InformationWeek

Where The Jobs Are: Back To Work

Even shrinking technology giants are hiring again to capitalize on hot industry trends

By Edward Cone
Issue date: Nov. 18, 1996

Security consultant Al Decker left a good job as a partner at Coopers & Lybrand last December to join a fast-growing competitor. Such moves are hardly news in the IT business, but Decker's story has a wrinkle: The fast-growing competitor was IBM.

"It's exciting around here," says Decker, 48, from his new base at IBM's offices in Raleigh, N.C. "I've hired 10 people since I arrived, with half of that tale nt coming from outside the company." Decker says his office should double in size next year.

While it's too early to celebrate the end of downsizing in the computer and communications industry, IBM and other shrinking giants are aggressively hiring in discrete areas of their business.

They're changing shape as they seek to capitalize on hot trends such as outsourcing, wireless networking, and the Internet. Some are even showing overall employment growth.

Swelling Services
IBM has added 11,000 new services jobs worldwide this year, bringing its services staff to 105,000--about 45% of the company's total workforce. Some of that growth includes positions added by outsourcing contracts and acquisitions. Such job consolidation often results in a net loss of jobs when all the companies involved are factored in, but IBM is creating new U.S. jobs at a healthy clip--and plans to keep hiring.

Last year, services contributed $1.8 billion to IBM's profits, according to IBM watcher Bob Djurdjev ic, president of Annex Research, a consulting firm in Phoenix. That's more than any other division--and 50% more than IBM's mainframe business, Djurdjevic adds.

IBM is also growing rapidly in emerging markets such as China and India. With as many as one-half of the company's new hires coming in at the entry level, IBM is recruiting on college campuses for the first time in several years and has set up a graduate training program at its Armonk, N.Y., headquarters. Overall, IBM's domestic workforce is expected to grow this year for the second year in a row.

At Xerox Corp., which has slashed more than 10,000 jobs in the last three years, the net job reduction in the second quarter of this year was only 100 positions. Even Digital Equipment--which will cut about 7,000 positions this year--offset the elimination of 1,700 jobs in its third fiscal quarter by adding some 1,450 newcomers.

At communications companies, the explosion in wireless and Internet services represents a bright spot in an otherwise b leak job market. AT&T's major downsizing made headlines last winter, and the company will show a net job loss for 1996. But at the same time, the company's Wireless Services division is hiring in several states and will grow by 11% to 11,300 employees this year, a growth rate projected to continue next year.

This pattern reflects the state of many U.S. corporations, says Michael Useem, a professor at the University of Pennsylvania's Wharton School of Business. "Over the last five years, many firms have figured out how to get the job done better with fewer people," Useem says. "Now, companies are lean, tough, and streamlined. At places led by executives like [IBM chairman Louis] Gerstner, who have not just cut employment but redesigned the company, they are more confident about hiring people."

Pain And Payoff
Ed Hunt, a 34-year-old engineer now working for AT&T Wireless Services in Kirkland, Wash., has experienced both the pain and benefits of the wave of corporate change. He came to AT&T Wireless after accepting a buyout in January from his old employer--an AT&T research facility in Whippany, N.J.

"I was getting married and thinking of relocating anyway," says the London-born Hunt. "I wasn't really looking within the company, but this was the most interesting job I found in the Seattle area, and the pay is about the same as what I was making in Whippany."

Hunt's compensation package at his new position is a traditional one, with salary and benefits, as opposed to contract employment. The same is true of most domestic jobs being created at IBM, but that's not necessarily representative of the market as a whole. It's still a buyer's market for labor, a recent study by the Bureau of Labor Statistics indicates. The study shows that one-third of white-collar workers downsized out of jobs are taking new positions that pay 80% or less than their former positions.

Even robust growth is unlikely to return downsized companies to their former size anytime soon. IBM cut its wo rkforce from 405,000 employees worldwide in 1985 to 225,347 at the end of last year; domestically, the company shrank by more than 50%, to about 110,000, over the last decade.

AT&T, before this year's big cuts, had shed an average of 900 jobs per month since the court-mandated breakup of the Bell system in 1984.

Digital has shed more than half the 125,000 jobs it had in the late 1980s. Unisys, even though it is adding some services jobs, is still executing a downsizing plan that will eventually reduce the workforce by about 6,600 jobs. Net employment growth isn't expected until mid- or late 1997.

None of this, though, bodes ill for the IT job market. The Bureau of Labor Statistics predicts there will be 620,000 new jobs for systems analysts and computer engineers nationwide by 2005.

New Atmosphere
However the job market shakes out, a new atmosphere seems evident at IBM. Gerstner has announced that most of the downsizing is over. "It feels different here now," says Janet McAlli ster, a 12-year IBM veteran who serves as director of the IBM Solutions Institute, an arm of the Global Services unit that coordinates training for new hires. "We're bringing in new people in their 20s, and it's very invigorating."

See related story: " New Life For The Downsized "

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