07 Jan The state of IT careers: What will become of IT jobs lost in recession?
Madison, Wis. – The economic recession already is impacting information technology hiring and compensation, but will IT jobs lost in this recession remain gone forever?
WTN put that and other questions to IT professionals following the results of a NetworkWorld salary survey conducted last fall. Like other recent studies, the NetworkWorld survey found that deteriorating economic conditions were impacting IT hiring, compensation, and budgets, and it revealed some interesting attitudes among IT personnel.
The results came as no surprise to experts interviewed for this article, several of whom are wrestling with flat or reduced 2009 technology budgets. For several years, labor experts have predicted a high demand for certain IT skills, but what impact will the recession have on the IT jobs connected with those coveted skills?
The NetworkWorld survey was conducted in mid-September at about the time the full extent of the nation’s economic crisis became known, but it’s more than 1,800 IT respondents already understood that the nation was headed toward recession.
While most have tried not to cut pay, they have pulled back on some major expenditures and pared back discretionary spending, the publication said. This is consistent with other recent IT surveys and recent Wisconsin CIO profiles published by WTN.
As for individual IT employees, one-third said salaries were frozen at 2008 levels, and three percent said their pay was cut. The remainder said they got raises, but four in five from that group got increases of four percent or less.
In some cases, planned raises were cancelled or simply put off until the economy regains some traction.
Meanwhile, the attitudes of IT professionals at the onset of a recession was, in some cases, defiant. While the vast majority of respondents, 97 percent, were either satisfied or highly satisfied with their jobs overall, they were not happy with an overall average pay increase of 2.3 percent (by comparison, the inflation rate at year’s end was 3.7 percent), especially when so many business improvements are linked to process transformation and IT.
In addition, almost half the respondents said they feel underpaid, and only 20 percent felt their compensation packages were more competitive than similar packages offered elsewhere.
Not every technology professional placed an emphasis on salary, which ranked eighth among 10 factors and below overall compensation that included salary and benefits and categories related to work-life balance and job security.
Job security is likely to loom large with IT stalwarts like Hewlett-Packard having announced thousands of job cuts, Microsoft reportedly ready to lower the boom, and Intel reporting a 20 percent reduction in quarterly revenues.
Alex Yarmulnik, vice president and chief information officer for Midwest Airlines, found nothing surprising about the NetworkWorld findings. He indicated that three percent pay raises probably are generous for some companies since many of them are shrinking their workforce.
As for the people that are unhappy with a three percent raise, he said there are always people who have a difficult time putting things in perspective – until they lose their job and are then willing to work for no increase.
“I do, however, believe that most of the folks understand what’s going on and are grateful for what they have,” he added.
Aaron Stratman, Wisconsin market director for Kforce Technology Staffing, also found no real surprises in NetworkWorld’s findings. Despite any dissatisfaction, he said most people could understand that companies have to pull back on giving raises to protect themselves in uncertain times.
“That certainly doesn’t mean they can’t seek employment elsewhere,” he noted. “Everyone’s situation is different, but the majority of people we talk to are always willing to listen to new opportunities in order to improve upon their situation no matter what the economy bears.”
Nearly a quarter of survey respondents classified themselves as active job seekers, meaning they’ll look for new positions this year. Yarmulnik believes there be less mobility and job-hopping over the next couple of years because “being the last guy hired is not a good thing in today’s economy. He will not be surprised if by spring the number of “loyalists” increases dramatically.
“I know of many companies that are planning a five percent or more reduction in IT staffing and budgets,” he noted. “Most of the CIOs I talk to are getting rid of all consultants as the first step to reduce the expense. Where do you think these guys can find a job nowadays? I get a lot of resumes from IT consultants whose assignments were terminated.
“They would be happy to replace any internal IT employee who is not happy with their three percent increase.”
In a NetworkWorld podcast, Rich Milgram, CEO of the job site Beyond.com, predicted that high level IT professionals would begin to fill more junior-level roles or lower their salary expectations, and that more experienced people will be subject to layoffs while more lower-level people are spared. One of the things that monthly employment numbers don’t show, he noted, is the number of people that take lower-paying jobs when higher-paying jobs are eliminated in reactionary, sometimes short-sighted cost-cutting moves.
Milgram also said fewer people overall would be needed due to automation, but that is mitigated by the fact that some IT people will be needed to automate.
Yarmulnik cited five factors that will contribute to decreasing demand for internal IT staff, including:
- Worsening global economic conditions.
- Increasing trends of outsourcing “commodity” services on the infrastructure side, including network and server management, storage management, help desk, and e-mail.
- The emergence of viable software-as-a-service vendors that do a decent job of hosting back office and other applications (Salseforce.com, NetSuite, Ceridian, and Workday).
- Even with forecasts for a decline of labor arbitrage, there will be a continuing need to off-shore as companies look for more cost-effective IT alternatives.
- The emergence of many affordable, out-of the-box and easy-to-maintain packaged applications – from enterprise resource planning to industry-specific software that no longer needs to be developed by internal IT staff.
That’s not to suggest the lost jobs are lost and gone forever. Yarmulnik thinks most of the jobs will come back when the economy does. “When the economy begins to expand and the funding becomes available, the time to market for IT will always lag the business demands and senior management expectations,” he explained. “Once business opportunity is identified, the delivery is never soon enough. Hence, a lot of companies will be hiring back just to keep up, at least for while.”
Stratman also believes that lost IT jobs will come back when the economy surges back. “There is a correlation between the two, and we will see more jobs open up as the economy opens up,” he predicted. “It is only a matter of time and how things play out.”
David Cagigal, chief information technology officer for the Madison-based Alliant Energy, indicated that now is the time for IT professionals to assess their career options, even though not many companies are looking for talent due to hiring freezes, and the music has stopped for IT professionals that have rotated to other jobs after two or three years.
He also believes it’s time to reflect on the non-salary aspects of the job, such as benefits, flex hours, location, culture, job content, responsibilities, and harmony with the leadership and team. “I value IT professionals that understand the business as they practice their profession,” Cagigal noted. “In doing so, they also understand the economic conditions and circumstances in good times and bad.
“These are one of the bad times. Therefore, business-orientated IT professionals should see this coming and anticipate the leadership’s action to control expenses when the top-line revenue begins to decline.”
Stratman was a bit more optimistic about the prospects for finding IT employment. “Do your homework to ensure your situation will be improved to some degree by the choice you make,” he advised. “Whether that is salary, benefits, security, or advancement, we (Kforce) are still finding good opportunities for our candidates to capitalize on.”
Milgram said IT occupations are strongest where people can contribute to cost reductions and revenue increases. Among the IT workers that will be in high demand are engineers that can improve security and streamline networks, data administrators that can help people get to data, and business analysts that can decipher data and create meaningful and actionable reports.
“Be aware of your value to the organization,” Milgram said, “and be sure you’re adding bottom-line value.”