Business Optimism Seems Untethered to Hiring Plans

Susan Hall

Surely there's an economic barometer to say whatever you want it to say. Consider this: The CBIZ Small Business Employment Index, which polls companies with fewer than 300 employees, fell by 0.81 percent in September, the third month in a row in which it indicated a decline in small-business hiring.


Yet the National Federation of Independent Business released a survey on Tuesday showing a 0.8 point increase in small business confidence in September. That boosted its Business Optimism Index up to 88.9. But wait: Only a net 4 percent plan to create new jobs.


A Deloitte survey of 696 executives of midsize U.S. companies, meanwhile, found business leaders' projections for growth of the economy as a whole declining since a previous poll in April. My colleague Ann All has been keeping tabs on projections of IT spending, which remain pretty rosy, and the Deloitte survey echoed that, showing a willingness to invest in technology, but not so much in jobs, according to this Chicago Tribune story.


Just Monday, Ann quoted from more analyst research, this from the Nucleus Research website:

Rather than invest in hiring, retaining, and potentially paying the costs of laying off staff, companies are choosing to invest in technology to improve customer service and support, analyze data for better decision making, and generate more productivity from the employees they still have.

The Deloitte survey found companies trying to squeeze more out of their businesses without adding jobs. And while 70 percent reported increased productivity since the recession, they attributed it to improvements in business processes and technology. Controlling labor costs was a big concern. According to the article:

Hiring was ranked low among reasons for the increase, as many companies have found ways to automate tasks done by low-skilled workers.
"In other words, if a job can be automated - if it can be reduced to an algorithm, an application, or a set of instructions - it probably will be," Deloitte said in its report.

The three reports I've mentioned here are not specific to IT. Yet CompTIA reports that its IT Industry Business Confidence Index for the fourth quarter fell by 1 point to 51.9 on a 100-point scale. That's the third quarterly decline this year, eWEEK reports. CompTIA concludes that "economic malaise has clearly" set in. Though executives remain confident in IT and their own companies, Tim Herbert, vice president of research at CompTIA, spoke of "dimming confidence in a short-term fix to a shaky world economy."


Of the responding IT companies, 54 percent say they are understaffed by 5 percent or more. Another 22 percent report being at full staff, but that they would like to hire more workers to expand their business. The survey also found 55 percent of companies require IT workers to multitask more and 45 percent require salaried workers to put in more hours. Nearly a third (32 percent) report having postponed or canceled projects due to staffing shortages. Also:


  • 74 percent reported difficulty in finding people with the right skills for their jobs.
  • 54 percent cite stalled economic recovery as their biggest business threat; 45 percent pointed to general lack of confidence.


Tying together the economic indicator and small-business angles on a much more granular level, OnForce, a company that rounds up local service providers to fulfill major contracts, launched its first quarterly IT Field Services Confidence Index, patterned after the Consumer Confidence Index. It polls local service providers with revenue of at least $10,000 and fewer than 100 employees.


Among the findings:

  • 51 percent of IT field service professionals surveyed cited reduced business spending and fewer IT service job opportunities.
  • 73 percent expect businesses to use more contractors and fewer full-time employees for IT work in the next six months. Less than 10 percent expect to see increased hiring.
  • Yet 63 percent of those who specialize in networking saw increased business or no impact from the downturn in the economy.
  • Networking and cloud computing services were expected to be top areas of increased demand in the next six months. Services for mobile devices ranked second highest, with these IT pros expecting greater interest in security services.
  • Networking services professionals have the most positive outlook for the next six months, with more than 36 percent expecting to see increased opportunities.
  • Those who run a one-man or -woman shop were more optimistic than those with employees.

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