The number of companies furloughing staff and cutting salaries could more than double between March and June, according to according to a Gartner survey of 161 finance executives.
The survey found 11% of respondents reduced staff in March. Some 25% said they plan to make cuts in May and June.
“CFOs are unsure what reopening will look like and have little visibility into when revenue will start to normalize,” said Alexander Bant, a vice president at Gartner. “This is driving CFOs to look for the next round of structural cost cuts to preserve cash for the coming month.”
“Companies are being deliberate about rapidly reducing headcount in areas of the company they do not believe will return to normalized revenues anytime soon. They are protecting roles in parts of the organization that will be necessary to meet a return of demand across the coming two quarters,” Bant said.
The survey found companies were planning to invest more in robotic process automation, cloud-based technologies, and advanced analytics as they prepare for social-distancing rules to be eased or lifted.
Twenty-four percent of finance executives said they expected more spending on RPA, 20% expected more spending on cloud-based ERP, and 19% expected more spending on advanced analytics. Open hiring and capex investments were the favorites chief financial officers intended to reintroduce spending on when revenues returned.
“Conversely, we see several areas that CFOs tell us they will not bring back spend right away. Notably, real estate spend, sales reward trips, social media marketing, and service provider contracts do not look like they will be making a rapid return to previous expenditure levels,” Bant said.
An unprecedented 20.5 million jobs were lost in April as the U.S. economy reeled from the impacts of the COVID-19 pandemic. The real unemployment rate was 22.8%, though the Secretary of the Treasury, Steven Mnuchin, said the actual jobless rate may be 25%, comparable to the Great Depression.