The coronavirus (COVID-19) outbreak and its impact on the economy will likely trigger four waves of layoffs, according to Challenger, Gray & Christmas, Inc., an employee outplacement and executive coaching firm.For channel partners and MSPs, customer layoffs could ultimately impact monthly and annual recurring revenues (MRR and ARR) — especially those based in per-seat monthly fees based on end-customer headcounts, ChannelE2E notes.Still, Challenger warns employers against making knee-jerk cuts, especially since re-hiring talent in a snap-back economy can prove extremely challenging, expensive and time-consuming.
Coronavirus: Four Stages of Staff Layoffs
Despite that caveat, Challenger foresees four likely stages of layoffs that include...- Wave One - Supply Chain Issues will likely involve companies affected by the supply chain. The challenge started when Chinese factories shut down shortly before the Lunar New Year on January 25, 2020 to slow the spread of Covid-19, Challenger notes. By February 2020, two million shipping containers were idle -- a record, according to Alphaliner. That is half a million more containers than were idled during the height of the financial crisis in 2009, Challenger notes.
- Wave Two - Industries at Ground Zero including cruise ships, international tourism, hotels, conferences, and airlines, which are experiencing so-called Demand Shock. According to the trade organization Airlines for America, the downturn in demand could cost airlines between $63 and $113 billion in lost revenue this year, Challenger notes
- Wave Three -- In-person Services and Manufacturing Jobs at restaurants, retailers, and entertainment venues where customers stop shopping, as well as manufacturers, bus drivers, and schools where workers refuse to come in due to outbreak fears, Challenger predits.
- Wave Four -- Recession-Related Layoffs.