Bright spots for tech in a dark economic picture
- 17 September, 2008 08:56
The state of today's economy has triggered many economists, job experts and hiring managers to warn of layoffs and hiring contractions, and tech pros themselves have become skeptical about job security and future opportunities. Despite these concerns, the outlook for US employment, particularly in the tech sector, is not as dismal as some fortunetellers would lead us to believe.
An increasing number of studies and reports are emerging, boasting of the strength of the IT profession and indicating that job opportunities will only continue to grow as we move into the next decade.
In July, the US Bureau of Labor Statistics reported the seventh consecutive month of negative job growth. More than 51,000 jobs were slashed. Although not as severe as the loss of 72,000 jobs that was predicted, this cut still brought the total number of unemployed in the US to 8.8 million -- 5.7 percent of the population. That's 1.6 million more than in the same month last year, and a four-year high.
But although the overall job market continued to worsen in the second and third quarters, employment in the IT sector is not nearly as bleak. In fact, according to the National Association of Computer Consultant Businesses, IT employment is on the rise.
This year, businesses have added close to 90,000 IT professionals to their rosters -- a gain that lies in stark contrast to the job market as a whole, which had cut a total of 463,000 jobs by the end of Q2. What's more, in June the number of IT pros employed in the US reached an all-time high of close to 4 million.
Wages in the IT sector are holding steady. The latest Yoh Index of Technology Wages found that pay remained stable throughout the second quarter and even finished up slightly (0.29 percent) from June of last year. It's not robust growth, but it's also not the black hole everyone has been predicting.
So, why are tech jobs defying the pace of the employment market as a whole? To begin, the economy's current struggles are different from those earlier in the decade, when overvalued tech stocks caused the bubble to burst, sending many technology companies, and the economy, tumbling. This time, the slowdown was sparked by the subprime mortgage crisis, putting contractors and real estate moguls -- not techies -- at greatest risk.
Second, there are certain skills that a business simply can't live without -- skills that no recession or economic downturn can eliminate the need for. In fact, in many cases, the workers who possess such skills become even more valuable during an economic slump or recession, because they are integral to keeping the company afloat and moving forward.
For example, regardless of the status of the economy, there will always be a demand for tech workers involved in R&D or product development, since they create or enhance a company's product line.
All about relationships
Another area where companies need to maintain a steady supply of talent is in customer relationship management (CRM). Maintaining good relationships with customers is integral to a company's success, especially when a slumping economy is prompting consumers and businesses to curb their spending.
A recession is no time to be losing customers, and gaining new ones can be difficult. The last thing a business wants or needs is for its customers to become dissatisfied and jump ship for a competitor.
That said, highly skilled tech workers are needed to maintain the CRM software and programming that companies such as SAP have made available. And there's currently a shortage of these workers. For example, the demand for SAP talent currently outweighs the supply by more than 30,000 workers. Recruiters simply cannot find people to fill these roles fast enough.
In today's slowdown, many businesses are retaining their high-tech talent and looking to hire and to expand their technology budgets. According to the last bimonthly CDW IT Monitor, 25 percent of midsize businesses are planning to hire more IT workers. What's more, the number of midsize companies expecting to increase IT budgets reached 64 percent, an increase of 10 percentage points since April.
Growing in the middle
A recent report from the Computing Technology Industry Association (CompTIA) also found that companies in the middle market (those with 100 to 1,000 employees) are looking to bring in new technology talent to take their businesses to the next level of technical sophistication.
Many of these companies, which post yearly revenues of US$50 million to $2 billion, are holding strong and even operating in growth mode through the economic downturn. Businesses in this range often have a different perspective than smaller or larger companies, which may experience the effects of economic turmoil more directly or severely.
Many midsize companies are not publicly held, which means management can run the business without worrying about the effect on company stock or investor sentiment. In addition, cuts in IT spending are not nearly as dramatic as they are elsewhere in the economy. Companies are willing to invest more in hopes of emerging from the downturn ahead of their competitors.
CompTIA also found that 60 percent of midsize companies are looking to beef up their supply of networking talent; 57 percent are planning to hire tech experts in security, and 48 percent want to increase the number of staffers with skills in nonspecific server technology.
Companies know that in order to stay competitive and ensure that they can survive beyond the economic downturn, they'll need to stay on top of the latest technological advancements. This is particularly true when it comes to security.
Fraudsters and cyberthieves are increasingly adept at stealing sensitive information. In cases where thieves are successful, businesses can suffer financially, in addition to losing customer trust -- a loss that can have severe consequences.
Another trend currently driving the tech job market is the environmental movement. As Americans' environmental consciousness continues to increase, there is a growing demand for virtualization and "green" technologies that can help reduce the carbon footprints of businesses and individuals.
More and more companies are experimenting with work-from-home options and are in need of technologies that will keep these remote workers connected to colleagues, databases and systems. As long as environmental preservation remains a priority for businesses and consumers, workers who possess the skills and talent necessary to develop and advance these technologies will continue to be in strong demand.
In the end, employees who can create value, reduce costs, enhance product development and improve the customer experience will always be in demand, even as the economy struggles. The skills that are not related to core business functions or that are outdated -- such as skills required to maintain legacy programs -- will be the least required and the most likely to be eliminated if job cuts become necessary.
According to the CDW IT Monitor, 51 percent of all businesses are expecting IT budget increases in the next six months. Combined with the already solid hiring trends and stable wages of tech pros, and the anticipated growth of IT staffs among midsize companies, the employment outlook in the tech sector is promising.
The belief that technology is the bellwether of overall wages and employment is fairly widely accepted. With strong wages and hiring in the tech sector, we can anticipate that these positive trends will spill over into other areas of the economy and improve employment in other sectors -- important steps toward pulling the country out of its current troubling state.
Jim Lanzalotto is vice president of strategy and marketing at Yoh, a leading provider of high-impact talent and outsourcing services and a unit of Day & Zimmermann. For more information, please visit www.yoh.com or contact him directly at Jim.Lanzalotto@yoh.com.