Will There Be a Jobless Recovery for IT in 2011?
Will there be a jobless recovery for IT in 2011?
That's the most important career-related issue facing IT executives today, as they make staffing decisions for next year while also worrying about their own job prospects amid a steady stream of corporate downsizing and offshoring announcements.
Ask any IT pro who is out of work right now, and the answer to this question is a resounding yes. They'll point out that more IT infrastructure and support jobs are being outsourced, and that it's harder than ever to find full-time employment.
Talk to recruiters and placement firms, and a different picture emerges. They report a rise in corporate IT shops looking to hire application developers, project managers and mobile device experts -- if not on a full-time basis, then at least for short-term projects.
We polled five experts in IT hiring trends, and here's what they had to say about tech job prospects for 2011.
Yes, There is a Jobless Recovery for IT
Jerry Luftman, a distinguished professor at Stevens Institute of Technology in Hoboken, N.J., says that by definition we are in a jobless recovery in the United States.
"The economic gods in Washington have declared that the recession has been over since the summer of 2009, but we also know that the job situation has not been very good," Luftman says. "If we look at the next year or two, it will probably remain a jobless recovery."
Nonetheless, Luftman predicts that IT professionals - entry-level and experienced - will have better job prospects in the coming year than other types of professionals.
"The use of IT is expanding everywhere," Luftman says. "There isn't an industry, there isn't a part of an industry, that doesn't see new and innovative opportunities to leverage IT. Whether it's in changing infrastructure, considering going to a virtualization or cloud computing, or whether it's new, innovative applications that leverage business intelligence or [customer relationship management], the opportunities are growing."
Luftman sees job opportunities growing not only with emerging technologies but also in support of legacy systems. In particular, he sees rising demand for IT professionals with experience in Cobol, IBM's CICS transaction systems and IBM's IMS database management system.
"As the Baby Boomers start to retire, there's going to be a huge gap in the number of IT people with experience in legacy systems," Luftman says. "The biggest companies still have a significant amount of their production environment running on legacy systems...and as Boomers retire, they aren't going to have enough people to backfill these jobs."
It's possible that support for legacy systems will go offshore. In a recent survey of CIOs that he conducted for the Society for Information Management (SIM), Luftman found that offshore outsourcing is expected to increase from 5% of IT budgets in 2010 to 7% of IT budgets next year.
"That's a big jump," Luftman says. "I think part of it is that organizations are not finding the talent they are looking for and are willing to go offshore...There are Cobol people in India, and they are ready to support a legacy application."
Luftman advises IT professionals to build up technical skills in such areas as business intelligence, virtualization, cloud computing, enterprise resource planning and information security because that's where he sees the most demand in coming years.
But Luftman also points out that in year-after-year of surveys he conducts, CIOs continue to emphasize business skills over technical skills.
"They're looking for management skills, industry-specific skills, communications skills, marketing skills, presentation skills and negotiation skills," Luftman says. "These are all just as important as companies look to hire people."
IT hiring remains sluggish because of outsourcing and offshoring, asserts Janco Associates, a consulting firm. The firm reported that total employment in IT rose only 0.17% in November 2010 compared to a year ago.
"It is a jobless recovery for IT because of two things," explains Janco Associates CEO Victor Janulaitis. "IT organizations are not in a hiring mode...and we have companies outsourcing a lot of lower-level and entry-level jobs. Unless you're somebody who has prior experience or lots of contacts, it's very, very difficult to find a job."
Janulaitis says companies are outsourcing more technical work, in such areas as managed IP services such as VoIP and VPNs. In addition, companies are hiring contractors for desktop, helpdesk and security services, and they are preparing to put more applications in cloud computing environments.
"It's the grimmest of the grim for telecom and network infrastructure specialists," Janulaitis says. "This is an area that people have outsourced or eliminated in a lot of organizations."
One bright spot that Janulaitis sees is increasing demand for experienced application developers.
"If you can develop applications with HTML5, if you know how to integrate data and create customer service applications, those skills are in demand," Janulaitis says. "The skills that are not in demand are running a data center, running a communications center or running a help desk."
Janulaitis sees continued demand for IT people with business skills, such as project management and risk management. He also sees job opportunities with contractors and for hourly or project-based work.
"A lot of organizations are still on hold. They're not going to hire anybody. They're not going to add IT capabilities unless it creates additional revenue or improves productivity," Janulaitis says. "The issue I think for people who are out of work is that the likelihood of them finding full-time employment is very, very slim. The likelihood of finding part-time work is greater."
No, There isn't a Jobless Recovery for IT
Outplacement leader Challenger, Gray & Christmas has issued some of the gloomiest U.S. unemployment reports in recent months. Yet CEO John Challenger is optimistic about the tech sector's prospects in 2011.
