Technology's Negative Impact on Jobs

Share it on Twitter  
Share it on Facebook  
Share it on Linked in  
Slide Show

IT Employment Trends to Watch in 2011

Two-in-five IT employers plan to increase hiring in 2011, up 10 percent from 2010.

In past economic recoveries, technology spending and hiring have risen in parallel, with companies increasing both to drive growth. That doesn't appear to be happening now, however, writes Forrester Research analyst Andrew Bartels on his blog. While corporate profits and technology spending have both seen impressive growth, hiring has remained flat, leading him to wonder whether IT investments are actually hurting U.S. job growth.


Digging into the data, Bartels says 41 of the 62 non-government industries in the North American Industry Classification system increased IT investment from 2007 to 2010, while cutting employment at the same time. In a fifth of the industry groups, the contrast was especially sharp, with tech investment rising by 10 percent per year from 2007 to 2010 while employment fell 7 percent on average. In a quarter of industries, tech investment rose by 7 percent on average while employment declined 2 percent on average.


While his analysis "shows correlation, not causation," writes Bartel, it "suggests that it is certainly possible that ... companies with good profits have chosen to invest in technologies that allow them to operate with fewer employees on a broad enough basis to be hurting job growth in the U.S."


I've had my eye on this worrisome trend for a while. In September I wrote about the impact of automation and offshoring, noting both were part of technology's seeming inability to drive hiring in the U.S. As one example, I mentioned HP's plans to spend $1 billion and cut 9,000 jobs over the next several years as it automates its data centers.


More recently, my colleague Susan Hall shared Gartner's list of eight IT predictions for 2011-2015, one of which was the elimination of 25 percent of labor hours associated with IT services by 2015, thanks to tools and automation. Automation also plays into an InfoWorld story, which notes increased IT spending on hardware and cloud services but not on hiring.


The article also mentions offshoring's impact on U.S. jobs, something that Susan wrote about in November. She cited a ZDNet item that predicted "full transactional process automation and enablement of self-service options will eventually eliminate much HR, IT, finance, and procurement work altogether and will continue to be the most sustainable strategy for structural efficiency improvement."


If the performance of IBM's Watson supercomputer on "Jeopardy!" last week is any indication, some knowledge workers' jobs could be threatened as the price of artificial intelligence technology drops, reports USA Today. While computers, even sophisticated ones like Watson, will never replace humans, IBM does have plans to move the "Deep Question" technology behind Watson into industries such as medicine, finance and law. Big Blue has partnered with Nuance Communications Inc., producer of the popular Dragon speech recognition software, to develop a "physician's assistant" technology based on Watson that will help physicians making rounds with diagnoses and treatment recommendations.