10 Alarming Figures on the Business Impact of COVID-19
We’re only just beginning to see the impact of COVID-19 on businesses around the globe. But already the data is staggering.
With government-mandated lockdowns across the globe, companies in numerous industries are facing massive cuts and closures. Even in sectors that are shifting to remote work, coronavirus is causing major operational disruptions just about everywhere.
Here’s what we know so far.
1) Massive shift to telecommuting
In the U.S., one of the biggest initial responses to the pandemic was the shift to remote work. Tech companies like Amazon, Facebook and Google were among the first to encourage employees to work from home. In early March, both Amazon and Facebook announced that some of their Seattle-area employees had tested positive for the virus.
Companies across the country soon followed suit, especially as state officials began forcing non-essential businesses to close.
- In a survey by CNBC, roughly 85% of senior tech executives said that at least half of their workforces were now telecommuting.
- 25% said their operations were completely remote (and others were quickly approaching that goal).
2) 1.5 million jobless claims projected
For industries in which working from home is not feasible, COVID-19 has been catastrophic. Businesses have announced massive layoffs, particularly in the retail, hospitality and travel industries.
- 3 million Americans claimed unemployment for the week ending March 21 – by far the largest in U.S. history.
- That number dwarfs the previous record for unemployment: 695,000 claims filed in the first week of October 1982.
- The 3.3 million claims is on top of the 281,000 claims filed the week prior, which was already the biggest single-week increase since the 2008 financial crisis.
3) 53% say IT systems were not prepared for this
Businesses have been rapidly adjusting their disaster recovery planning for COVID-19. But most could not have seen this situation coming the way it did. Mandatory social distancing forced businesses to decentralize their operations virtually overnight, with little time to make sure their infrastructure could support it.
- 53% of surveyed tech executives said they never stress-tested their IT systems for an event like this.
- While well-prepared businesses do regularly test for events such as traffic surges, security breaches and natural disasters, COVID-19 has introduced an entirely new shift in behavior that most businesses did not anticipate.
4) 40% increase in COVID scams
Numerous reports show that hacker groups are taking advantage of the COVID-19 crisis. U.S. officials are already seeing an “unprecedented” wave of coronavirus scams. Examples include everything from phishing emails disguised as credit card notifications to malware-laced COVID-19 infection maps.
These threats are making a challenging situation even tougher. Attackers are exploiting employees’ fears and confusion, as well as vulnerable IT systems.
- One tech company reported a 40% rise in phishing attacks and other cyber scams.
- The FBI warned of a surge of coronavirus fraud schemes, including fake emails from the CDC, charitable organizations and banks, as well as schemes for cures and test kits.
- More than 4,000 coronavirus-related domains were registered in the first 3 months of 2020. Cybersecurity firm Check Point predicts that a COVID-related domain is 50% more likely to be malicious than other domains registered during the same time period.
5) Revenues are cratering
Entire industries are suddenly on the brink of collapse as businesses are forced to close and customers are forced to hunker down at home. On the cusp of a $2 trillion stimulus bill being passed in the U.S., the travel and hospitality sectors have been hit especially hard.
Hotels have been forced to close. Popular resorts have cancelled reservations for their busiest season of the year. International flights have been banned. Airlines like United and American Airlines have cut their flight capacity by up to 85%.
To stay afloat, many companies have had to make drastic cuts:
- Delta announced a 50% pay cut for its corporate officers and a 25% cut to directors and managing directors.
- An estimated 1 million hotel jobs (roughly 45% of the industry’s workers) were projected to be eliminated in the next few weeks.
- Meanwhile, digital advertising behemoths Google and Facebook are expected to lose $44 billion in global ad revenue as businesses in numerous industries put their ad campaigns on pause.
6) Operational realignment and workforce protection
In addition to letting some employees work from home, businesses are doing everything in their power to keep operations running while also preventing the spread of COVID-19.
For many, it’s not enough to simply say, “You can work remotely.” Businesses need to consider how they can help keep their workers safe, healthy and productive.
