IT service providers in Poland: up to PLN 500 million losses due to COVID-19

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The Association of IT Service Employers (SoDA) prepared a balance sheet concerning losses related to the current Covid-19 pandemic. The sum of reported losses by enterprises in Poland exceeded PLN 50 million.

Conclusions of the report

The authors of the SoDA report asked companies belonging to the Association to assess the impact of coronavirus on business operations in two categories. The first was the impact of COVID-19 on business, while the second asked for an assessment of the coronavirus’s impact within 12 months. The vast majority of responses are negative and most of the responses come from the third week of introduction of restrictions in Poland (the quarantine was introduced between 10 and 12 March).

The total amount of reported losses was PLN 52,849,000. The companies participating in the survey could indicate the losses using categories such as loss of the project, reduction of the project scope, postponement of the project and reduction of remuneration for the project. Out of these losses, about PLN 38 million were indicated as loss of a project.

You could say that the IT industry is the easiest to control during a pandemic. Theoretically, IT service companies do not feel the impact of a pandemic due to the possibility of remote working and having employees with high technical skills. However, it should be noted that the entire IT industry, especially the IT services industry, is highly dependent on other sectors of the economy, and the pandemic causes the ‘freezing’ of many investments and suspension of new projects.

PLN 500 million less proceeds

According to PMR data, the value of IT services in Poland in 2019 was over PLN 14 billion. The loss indicated by SoDA reflects 0.35% of the whole market. However, if we take into account the number of reported losses (76 out of 117) and the number of Polish companies engaged in custom software production and provision of IT services (800-900), the above value may be higher. It can be assumed that the loss is at least 3.5%, i.e. about PLN 500 million.

Nevertheless, IT companies are moderately optimistic about the second half of 2020. The restrictions on doing business are gradually being lifted. Further sectors are being de-frozen. COVID-19 has also shown the direction entrepreneurs have to take in order to avoid negative effects of similar events in the future. Digital transformation, the growing importance of the online channel, the cloud and the emphasis on remote access to resources will safely force companies to invest.