Reality Check: The Tech Job Market in 2009

Despite recent layoffs, experts see strong signs of life – at least for tech jobs.

By Mathew Schwartz | February 2009


Is the tech job market destined to head anywhere but further into the dumps before 2010?

At
all levels – personal, corporate, national, global – the situation
seems dire, the economy in shambles. Congress is debating an $800+
billion stimulus plan. Brand-name companies Caterpillar, Sprint Nextel, and Home Depot collectively slashed more than 62,000 jobs in a day. Technology sector bellwether Microsoft plans to cut 5,000 jobs over the next 18 months. Intel,
with fourth-quarter 2008 profits down 90 percent, will eliminate 6,000
jobs and close several factories, including one in Oregon. Even Google has cut back on perks and hiring.

In
short, everyone is stressed out, overworked, maybe bitter – and that’s
just the people who still have a job. But there’s this: All is not
bleak in the tech jobs sector. In fact, far from it, say experts.

No IT Death Knell

To
understand why, consider what happens when a technology company. "They
are typically laying off people throughout the organization, not just
IT workers," notes Todd Thibodeaux, president and CEO of the Computing Technology Industry Association (CompTIA). "That means all types of jobs are affected – IT, sales, marketing, white collar, administrative."

Furthermore,
far from being unexpected, the current layoffs reflect more of what’s
financially already happened as opposed to what’s going to
happen. "The numbers certainly aren’t good, but the headlines we’re
seeing now on layoffs and earnings decline are based on 2008
fourth-quarter performance, which we knew would be bad,"says
Thibodeaux."In that regard, they are trailing indicators."

Layoffs Come in Three Flavors

Even so, the specter of layoffs at companies like Microsoft, Sony and Intel is alarming. But David Mitchell, senior vice president of IT research at researcher Ovum,
cautions that "all job losses are not equal." Rather, the recent
layoffs fall into three broad categories, not all of which are scary:

  • SOS: "Some
    companies are in genuine financial distress and need to make immediate
    cost reductions in order to make payroll," says Mitchell. Smaller
    companies comprise the bulk of this category, and he warns that for
    many, job cuts "will still not guarantee their survival."
  • Course corrections: "Larger
    companies have used redundancies to refocus their efforts – these are
    planned course corrections to improve future results rather than
    decisions forced upon them." Examples include Microsoft (minor
    correction), as well as Intel (major correction required due to longer
    PC-refresh cycles, and the popularity of lower-margin netbooks).
  • Streamlining: Eliminating duplicate jobs after a merger or acquisition, for example at Hewlett-Packard.

On
balance, says Mitchell, "big (IT) companies continue, for the most
part, to do well." He cites recent results: Microsoft’s fourth-quarter
net profit of $4.17 billion ("a large number in anyone’s books"),
Google’s "quarter-on-quarter revenues up 18 percent," rising profits at
IBM, and strong revenue growth at HP.

Many
small technology concerns are also doing fine, says CompTIA’s
Thibodeaux. "Some segments of our business, especially small
(businesses) that sell to other small (businesses), have not been as
affected as the large enterprises," he says. "These companies generally
run lean to begin with, so they aren’t as susceptible to some of the
problems larger companies face."

Waiting for the Upturn

Unfortunately,
when the economy will recover is anyone’s guess. "When will the credit
markets loosen up? That will have a lot to do with how soon a
turnaround begins," says Thibodeaux.

"The best experts are saying it’s going to be six months, 10 months for this to end," says Jerry Luftman, distinguished professor and associate dean at Stevens Institute of Technology in Hoboken, N.J., and vice president for academic affairs at the Society for Information Management. But of course, it could take much longer.

Revising the IT Hiring Outlook

Until
then, how will the recession affect IT hiring? When SIM surveyed its
members in June 2008, respondents said their plans for 2009 included
increasing their IT budget (for 44 percent of respondents), increasing
IT hiring (43 percent), and higher IT salaries (75 percent). More than
six months later, do those results hold? "That head count will be on
the rise ¿ seems to be holding firm," says Luftman. "Will it be as much
as was suggested in our study? Probably not."

Ditto
for overall IT spending: It will likely still increase, just not by as
much as people had hoped. But compared with non-technology sectors,
"that’s reasonably good news for the field," he says.

Furthermore,
Luftman predicts demand will exceed supply for many tech positions. "We
know that the shortfall for IT people with appropriate skills is
falling far short, and will get worse over time."

Why Businesses Rely on IT

For example, in 2007, the Bureau of Labor Statistics predicted that through at least 2016, demand for numerous tech positions would see the biggest levels of any job growth. It even forecast that demand for networking would outstrip nursing.

Relatively
speaking, those predictions still seem to hold because IT skills remain
crucial to corporate success – especially during a downturn. "While
organizations may have slowed their spending on new IT projects,
they’re still pushing to squeeze more out of the systems they have in
place," says Thibodeaux. "That requires the expertise of IT
professionals who can identify ways to use technology to make the
business operate more efficiently or less expensively."

IT Careers: Much Growth Potential

Of course, some IT careers are destined for faster growth than others. Says Thibodeaux: "There’s a need for systems engineers, application developers and database gurus. Security credentials and wireless skills
are in high demand and short supply as organizations move to become
more mobile without compromising security." Also, don’t discount the help desk.
"Many employers still struggle to find computer support technicians,
which is still the best first job for new workers to break into the IT
industry," Thibodeaux says.

Mathew Schwartz writes about technology and business from Pennsylvania.

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