American consulting firm McKinsey & Company interviewed hundreds of businesses on how they’re adapting to the crisis. They identified 5 core areas of response, consisting of the following:
- Workforce protection: Policy and management changes; multi-channel communication; telecommuting; staggered work shifts; engagement with public-health officials.
- Supply-chain stabilization: Realignment of suppliers; inventory management; production-capacity optimization; demand management; logistics optimization.
- Customer engagement: Communications and transparency with customers (B2C and B2B); spread-prevention guidance for customers; customer outreach and support programs for COVID-19 related concerns.
- Financials stress testing: Scenario modeling based on epidemiological and economic outlooks.
- Nerve-center integration: leadership alignment; trigger-based portfolios of actions.
7) 78% of manufacturers anticipating financial impact
The manufacturing sector, often considered to be a gauge of overall U.S. economic health, is bracing for substantial losses. The National Association of Manufacturers said that 78.3% of surveyed manufacturers anticipate a financial impact. More than a third have already faced supply chain disruptions, while many are also struggling to keep their workforce at full capacity.
- The auto industry quickly dropped from being the United States’ top producer to the #4 spot, behind Aerospace/Defense and medical manufacturing.
- Many of the world’s largest manufacturers have temporarily closed factories in some countries, including automakers, smartphone makers, consumer electronics firms and appliance manufacturers.
- A 4-week analysis of North American production shows that the sector reached a peak around March 10, but has been declining sharply every day since.
8) 50% of small businesses at risk of closure
The impact of COVID-19 on small businesses has been especially destructive. With lockdowns in numerous states, many businesses have had to close their doors. And since smaller companies typically don’t have the same resources as large businesses to survive such disruptions, many could be on track to permanent closure in the months ahead.
- Analysts predict that as many as 15,000 retail stores could close permanently, according to CNBC.
- In a survey of 1,500 small-business owners, more than half said they wouldn’t be able to continue operating their businesses for more than three months.
- Economists forecast that the U.S. restaurant industry stands to lose $225 billion because of COVID.
9) Downtime costing $10,000+ per hour
Even before the coronavirus outbreak, operational downtime was already extremely costly. For small businesses, downtime stemming from data loss and other disruptions can cost more than $10,000 per hour. For larger businesses, that number balloons to more than $5 million per hour, according to figures from Datto.
Given the current situation, these numbers could increase even further. A decentralized workforce, combined with stressed IT systems, create the perfect recipe for a major data-loss event at small to mid-sized businesses (SMBs) – at the worst possible time.
- Without a robust data backup system, small businesses take about 7 hours to recover from a data-loss incident, according to figures from IDG.
- Data-loss due to ransomware can be even more costly: a survey of IT providers revealed that the average cost of downtime for SMBs was $46,800.
- The cost of downtime can vary significantly depending on factors such as the size of the business, amount of loss and the length of the IT outage.
10) 80% of consumers worried about health and financial effects of coronavirus
It’s not just businesses who are concerned. The economic impact of COVID-19 is directly tied to how consumers view the crisis and how it affects their buying behavior. Even if the outbreak were suddenly gone and social-distancing laws lifted, businesses still need to be concerned with the lasting financial impact on consumers.
Consumers are already drastically changing their buying behavior, in large part due to government mandates and affected workers having reduced disposable income. The question is: will spending resume once the economy is restored?
What’s the Business Impact of COVID-19?
Businesses need to be prepared for the fact that the fallout from COVID-19 could continue long after the infections begin to diminish.
- More than 9 in 10 Americans believe the outbreak will lead to an economic recession, according a Washington Post-ABC News poll.
- As of March 23, 87% of surveyed consumers expected moderate to several financial impact from the outbreak (up from 73% the week before).
- 89% have taken at least one action in response to the outbreak, such as reduced use of public spaces, working remotely, purchasing emergency supplies and canceling travel plans.
We’re here to help.
If your organization is evaluating business continuity systems or work-from-home collaboration solutions during these uncertain times, we’re here to help. Request a free demo or contact our experts at Invenio IT: call (646) 395-1170 or email success@invenioIT.com.