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Coronavirus, Crisis, and IT Implications

According to Mikhail Zadornov, chairman of the board of Otkritie Bank, the economy is facing a recession. Every day, due to the pandemic, small and medium-sized businesses, the tourism sector, airlines, the services and entertainment sector suffer losses, this is millions of rubles. All this affects and will affect IT in the near future - there will be less work, less pay and difficulties with relocation.



Coronavirus and the crisis have already affected the economy, and, as a result, will affect developers, testers, DevOps and managers. I am not a doctor and not an economist, but for 10 years I have been engaged in recruiting in IT and a pandemic will also affect my work. In the article, I gathered the opinions of several leaders of IT companies, studied some statistics and material on the topic, and try to give a private forecast for the development of the situation. How the labor market in IT is changing and will change due to the coronavirus and the crisis, what happens to customers, what CTO do and think about the current situation, what they have with hiring, how this will affect developers in the near future.

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Everyone goes to remote work . Google , Twitter , Mail.ru Group , Microsoft, Vkontakte, Yandex , Tutu.ru , MTS , Beeline, MegaFon, Rossiya Airlines, Wrike, Dodo Pizza, Tinkoff Bank, Kaspersky Lab and other companies transferred or transferred employees to work from home. Even if the companies were ready for this, it incurs certain costs: a new format for the distribution of tasks, communication, and workflow. In the long run, a remote site is even more profitable, for example, less office rental costs.

All offline events are canceled.. At Tinkoff Bank, all the meetings, lectures, and training were transferred online. Yandex froze business trips, and the IT company Lanit can go abroad on a business trip only by agreement. JUG.ru transfer conference in June or July, the conference DUMP from it-people in November and events Ontika online or in the fall.

The coronavirus pandemic was superimposed by a fall in oil prices on March 9th. Naturally, this immediately affected the exchange rate and the share price of many companies. Shares of Tesla, Microsoft, Apple, Facebook, Amazon and other giants fell in price by about a trillion dollars. In one day (March 9), the S&P 500 lost5%, European indices 5–9%, Japanese Nikkei 5.1%, and Australian S & P / ASX 200 - 7.3%, and these are not the largest numbers.

Now (at the beginning of April 2020), the American, followed by European and Russian, stock markets are recovering their values ​​thanks to the support of $ 2 trillion of the US government, but they are far from the previous values.


Monthly index drop charts from investing.com.

What will happen next


I suppose that the virus can no longer be localized. One way or another, everyone will get sick. Restrictions can pause the flash, smooth the peak. But the virus will stop only when it has no one to infect. This will happen only in two ways: in the near future a vaccine will appear or the majority of the population will be ill and will receive immunity.

There will be no vaccine in the next few months. In the US (Seattle), people began testing the vaccine. At the same time, tests on laboratory living organisms were not carried out, several important steps were missed before testing the vaccine in humans - all this will take several months. Other studiesoptimistically promise a working vaccine in 2021. Therefore, it is logical that most of the world's population will have time to get sick by the time of mass production of vaccines. Only in this case collective immunity will develop and the epidemic will not be able to spread further, as it is now.

Quarantine will cause a protracted recession.

The coronavirus pandemic overlaps with the oil wars. The stock market of the USA, Europe and the Russian Federation fell to the maximum “bottom”. Perhaps the measures of the US government will help smooth out the decline in markets, but the global economy has already felt the effect of reducing investment. This crisis will be stronger than in 2008 and 2014 - further it will only get worse .

  • Economic growth (in any country) will slow down or stop.
  • Stock indices fell and will recover for a long time.
  • Demand for goods and services will fall. 
  • People, in general, even in developed countries, will have less money.

Mikhail Zadornov, chairman of the board of Otkritie Bank in an interview with Ilya Kopelevich, chief editor of Business FM, predicts the collapse of all economies: American, Chinese, European. Zadornov shares data that in Italy, for example, a serious drop in oil and gas demand. As a result, fuel and energy consumption decreased, public institutions and the state apparatus, plants and production chains stopped.


