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Brrr! So Hot Earlier this Year, IT Hiring Hits a Cold Spell

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Just five months ago, I wrote about how demand for IT jobs seemed to be holding firm, even as other sectors halted hiring and/or cut jobs. But it didn't take long, about a quarter, for the slowing economy to hit the IT industry.

 

According to numbers from the U.S. Department of Labor's Bureau of Labor Statistics, the information industry lost 13,000 jobs in July and 44,000 jobs over the past 12 months. This report contrasts sharply with earlier surveys from two industry trade groups, the National Association of Computer Consultant Businesses and AeA, both of which found the economy added more than than 90,000 IT jobs over the past year.

 

I am not the only one puzzled by these seeming discrepancies in IT job numbers. CIO Insight blogger Brian Watson asked readers to weigh in with their opinions and 68 of them did. Some of the issues cited are those I address regularly in this blog: H-1B visa holders being hired for IT positions, worries over outsourcing, increasing reliance on contract workers and discrimination against older workers.

 

The Bureau of Labor Statistics numbers do mesh more closely with two just-released surveys, one from Goldman Sachs & Co. that found a growing number of managers considering IT staff cuts and another from Janco Associates that put demand for IT jobs at its lowest point since 2004. Janco also noted that salary increases for IT personnel over the past year largely have not kept up with the cost of living.

 

InfoWorld blogger Edward Schwartz cites three factors contributing to the staffing slowdown: companies cutting tech spending; no new "must-have" technologies to prompt them to open their checkbooks; and fading interest in Web 2.0 technologies.

 

A recent InformationWeek survey lends credence to the tech spending cuts. It found that 40 percent of tech executives scaled back spending from their original projections in the last quarter. An article about the survey mentions that many companies are making trade-offs, citing examples such as a retailer adding in-store kiosks but putting off process improvements such as a data-cleansing initiative.

 

More numbers from the survey: While 28 percent of respondents expect this year's IT budget to match 2007 spending levels, 39 percent say they will reduce spending. Thirty-two percent are being asked to cut a percentage of their IT budgets, 29 percent were told to plan on spending less than original projections, and 24 percent were asked to cut specific projects. The article is packed with graphs that illustrate these and other spending snapshots from the survey.

 

The top two items on a list of projects or investments most likely to be cut? New hires and infrastructure upgrades.

 

Yet there is a small silver lining in the staffing cloud. While three-quarters of the companies cutting back on IT say they are not adding new staff, just 7 percent are being asked to shed positions.

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