Is federal stimulus money being used for IT hardware, not hiring?

Info from recovery.gov doesn't show a lot of tech job creation

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The federal government estimates that for every $92,000 spent by the U.S. one job is created or saved, although that figure covers all occupations, including highly paid ones. The U.S. claims the stimulus money has created an estimated 640,000 jobs.

But drawing a line that connects the $787 billion stimulus package to tech hiring is difficult. The hemorrhaging of tech jobs may have stopped, according to the latest employment data, but there's no way of connecting that with federal spending at Recovery.gov. The same is true for anecdotal employment indexes, such as jobs board Dice.com, which shows an increase in hiring activity in both contract and full-time employment. In July, Dice said it had 48,993 jobs listed, including contract work. It's now at nearly 54,000, a 10% gain.

This job creation is running up against some strong headwinds. The Hackett Group., a Miami-based consulting firm whose clients include many multinational corporations, released a report last week that estimates 1.95 million IT jobs will have been lost at large companies in the U.S. and Europe between 2000 and 2014 due to efficiency gains, offshoring and other factors. That means the IT recovery may be a jobless one.

In 2009 alone, Hackett estimates that nearly 630,000 back-office jobs were lost, including positions in IT, finance, and other administrative areas. More than half of those jobs were in IT.

In its report, the Hackett Group argues that many companies are concerned that once the stimulus money is used up "growth could slow again in the absence of a rebound in consumer spending. Consequently, executives are extremely cautious about adding cost. Thus, significant rehiring of laid-off back-office staff is not expected," argued Hackett Group.

Much depends on how a company handles the recession -- and any federal stimulus money it gets. One of the CSC contracts, for instance, totalled $5.1 million, most of it for a sub-contract to Silicon Graphics Federal Inc. A CSC spokesman, in an e-mail, said the contract was primarily for new hardware for the customer.

Asked about that contract, George Skaff, chief marketing officer at SGI, said that "the stimulus package creates business for many companies, including SGI. Whether jobs are created or not is not the main point, as different companies deal with recession differently.

"Some do layoffs and wait for the economy to turn around and then they hire back, and some do spend more on R&D to be ahead of the curve when the economy turns around, which is what SGI is doing," Skaff said. "The real answer here is that the stimulus package did create interest in the Federal sector for SGI."

Copyright © 2009 IDG Communications, Inc.

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