Quote Source

This is a consequence of globalization: resources are extracted in one country, goods are produced in the second, and sold in the third. Basically, everything is made in China: clothes, microcircuits, household appliances, antibiotics and fertilizers. Because of quarantine, the factories did not work for almost a month, which led to the disruption of supply chains: the goods were delayed at the border, the seller could not sell it, the money was frozen, and at the same time you need to pay for loans, payroll, rent. Even after quarantine has been removed, everything cannot be returned immediately.

How Crisis Affects IT


Less work awaits us. IT is a “service industry”, one way or another. All software, programs, scripts, frameworks, languages ​​and bikes are business tools.

IT solves the problems of business in the real sector and helps it make money.

Oil and gas companies, tour and hotel reservation aggregators, online stores, restaurants and cafes, banks or mobile operators - they all order software from development companies or internal teams in order to facilitate their work or automate some processes.

  • Accounting programs help to calculate taxes, calculate deductions and not disrupt the deadline for submitting a declaration.
  • CRM - faster to serve the client and automate the work of managers.
  • Design software facilitates the work of architects, planners, and engineers.
  • Banking - calculates a credit rating or payment schedule.

Non-food retail, companies that deliver or sell imported goods (not online), the fitness industry, real estate rental and sales, marketing, cinemas, air transportation and tour aggregators feel unwell. The borders between countries are crossed, hotel reservations and vouchers are canceled, and flights to other countries have been limited in Russia. Due to falling oil prices and lack of demand, the “money” oil and gas industry is also declining: people do not buy anything, there is no demand, there is no production (as Zadornov described above).

For example, according to Evotor , 73% of outlets : public catering, clothing, flower and electronics stores, stopped working in Moscow , and in the coming months every second entrepreneur will lose his job, go bankrupt, and go to the labor exchange.



The decline in demand and sales forces to reduce costs: for staff, business trips, events, the purchase of equipment and its maintenance (including software). Forced “vacations” only aggravate the situation - small and medium-sized businesses simply cannot pay payroll, rent and other expenses with zero demand.


Source: RBC . The calculation is made on the basis of data on the average daily turnover, only lost revenue is taken into account, without rent, payroll and other expenses.

In this situation, the main goal is to survive. Therefore, fewer businesses will develop something new, only supporting what they already have.

Note: all of the above does not mean that I urge quarantine or other measures. I just state the situation and reflect on what this will lead to.

All this will affect, first of all, freelancers - their main customers are just small and medium-sized businesses. In the above-described situation of absent demand, it is easier for all offline enterprises to close and dismiss staff than to take losses on non-working employees with zero revenue. Will there be orders for a new design, layout, application, testing, server setup, if the business has no customers or the business itself is no longer?

Internal software development teams for the transport, restaurant, tourism, and logistics sectors will also feel reductions, while outsourcing companies will feel a drop in the number of orders. If the business does not make money, then it makes no sense to keep the staff or order something from the developers. 

But there will still be work in IT - in delivery services and companies that provide online services. With minimal losses, and possibly with a profit, various services will come out of the crisis: 

  • food delivery: Delivery Club, Yandex.Food;
  • online trading;
  • online cinemas: ivi, KinoPoiskHD, Megogo, Amediateka;
  • online games and streams;
  • distance learning: Netology, SkillBox, Skyeng;
  • tools for remote work: Zoom or Trello.

There will be reductions in IT . If during the crisis of 2008, 100,000 people in IT were laid off, now the crisis is "stronger". I expect that in 2020 the numbers of reductions will be greater.

CMS Magazine interviewed teams and companies that specialize in web development. These are companies that develop websites, portals and take online stores, industrial and pharmaceutical companies, construction companies, and furniture manufacturers for technical support. About 70% of companies say that companies are experiencing problems because of the crisis: most of the projects have stopped, fewer sales, the cash gap is widening and the first salary delays are occurring. A third of companies are preparing to send employees on unpaid leave, and about a quarter - to dismiss.

