S.i. Systems internal employees are working from home. The company already had a work-from-home infrastructure in place because of Canadian weather.

Some industries have been hit harder than others, says Scott Aicher, president of TechServe Alliance and VP of IT solutions at Belcan, based in Cincinnati. Still, there are some specific segments where there is opportunity such as IT security and positioning virtual resources as the new norm. Automakers, however, are facing headwinds.

One positive is companies are becoming more used to professionals working from home. That’s good because it allows companies to access IT talent from a broad geography rather than just a local area. “I hope the virtual workforce becomes more the norm from the IT perspective,” Aicher says.

But the struggles are real for both staffing firms and client companies.

“The industry is seeing some requests for delayed payment,” although that hasn’t been widespread, Aicher says. On the other hand, he is seeing some companies sharing the burden by paying workers for the next couple of weeks to keep them onboard despite the economic slowdown. While it’s not the majority, more companies than expected are doing it.

Still, the Covid-19 crisis is obviously not good news, and some firms may struggle making it through. But in the end, Aicher believes the IT staffing industry will end up stronger than ever, and given the speed the downturn came on and projected duration, things are likely to be bounce back as fast.

“As challenging as this market is, I’m optimistic about coming out of this much stronger,” he says.

Dhar Patadia, CIO at IT staffing firm Collabera, says all business lines are being affected. Airlines and hotels are suffering while healthcare clients doing a bit better.

And working from home has definitely become a thing.

WFH: Benefits and Challenges

Collabera has contractors working from home at clients’ request, and its internal workers have been assigned to work from home as well. Collabera is based in New Jersey, a state that is currently in lockdown.

Patadia says getting workforces to work from home, at this scale, can be costly for companies that are not accustomed to having remote workforces in terms of both hardware and software. Some client companies are scrambling to find laptops so workers can operate from their homes and have asked staffing firms for help locating them.

“It’s interesting in the US, but when you go out of country, it becomes even more difficult,” he says of working from home. “In the US, people have worked from home before but not to this scale.” Other countries may have challenges with bandwidth or broadband connectivity as well as cultural challenges.

Of course, some jobs cannot be done from home.

Collabera is working with clients to support them when they request contractors work from home.

Genesis10’s Lippman says some client companies are concerned about IT operations in India.

The country is a major supplier of IT services. But right now it’s on lockdown and some are worried about the reliability of the power grid and internet infrastructure — especially for workers who must now work from home, Lippman says. Some client companies are now looking for solutions within the US.

Planning Ahead

Lippman notes this Covid-19 crisis differs from emergency situations in the past, such as 9/11 and the 2008 financial meltdown, in that this time, clients are searching for ways to keep people employed. Most of Genesis10 clients are really doing a great job in keeping people working, he says.

The Covid-19 pandemic isn’t easy on anyone. However, one lesson for IT staffing firms may be to have business continuity plan in place for disasters such as this and test it no less than annually, Lippman advises.

Genesis10’s own plan helped the company move forward amid the pandemic without skipping a beat. “If there’s any lesson out of this is have a strong business continuity plan and have it reviewed to address any emergency that comes up,” he says.

When putting together the continuity plan, they envisioned a catastrophic weather event such as a hurricane. Then Covid-19 cropped up. The next catastrophic event will likely be something different; it’s anyone’s guess as to what that will be.

The Virtual Connection

The large amount of people working remotely is creating a trend that may continue even past the current Covid-19 situation, said Josh Nazarian, president at Eliassen Group, an IT staffing firm headquartered in Reading, Massachusetts. Fortunately, many clients and other companies have successfully built out their infrastructures for professionals to work remotely even though working from home may not be the norm for them.

People are also becoming much more accustomed to using video teleconference platforms such as Microsoft Teams and Zoom. “In a very short period of time, this has become a new norm for our organization,” Nazarian said. And the habit of using the teleconference tools may remain even after this crisis ends.

Eliassen Group has also put less of a focus on business development in favor of other ways to help clients. For example, the company is working to connect clients with one another as they work their way through the Covid-19 pandemic.

“There’s going to be a time to engage in the transactional part of our business, but right now we’re just focused on helping people,” Nazarian says.

Legal Aspect

There’s also the legal and legislative aspect. The TechServe Alliance’s Roberts said his organization is educating staffing firms on the impact of the new laws such as the expanded sick leave and the stimulus package. The stimulus bill, which is more than 800 pages long, was just passed by Senate last week. The TechServe Alliance is still analyzing the details around the financial support included in the bill that may be available to staffing firms.

“We’re going to be watching it very closely to see how we can support IT and engineering staffing firms weather the crisis,” Roberts said.

The Future?

Overall, the Covid-19 crisis will have a lasting impact on the industry, it’s just a question of how much. What will the IT staffing industry look like when the pandemic is finally over? What impact will the stay-at-home orders have as well as the new laws being drafted in response to the virus? Only time will tell.

Some expect the industry to rebound, possibly in a big way.

“While business may decline temporarily, it will ramp right back up very quickly,” Lippman says. “Nobody should take their foot off the pedal because when [the recovery] comes it’s going to come ferociously.”