THIRUVANANTHAPURAM: Covid-19 has impacted the information technology sector in Kerala after its markets in the USA and Europe have started cancelling projects. While the large companies are yet to come out with a statement on the current situation, a majority of small and medium companies have reported severe cash flow crisis due to the project cancellations.
“The IT companies are in a state of panic as their points of contact in the US and Europe are not responding. There is no work.” said Pinaki Krishnapillai, CEO of MicromCRM, a Technopark-based IT company. According to him, the contracts of small companies are likely to become void soon, except for those working in the healthcare sector.
A survey conducted by the Group of Technology companies (GTech), the pan-Kerala IT industry body, found that the pandemic had caused a business slump, reduced cash flow, delayed collection and delinquent loans. GTech has also constituted a Covid-19 Support Cell to understand issues companies are facing in the short and long term.
Small and medium companies employ 70 per cent of the over one lakh IT workforce. Some of the companies are already mulling over salary cuts of employees as a survival strategy. GTech would take a call on the issue when the member companies meet on Monday, said Vijay Kumar, CEO of InApp and chairman of the support cell of GTech.
“We believe that the industry will have to take some very careful and sensitive steps to tide over the financial and operational impacts of this crisis over the coming months.” said Alexander Varghese, chairman of GTech.
GTech has proposed a number of relief packages which would help companies overcome this economic slump, which include rent waiver, tax relief and subsidies on salaries. According to Vijay Kumar, the government should create a supportive environment for employment during the crisis.