Thursday, May 25, 2017

[EJinsight] Companies are being short-sighted in laying off IT staff

After a recent massive lay-off in the IT department of an international bank, Cathay Pacific announced on Monday a redundancy plan, with its IT department taking the brunt.

According to media reports, at least 77 IT workers in Cathay Pacific are facing redundancy but that is only the beginning. It is said that the company is planning to eventually lay off 150 workers, 20 percent of its entire IT staff.

In fact, many current employees in the airline’s IT department have lamented unfair treatment by their employer. As some of them put it, compared with their colleagues in other sections, they are often the last to get a pay rise but always the first to get laid off.

Information technology is indispensable to business operations, so much so that the degree to which business owners are able to make good use of information technology to find new customers and boost their business to a large extent determines whether their companies will thrive into the future.

Unfortunately, many old-school board members and top managers of big businesses are completely out of touch with the ongoing technology trends and continue to underestimate the role of information technology in today’s business world.

As a result, many of them simply regard their IT workers as insignificant and expendable, which explains why they are always the first victims whenever their companies want to cut costs.

The fact that companies often choose to lay off IT workers as a quick fix to boost their short-term financial performance only shows their tunnel vision and short-sightedness.

Information technology is instrumental in maintaining good customer service, promoting sound corporate management and even guaranteeing the safety of passengers.

What is bizarre about these redundancies is that many big corporations often outsource their internal and external IT services to sub-contractors after they have laid off their own IT workers. After a period time, they would re-hire them and re-establish their own IT departments, having found that the service provided by their sub-contractors is unsatisfactory.

The fact that there is little job security in IT positions has put off many young talented people, leading to a brain drain in the sector.

What gives rise to the low priority given to IT workers is the perception among big business operators that the only function of their IT departments is to support other departments and frontline workers.

As a result, IT departments are often regarded as something that incurs cost rather than make profit.

Such a view is completely outdated and obsolete in the age of the internet.

In the face of fierce competition from budget airlines, traditional airlines like Cathay Pacific need a good IT team more than ever.

Contrary to popular belief, the IT department can be a growth engine in its own right and generate profit rather than being just a money-guzzling parasite.

It all depends on whether you can revolutionize your business mindset and fully utilize its potential.

In fact, Air France has noticed the profit potential of IT and has taken painstaking efforts to develop new digitized technologies and devices to boost its quality of service.

Cutting IT staff might save costs in the short run but it would take a heavy toll on profitability and competitiveness in the long run.

This article appeared in the Hong Kong Economic Journal on May 23 2017

Translation by Alan Lee


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