For example, in Dodo Pizza all investment programs were frozen (and development, as a result), and they offer developers to reduce salaries, but compensate for shares in companies. By the way, Fedor Ovchinnikov himself lowered his salary to 20,000 rubles a month.



I suppose that QA, designers, UI / UX-designers, scrum-masters, product-managers will fall under dismissals. The development of new code, new features, pages, applications will be frozen. Accordingly, there will be no need to develop the design of all this. If there are no new functions (features), then you do not need to test them and reduce QA - developers can test their code themselves. This will lead to a drop in quality, but during the crisis they don’t think about it.

When new functionality is not developed, the number of tasks decreases. Remain those related to the support of the current code. Developers can cope with the entire volume on their own, without rallies, sprints and many managers who will fall under reductions. Where a team of 5 developers, team lead and product used to work, there will be two developers, one of which will be team lead and product.



Without work, of course, it's hard to stay. 



Highly qualified specialists will always be in demand. Perhaps the salary will not rise or fall slightly, and the search for a new one will be delayed with a reduction.



IT giants will come out of the crisis stronger than they were before.Small companies will close, and medium ones will suffer greatly. Those who survive will be optimized even after the pandemic. These are savings in logistics, business processes and staff.



Corporations like Yandex, Mail.ru Group, Facebook, Google or Amazon have gigantic resources to survive this “winter”. Reductions in them can be minimized, they will occupy the entire shrunken market and simply become stronger .

For example, the same Amazon captures the online market for electronics, books, children's toys, and even food, while competitors go bankrupt. The corporation additionally recruits tens of thousands of employees to its warehouses, because it can not cope with the load. Traffic on Facebook and YouTube grew by tens of percent, at Microsoftthe growth of service users is up to 40%, and Zoom has grown in capitalization to $ 43 billion in a couple of weeks, which is more than all airlines combined. Cinemas close, and their customers take away online services, such as Netflix.

Production corporations will also restore the production cycle. In China, quarantine was canceled and Apple will again produce equipment. But besides the production of phones and computers, Apple has been developing online services for several years: streaming music and video, Apple TV +, applications, games. Thanks to isolation, Apple's customers began to spend more money and time on them, which is at the mercy of the corporation.

I will add a bonus to manufacturers of thermal imagers , pharmaceutical companies and biotech. For them, a pandemic is a time of opportunity .

We are waiting for more remote work. Companies are switching to remote work mode, and after a pandemic, perhaps everything will remain so.



During crises, they get rid of those who imitated office work, those whose work is not needed. It is already clear that companies can work with a minimal staff - a lot of people are not needed. Moreover, all this is in a remote format. All processes will be reorganized to a new mode: meetings in conferences, documents in the cloud, tasks in Trello, and chatting.



Foreign orders will be less . Three million unemployed recently appeared in the US due to cuts in the domestic market. Overall purchasing power has fallen and will continue to fall. They buy less - less money in the economy - no growth - no orders for software development, even outsourced.



Most people sit at home in different countries. This means that a huge number of freelancers and remote workers will appear on the market. In quarantine, they will study something new and look for orders - competition will grow for orders, which are already so few, which means payment for services will decrease.

For now, you can forget about relocation . This is, of course, related to quarantine. Borders are closed, movements are limited. Even when it's over, because of the protracted recession, companies simply won't have the desire and / or money to transport you.



In order to somehow mitigate the inconveniences of this time and support developers in difficult times, the headz.io service launches an action. If you have lost your job or freelance orders, register at headz.io . Anyone who finds work in April through the platform, we will pay a bonus of 10,000 rubles. The action is valid for both new users and those who have long been registered. And you can improve the resume or get a free consultation on finding a job in the cvimprover service.

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