IT Job Growth Slows -- Hiring on Hold

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IT professionals looking for work should expect the number of open positions to decline in coming months as those currently employed in high-tech brace themselves for budget cuts, possible pay cuts and of course, layoffs (view a slide show of the largest IT layoffs in 2008).

Despite statistics from earlier this year pointing to job growth across technology sectors, the economic unrest that started in late September and since then has dominated the news has many IT industry-watchers forecasting a slowdown in high-tech job creation through the early part of next year. The big layoffs announced recently by such tech companies as Sun and Nokia don't bode well for the IT job market, but neither do huge workforce cutbacks at such companies as Citigroup that have big IT staffs.

According to career Web site, IT experienced the largest percentage decrease in jobs during the third quarter with little more than 1% growth, causing IT to fall from the site's top industry position for the first time in six quarters. Now ranked in the second slot, IT positions represent 12.9% of all positions posted on the career site. For instance, the number of Web-developer jobs decreased by nearly 15%, open positions for database administrators fell by 12%, and jobs slotted for system engineers and systems administrators experienced 11.41% and 7.63% decreases respectively. The number of IT-related résumés posted online dropped by more than 2% during the same time, notes.

"The number of open jobs in IT has fallen substantially year over year in key geographies. For instance, we've noticed a 25% decline in open positions in New York and 30% fewer available jobs in Silicon Valley," says Tom Silver, senior vice president and chief marketing officer at technology jobs site "IT had been relatively steady most of the summer through late September, but there has been a significant drop-off in October and November. For the near term, the IT job market has slowed, no doubt."

As recently as mid-October, the American Electronics Association trade group reported that the pace of high-tech job growth slowed to 1.3% between January and July 2008. Then, in mid-November global outplacement consultancy Challenger, Gray & Christmas reported that the economic downturn had reached the tech sector in no uncertain terms: The number of jobs cut by Oct. 31 in the telecommunications, electronics and computer industries totaled 140,422, a 31% increase over the 107,295 tech-sector jobs cut in all of 2007. The firm reported that another 19,779 cuts have been made since the start of the fourth quarter. "In addition to Sun's announcement, Applied Materials and National Semiconductor have announced job cuts in November. By the end of the year, we may also see cuts from Cisco, Qualcomm and Nokia, all of which are reporting falling sales amid the weakening economy," said CEO John Challenger in a statement.

Challenger, Gray predicts the job cuts in 2008 could reach 180,000, which would be the largest annual total since 2003, when technology firms announced 228,325 positions lost.

"Tech bottomed out in 2003 and when it came back, it was at a much slower and more steady rate,"'s Silver says. "In the past, the tech sector led the economic downturn. Now tech is trailing behind other segments."

The outlook is at best cautiously optimistic and at worst, bleak for the coming year. "The last time the tech industry experienced job losses, it was a correction of the market; tons of money was poured into tech and when that dried up, it took the industry 18 months to figure out what to do next," says Michael Kirven, co-founder of high-tech staffing firm Blue Wolf. "Now the downturn is led by the financial markets and in high-tech, we are fairly confident we won't see the same impact as we did earlier this decade."

Others appear to be bracing themselves for another lean year, as fewer positions become available, less money is dedicated to IT budgets and high-tech compensation starts to shrink.

CDW, a provider of technology products and services for business, government and education, reported that among 1,058 IT decision-makers, 41% expect cost-cutting and management to be the biggest priority for 2009. Of that same survey group, 57% reported the economy as the biggest obstacle to growth in 2009, a 16 percentage-point increase over 2008. About one-quarter listed cash flow or access to finances as a hurdle for the coming months, and 19% cited internal operational costs.

"A lot of small businesses today need access to finances to fund payroll, and the lack of access to that is a scary proposition for many in IT for 2009, considering the financial-sector meltdown," says Mark Gambill, chief marketing officer at CDW. "There are areas of technology that must continue to be invested in, such as security, but the market has acknowledged that technology investments will have to be intelligent and targeted going forward."

The hold-off on investments in technology not only indicates fewer new positions but also marks a trend toward lower compensation for existing jobs. According to the Yoh Index of Technology Wages, compensation for high-tech positions in the third quarter shrank by more than 6% from the same period last year. Earlier indications showed wages up by nearly 2% compared to the same time in 2007, but as weeks progressed, nearly flat increases shifted to negative growth, the recruiting services firm reports.

"The major staffing trend for IT in 2009 is that managers are going to try to conserve IT staff and retain in-house talent in appropriate cases, but they will be cutting back on consultants and contract work wherever they can," says Andrew Bartels, vice president and principal analyst at Forrester Research.

This story, "IT Job Growth Slows -- Hiring on Hold" was originally published by Network World.

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