IT jobs outlook modest for 2011

Some improvement over 2010, but offshore outsourcing expected to hurt IT jobs recovery

Perhaps the best thing that will be said about 2010 and IT hiring is that large layoffs have tapered off and the overall trend seems to favor hiring.

For sure, IT workers are still losing their jobs, particularly in the weakest areas of economy, such as state and local government. Camden, N.J., for example, recently announced a plan to lay off one in four city workers to cover a large budget shortfall.

About four IT workers in Camden will be axed if this plan is adopted, and the city said in a report that cuts will mean "the network will not function effectively." City officials did not respond to a request for comment.

Tech spending is expected to rebound next year, with IDC predicting 5.7% growth next year worldwide after experiencing 3% growth this year. But how will that spending on tech translate into hiring, with offshore outsourcing increasing?

The latest evidence that IT hiring is improving overall comes from a new study from Computer Economics, which surveyed IT managers at 136 firms in the U.S. and Canada with revenues above $50 million. It found that 48% of managers planned to add staff next year, with 11% planning to reduce staff.

John Longwell, vice president of research at Computer Economics, said, "The layoffs are over, people are starting to add workers to their payrolls, but it is going to be modest."

The survey looked at operational spending in IT -- those functions needed for day-to-day operations -- and about half of that cost is in salaries, Longwell said.

He noted that companies are beginning to take on new IT projects, extending staff hours, hiring contractors -- and turning to outsourcing. In this quarter, 27% planned to hire, and 14% said they were going to decrease staff.

Longwell characterized this year as one of "nervous stability" and said IT operational budgets are still restrained, with users in the Computer Economics survey planning for 2% growth.

Capital spending in the IT industry is projected to increase next year, which will help tech hiring, and offshore outsourcing will send lower-rung IT jobs overseas.

David Foote, CEO of IT workforce analyst firm Foote Partners, said he believes the demand for IT skills -- not necessarily full-time workers -- is stronger but difficult to track because it is being increasingly spread throughout companies.

Foote says he is seeing a lot demand for specific skills by business units in areas such as predictive analytics, architecture, social media and security functions that are attached to finance, accounting and auditing, and not to central IT operations.

"We know that there are pockets of IT spending all over the companies," Foote said.

But in his labor market analysis, Foote said he saw IT managers as more focused on filling specific skills needs, whether through hiring full- or part-time employees, consultants or contractors. "Instead of focusing on jobs, the accent is on skills acquisition," he said.

There has never been one absolute source for determining what is happening in the IT labor market. Most analysts use federal labor data, but the government reports can be examined in different ways. TechServe Alliance, for instance, said there were only 600 IT jobs generated last month; Foote's analysis showed 4,400 IT-related jobs.

Two years ago, at its peak, the IT labor market was counted at about 4 million workers by TechServe; in November of this year, it was at 3.9 million, with a year-to-year gain of about 2.5%.

Other indicators are more anecdotal. For instance, Dice.com, an IT jobs-listing board, has seen a big gain in tech jobs. In November 2009, it had about 52,000 tech jobs listed; on Tuesday, it had 72,700.

A more colorful source about the state of the labor market is the Federal Reserve Board's Beige Book. In it, officials at various Fed district offices talk with people in the industry to glean some insights. It takes these reports and shares what was learned, keeping respondents anonymous.

In San Francisco, sales are expanding for providers of technology services, "prompted in part by a focus on efficiency-enhancing software investments in most sectors of the economy," the Fed reported.

In Minneapolis, an IT consulting firm "expects to double its workforce over the next year due to unexpectedly robust demand." But the Minneapolis district also reported that "a contact in the information technology sector" said that "he expects continued depressed wage levels in software development."

In Boston, the Fed reported, "increased activity has led most respondents to continue raising their head counts. One contact is adding positions across the board, reporting a 10% increase in staff year-to-date; another, by contrast, reports a modest reduction, with a number of customer service and information technology positions being sent overseas."

Patrick Thibodeau covers SaaS 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 e-mail address is pthibodeau@computerworld.com.

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