Effects of Coronavirus on IT sector

TÜBİDER prepared a report titled “The Effects of Coronavirus on the IT Sector”. The report reveals what needs to be done for the IT sector during the pandemic period.

The report stated that: “We are going through difficult and unexpected period. COVID-19 Pandemic of 2020, which was as a growth year for our country and our sector, unexpectedly changed the way the future predictions for our sector. It is now being discussed how much shrinkage will take place and how long the biggest Global Economic Crisis after 1929 Great Depression will last. In the second quarter, the USA is expected to shrink by 20-30% and the European Region by 15-20%. All countries are looking for remedies to spin economy wheels with loan packages and grants. Unfortunately, our country gets its share in the same situation. How long the new normalization process will last and how the next process will be compared to before 2020 is still a matter of discussion. We will experience what the world after COVID-19 will look like.” Regarding the IT sector, the following issues were mentioned in the report:

“The IT sector acts as a locomotive for all sectors. As can be seen in the pandemic period, our sector stakeholders are the main source of public and private sectors to remote access and their survival. It is our primary duty to ensure this and to execute it without reducing the quality of service. However, we need to ensure that our stakeholders survive in this process, as well.”

IT Sector status before the pandemic

According to IDC data from the 20th Anniversary report shared by TÜBİDER after the 20th Anniversary Event; the IT market was at 8 billion USD level in 2019. The market figure should be at least 15 – 25 billion USD.

IT Sector status after the pandemic

According to IDC data, a small contraction was expected in 2020 before the pandemic, the shrinkage was predicted to be mainly in the main markets such as mobile phones that consumers use intensively. The software and service markets used by the corporate customers would continue to grow at a certain scale. However, after the pandemic, the market is expected to shrink by almost 50%.

What needs to be done in the IT sector…

* IT should be the priority sector in economic supports.

• Today, increasing the efficiency of all sectors is proportional to the IT infrastructure.
• IT creates Butterfly Effect for all other sectors. Therefore, the IT sector should be included in every application of economic support priority preferences and special supports should always be provided.

* We must have sector inventory.

–       Unfortunately, as well as many sectors, the IT sector also does not have an inventory.

–       This inventory should cover all companies operating in Software, Hardware and Service. In this inventory, the competencies of all the human resources, the operational fields of the companies, the required labor force and the reorganization of the educational infrastructure for this should be included and updated.

* IT Sector Union should be established.

• Unfortunately, there is no measurement or restriction for companies operating in the IT sector. Anyone can launch a business in this sector.

–      The IT sector cannot gain the status of a chamber due to the differences in the product and service categories. Therefore, the solution is the IT Sector Union. One of two alternatives can be preferred in this regard. The IT Sector may be a Union on its own, as TURSAB, or it may have a structure such as the Insurance Sector under the TOBB roof.

– There are studies in the past for both options and can be updated.

– Thus, the activities and development of our sector can be managed much more efficiently.

– Providing the legal infrastructure is one of the priority issues to ensure that our sector operates in accordance with professional rules, ethical values and qualifications.

* Digitalization and Digital Transformation should be specially supported in SMEs.

• Information Technologies – Hardware, Software and Service – are unfortunately not used adequately in SMEs that provide an average of 55% of the country’s economy. As TÜBİDER, our proposal for the solution of this issue that relevant Ministries, KOSGEB, NGOs, Universities, Chambers of Industry and Commerce and Development Agencies should carry out an effective COORDINATION both to raise awareness in our SMEs and to increase the competencies of IT companies operating in our sector.

* It should be ensured that infrastructure investments continue at full speed.

• According to TELKODER – Electronic Communication Sector Tracking Report – February 2020, fiber length has been determined as 371.304 km at the end of the third quarter of 2019. The number that our country needs is 3 times more than the current one.

* Support should be provided for VAT and SGK premium payments.

– It should be ensured that the institutions in the IT sector benefit from the exemptions applied to other sectors of the concise declaration, VAT Withholding and SGK premium payment processes.

– The VAT payment should be made after the collection of the invoice of a service and/or product by the seller party.

– With the new normalization process, it is expected that distributors and large chain stores will take longer to make face-to-face sales after the pandemic period. The main problem that such companies will experience will be the personnel and rental expenses. It is essential to implement an aid package that will optimize the employee and rental expenses of these companies.