"Tech is doing better than the rest of the economy," Challenger says. "For many other sectors in the economy, the tech spend is up. They have a lot of cash on their balance sheets and on their books, and they can start investing back in themselves after two or three years of being in survival mode. They've let their tech investments lapse, so they're starting to spend more again, which means newer systems and newer technology. And they need people to bring it up and integrate it and solve issues that come up. That's creating more demand for tech workers."
Challenger says he is seeing companies grow their IT workforces, and that they're looking for experts who can integrate the latest technologies - particularly mobile devices and applications - into the enterprise.
The hottest skills in demand are "what is new," Challenger says. "Tech workers have to constantly keep learning the new technology and help companies utilize it."
Challenger has a positive outlook for technology despite heavy job cuts reported in November. The outplacement firm said U.S. companies announced plans to reduce their payrolls by 48,711 jobs in November, the highest level in eight months.
Nonetheless, Challenger, Gray & Christmas points out that employers have announced 60% less job cuts in 2010 compared to 2009: roughly 500,000 compared to 1.2 million a year ago.
The biggest cuts right now are occurring in state and local government agencies and non-profit organizations, and that's expected to continue in 2011.
"The private sector went into this recession from a job standpoint in 2008 and 2009," Challenger says. "The government is just going into this recession now from a job standpoint, and who knows how long that will last."
Challenger points out that it's been a rocky recovery in 2010, but that he feels like the economy is picking up steam. His biggest worry is that the unemployment rate is still hovering around 9% nationwide.
"There are a lot of people out of work...That's one of the most stubborn and difficult after-effects of this recession that has occurred, and that's making recovery suspect," Challenger says. "As more jobs are created, more people will try to get back in the workforce, which is another thing that will keep the unemployment rate high."
[Also read: Why IT jobs are never coming back]
One indicator that IT unemployment rates are headed down is the growing placement of part-time and project-based workers.
Technisource, a leading IT temp placement firm, reports a 15% rise in corporate use of contingent IT workers compared with a year ago. Additionally, Technisource has seen its revenues related to temp-to-permanent placement of IT works rise 50% in the last six months.
"We are very bullish for 2011 in the IT industry," says Michael Winwood, president of Technisource. "The use of IT contingent workers and contractors is up, and we're also seeing the permanent placement side of the market pick up the second half of the year. We see confidence" among IT executives.
Winwood sees the most demand for programming and project management skills. In programming, he sees interest in the emerging HTML5 standard as well as standbys such as Java and WebSphere.
"We see a lot of capital expenditure being unleashed on new application development, application consolidation and infrastructure," he says. "We see two different types of project managers in demand: one project manager that can oversee a lot of the new application work, and as we move toward cloud computing, another kind of project manager that understands that world."
One shift that Winwood expects to drive corporate IT investment is the upgrade to Windows 7. He predicts that recently merged companies - particularly in the financial services sector - will use the upgrade to Windows 7 as an excuse to streamline their applications portfolios.
"Many of our clients have held up and are still running on the Windows XP platform," he says. "Now we see a wave of interest in the Windows 7 arena, not just in infrastructure and operating systems but also in applications."
Winwood says entry-level IT workers should look for opportunities at service desks as a way of gaining experience, while experienced IT staff should tout their project management and business analytical skills.
"We see very healthy demand from a client standpoint," Winwood sums up. "When I look to 2011 and 2012, my concern is more the supply of IT professionals vs. the demand from clients."
Technology Web site Dice.com has hard numbers to back up its claim that there's no jobless recovery in IT. The Web site has more than 72,000 tech-related job postings in December 2010, an increase of 38% compared with a year ago.
"The general trend is up significantly," says Tom Silver, senior vice president of North America for Dice Holdings. "If there's a jobless recovery, that's not what we're seeing in tech."
Silver says job postings for two high-tech hotspots - Silicon Valley and New York City - are up 30% compared with a year ago. Another positive trend is that 60% of Dice.com's tech job listings are for full-time positions, compared with 57% a year ago.
The two IT skills that are most in demand on Dice's Web site are Java programming and Oracle database management.
But the fastest-growing need is for mobile application developers.
"You can get a job if you know something about how to program Android or iPhones. Those jobs weren't even being listed a year ago. The number of positions looking for Android skill sets is 700 today," Silver says. "It's the same thing with cloud computing...I would expect that trend to continue going forward."
Silver admits that the opportunities for IT professionals aren't nearly as numerous as they were in the summer of 2007, when Dice.com listed 100,000 tech jobs. But it's a lot better than it was a year ago, when only 47,000 tech jobs were posted.
"The outlook has improved for most employers. Projects that had been put on hold are now being green lighted, and companies realize that they have to upgrade their systems," Silver says. "They have to do things to make their business competitive, and that's going to continue."
Read more about infrastructure management in Network World's Infrastructure Management section.