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

Ann All

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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Add Comment      Leave a comment on this blog post
Aug 7, 2008 11:54 AM Bob Bob  says:
Looks to me we need more H-1b's. You do know the Mantra of korporate AmeriKa [sic} > H-1B's create 5-7 more jobs for Americans. Reply
Aug 9, 2008 6:37 PM Weaver Weaver  says:
The groups measure different occupations.The AeA measures something called "High Tech" an AeA defined group of occupations. The National Association of Computer Consultant Businesses -- measures consultants.I'm not aware of any BLS Occupational group called "IT" but they do have a "High Tech" a "High Tech Manufacturing" a "Stem" occupations etc... On thing is for sure though, if an occupational group lost 44,000 jobs and 56,000 H-1Bs were added to the occupational group, 100,000 persons lost jobs. Reply
Aug 11, 2008 9:14 AM Alan Krishnan Alan Krishnan  says:
How many H1's really came in 2007 October to 2008 September? 56,000 were approved, but who has data on how many actually came in? I suspect that with a fear of shortage, most petitioners are filing applications without jobs in hand, in anticipation of jobs and many applicants are probably operating through more than one employer, and so some might have more than one approval in place!The decline in IT jobs is temporary and most probably linked to the decline in BFSI positions. Once this mess is behind us and the economy in general picks up, companies will start investing again in technology and hiring will go up. Reply
Aug 12, 2008 9:40 AM Anonymous Anonymous  says:
How the H1B works:This is how the US IT contracting market works. There are three beneficiaries of the Byzantine system.1) The American client: Saves a lot of money by hiring a contractor, instead of paying the benefits associated with a direct hire (regular) position. Prefers to look the other way with regards to all activities taking below his/her own domain of influence. Prefers to hire candidates with at-least 5 years of experience on paper in a myriad of technologies. Doesn't care to check if the experience is genuine or fraudulent, wants to avoid doing costly background checks.2) The Indian(desi) vendor(includes big Indian IT consulting firms): The middleman who takes advantage of his/her green card/citizen status, by acting as a pipeline between the client and the employee. The green card is an immigration platform for the H1B holder, which if s(he) loses is subject to deportation. Bills twice the amount to the client and pays half to the H1B holder. 3) The Indian employee: Usually the most uninformed of the three, is scapegoated into faking a resume, with the requisite 5 years of experience in the plethora of sought technologies, often learning all of those in a rapid-track training session, does it with impunity due to need to kickstart an IT career and the lure of earning dollars. The fresh graduate, usually a masters or phd student, again takes refuge in the Indian vendor, for escaping the clutches of the immigration law, which deems that s(he) is subject to deportation immediately on failure to have/maintain a job. Currently F-1 OPT regulations allow a grace of 90 days to find a job, H1B does not have a single day grace period. As direct hire positions are very less in number for international students and due to the stringent OPT time-frame of finding a job, often they (usually of Indian origin) take the Indian vendor route. Of course, international students of other nationalities also sometimes take this route.Vulnerable Indian job-seekers get exploited further by NOT KNOWING OR UNDERSTANDING THE LAW. The truth is prospective US - IT job seekers willing to get a H1B are much more than the demand in the US market. Indian vendors (can be a tier-one Indian consulting company-the biggies, but usually a mid-sized staffing/placement company located anywhere in the US), by virtue of the owner(s) having a green card/US citizenship, have the power to sponsor(for immigration purposes) candidates for jobs. What the Indian vendor provides is a immigration platform for the Indian employee, because US immigration regulations stipulate that the moment(not even a day's grace period is allowed) a candidate loses his job, he is subject to deportation to the home country. Of course, upon reaching the USA, it is revealed that there is no job available and job-hunting with a real American client begins then. The Indian vendor exhorts the employee to pads his/her resume for the minimum 5 year requirement imposed by the American client. The lure of the Indian vendor eventually sponsoring a green card for him/her keeps the rebellious impulses of the H1B holder in check, keeping him/her in servitude and grateful for all the hardship he/she has to endure all the while. All's well that ends well is the motto of the whole landscape, no questions asked!!!! Reply

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