IT managers will still have a tough time finding quality workers this year, but the shortage won't be nearly as bad as previously expected, according to a study released by the Meta Group Tuesday. The Meta Group's conclusions are similar to a study released by the Information Technology Association of America earlier this month.

Based on recent surveys of IT and human-resources managers at 500 companies, the Meta Group predicts U.S. companies will experience a shortfall of about 600,000 IT workers this year. Last year, the research firm had forecast a shortage of 1.2 million workers by the end of 2001. Meta Group analyst Maria Schafer says that at that time, IT managers looking to hire feared growing competition from emerging dot-com companies. "A lot of folks were anticipating that dot-coms would morph into full-fledged companies," says Schafer. "Then the dot-bust happened." The ITAA's recent study was slightly more optimistic than Meta's forecast, anticipating a shortage of 425,000 in 2001; that figure was revised from last year's forecast of a 850,000-worker shortage.

Schafer says the need is greatest for workers with specialized skills related to development and growth of E-business and Internet projects, including Java and XML programming, networking, security technologies, and database administration. Increasingly, she says, companies are looking to hire and retain full-time workers skilled in these areas, and are choosing to cut costs by eliminating IT contract services. "We've seen demand for IT services cut by at least 50% in the past six months," she says.

Despite the change in economic climate, the Meta Group reports no significant change in IT budget plans compared with last year. About 15% of respondents said they would decrease IT budgets this year, compared with 12% in 2000. This year, 41% plan to increase budgets and 42% will have the same budget as 2000 (2% of respondents were unable to predict budget plans); last year 54% planned to increase budgets and 34% planned to keep them the same. Says Schafer, "There is more of a positive view than a negative view regarding IT budgets."