IT employment shrinks in September

Three analyst firms report IT job reductions, cite volatility, fears from the 'fiscal cliff'

One month does not make a trend, but IT employment dipped last month after a long stretch of gains.

Analysts can only speculate as to the reasons for the decline. It may be an indication of market volatility, a short pause in hiring, or concerns over the so-called U.S. "fiscal cliff."

Overall global IT spending is being adjusted downward. Last month, J.P. Morgan, Forrester and IDC all lowered their IT spending forecasts for the year. The analysts blame Europe's instability and a consumer pullback in China, but they see the U.S. as an overall stronger IT market.

The Brookings Institution, in an update of an economic index prepared with the Financial Times, said the U.S. economy, when compared to other economies around the world, "remains the sole bright spot with economic activity, employment and financial markets all showing unexpected although still modest strength. There are signs housing markets have stabilized in many hard-hit areas, which could set the stage for a rebound in consumer demand."

Here's a look at what IT labor market analysts are reporting, based on their respective analyses of government data:

  • Foote Partners reported a decline of 1,700 jobs in the IT labor market categories that it tracks. It was the first monthly decline the firm has seen since August 2010 -- 25 months ago -- that was not associated with a labor strike or other market anomaly.
  • Janco Associates put last month's IT employment decline at 6,600 jobs, based on the categories it tracks.
  • TechServe Alliance, an industry group that tracks the broader IT labor market in the U.S., says IT employment fell about 0.16%, which would put the decline in jobs at approximately 6,900 out of an estimated overall total of nearly 4.2 million IT jobs.

"These numbers are volatile" and will change month to month, said Mark Roberts, the CEO of TechServe.

"I would not read too much into to it at this point. I think on balance, demand is strong," Roberts said. "If we were to see month-over-month declines for several months, that would be more indicative of a trend."

David Foote, the CEO of Foote Partners, called last month's decline "stunning," but he added that he sees it as nothing more than a market blip.

Other than Hewlett Packard's announced layoffs, there have been no major job reductions in the tech industry, Foote said. HP announced earlier this year that it is laying off 29,000 people, or about 8% of its workforce, through 2014.

Nonetheless, Foote says underlying the decline may be "nervousness being created by the daily election news cycle," which includes increasing attention to the "fiscal cliff," a series of automatic spending cuts and the elimination of tax breaks beginning next year if Congress takes no action to stop them.

Foote also said more employers have decided to step back and recheck their hiring plans for the rest of the year and into 2013. That is normal year-end behavior, but it is being influenced by the uncertainty in Washington, he noted. Foote predicted a quick return to aggressive hiring.

Janco CEO Victor Janulaitis said the results of his firm's continuing survey of CIOs suggest that many IT leaders are feeling cautious but believe overall IT hiring will improve significantly next year.

Janulaitis said there are a many issues, both international and domestic, contributing to this caution, and he noted that the stock market has been relatively flat for the past few weeks.

The fiscal cliff is also a factor "because we have no guarantee that Congress is going to do anything" to prevent the automatic cuts, Janulaitis said.

Patrick Thibodeau covers cloud computing and enterprise applications, outsourcing, government IT policies, data centers and IT workforce issues for Computerworld. Follow Patrick on Twitter at @DCgov, or subscribe to Patrick's RSS feed . His email address is pthibodeau@computerworld.com.

See more by Patrick Thibodeau on Computerworld.com.

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