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Fears about war, economy slow IT hiring

By Thomas Hoffman
April 2, 2003 12:00 PM ET

Computerworld - Weak business conditions and fears about a war with Iraq led companies to slow the hiring of IT employees during the last three months of 2002, according to a study released today from Dice Inc. and the Information Technology Association of America (ITAA).
While fewer IT workers were hired during the fourth quarter than in the previous three quarters of the year, there were also fewer layoffs at year's end. Companies hired 265,000 IT workers from October to December and cut 168,000 technology workers during the same period. By comparison, 211,000 IT workers were cut during the third quarter, while roughly 350,000 were laid off during each of the first two quarters of 2002.
"January was very strong for recruiting, and hiring has pulled back since then, largely driven by the economy and the situation in Iraq and its impact on the economy," said Scot Melland, president and CEO of Dice, a New York-based provider of online recruiting services for technology professionals.
At the end of 2002, there were just over 10.2 million IT workers in the U.S., a 3.3% increase from January 2002, when there were just under 9.9 million employed IT professionals.
According to the Bureau of Labor Statistics, there are now 94,000 unemployed computer scientists in the U.S.
IT professionals were hired by nontechnology companies at a 10-to-1 ratio compared with technology companies during the fourth quarter, and the skills in greatest demand have remained relatively stable since January 2002. Top skills include expertise in Java, SQL, C and C++, Oracle database administration and Microsoft Windows NT, according to the Dice/ITAA report. Technical skills that are losing clout in the market include "lighter" skills such as technical writing and Web design, said Melland.
Hiring managers surveyed indicated that together they expect to hire 874,327 IT workers during the next 12 months. That's down from the 1.183 million the group expected to hire as of the third quarter last year.
The Dice/ITAA study is based on telephone interviews with more than 300 hiring managers at both technology and nontechnology companies. The survey was conducted between Jan. 27 and Feb. 14.
Although IT budgets, where worker compensation can consume up to 50% of the available money, have been under pressure, IT salaries continue to rise, according to the 2003 IT Staffing and Compensation Guide released by Stamford, Conn.-based Meta Group Inc. today. According to compensation and best-practice surveys of more than 650 large and midsize companies across 14 industries and more than 40 geographic markets, 61% of IT managers indicated that IT salaries will rise this yearat an average rate of 5% of base pay.
Although salaries may be up, staffing levels are expected to remain essentially flat, according to Tom Pohlmann, an analyst at Forrester Research Inc. in Cambridge, Mass. "As [IT] budgets do recover, IT shops will still be pressed over the medium term to deliver more with less."

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