Strategic CIO // Team Building & Staffing
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4/7/2010
02:47 PM
Chris Murphy
Chris Murphy
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Global CIO: IT Jobs Claw Back From Crushing Recession

U.S. market shows glimpse of growth in the first quarter, but also a huge number of unemployed IT pros.

U.S. companies added information technology jobs--26,000--in the first quarter of this year, giving some hope that the IT job destruction from the recession is over. This marks the first time in almost two years that the U.S. economy has added IT jobs for two straight quarters.

The snapshot today is this: U.S. IT jobs have stabilized, and show glimmers of growth. The market will need much more than glimmers, though, to rebuild the almost 300,000 U.S. IT jobs still lost from the recession. A huge number of IT pros remain unemployed out there.

The data comes from the Bureau of Labor Statistics, which conducts a monthly Current Population Survey and issues quarterly reports estimating the number of people employed and unemployed, broken down by job categories. InformationWeek pulls out the eight IT jobs categories for analysis.

Here are the first quarter numbers: IT employment rose to 3.84 million, up from 3.81 million in Q4 2009 and 3.77 million in Q3 2009. These are estimates based on surveys, and a 26,000 jobs addition is a very small move. But looking at trend line, the IT jobs market is better than it has been since middle of 2008, though there remains a huge number of unemployed IT pros. Three of the last four quarters have shown IT job growth.

The U.S. IT job market shattered in late 2008. After an all-time peak of 4.13 million IT pros employed in 2Q 2008, employment plunged for three straight quarters, destroying around 387,000 IT jobs. After bottoming out in Q1 of 2009, the U.S. economy has added about 98,000 IT jobs, according to BLS data.

The number of unemployed IT pros is also on the rise. The past four quarters, on average more than 200,000 people describe themselves as IT pros looking for work. This quarter, it's 250,000. At the IT jobs peak back in mid-2008, that was less than 100,000. That puts IT unemployment at 6.2%, compared with 4.9% for management, professional, and related occupations overall.

So, what does all this means for what lies ahead for IT jobs? We of course don't know, but we can do some informed speculation. A hiring surge is unlikely. Our just-published 2010 U.S. IT Salary Survey shows stagnant wages--the median raise for IT pros is 0%. (Median salary is $81,000 for staff and $103,000 for manager. See more details here, or download full report free here.) Forty percent of the more than 20,000 IT pros we surveyed say their company has a hiring freeze, and 29% say there's been a pay cut. As our story notes, CIOs are worried about having the right skills and enough staff in place if growth picks up and leads to new IT projects. But companies are very wary of hiring, as the stagnant pay suggests.

A cautious view is also voiced by David Foote of Foote Research, which specializes in analyzing IT job, skill, and salary trends. Foote observes this from his research, which the firm does with input from 2,000 employers (Foote press release here):

My sense ... is that we're in a 'three steps forward, one step back' pattern. Jobs are also a lagging indicator in any economic recovery, and we're not seeing a strong job recovery yet. But it's clear that the bleeding stopped in October and many employers are once again acquiring needed skills and making selective IT hires. They are doing so very deliberately, and purchasing services where they once might have added full time staff. An the IT services sector is one showing the greatest gains in new jobs over the past several months, which bears this out.

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Foote says a freeze in spending for specialized skills "has thawed" and predicts that by this time next year the market will be less reliant on contractors and willing to bring IT staff back. Yet, in an e-mail exchange with David Foote, he predicts the IT market will remain quite volatile, in part because there's an IT workforce transformation happening along with the recession. Employers are increasingly focused on the skills they need to have and not the jobs they need to fill, Foote says, and are willing to look at new models that blend contractors, cloud-based software or infrastructure services, and new hires--whatever can deliver the needed skills most quickly and efficiently. Says Foote, "Resistance to this level of org change is natural. The recession has been successful in breaking down a certain amount of this resistance, and this volatility we're seeing is being driven by employers taking advantage of the window of opportunity to think through it and move things along to new models."

So, are IT jobs surging back? No. The IT job market does appear to have stabilized, and there are signs that hiring is slowly picking up. In our IT Salary Survey, 58% of IT pros say the IT career is as secure as most others, and 29% say it's more secure. Only 13% say it's less secure. This recession, while it wiped out hundreds of thousands of IT jobs, also clobbered white-collar jobs across professions, so that faith doesn't seem misplaced. Still, for the more than 200,000 IT pros out of work, the U.S. economy likely has a lot of work to do to earn back their faith in the IT career path.

Global CIO small globe Chris Murphy is editor of InformationWeek.

To find out more about Chris Murphy, please visit his page.

For more Global CIO perspectives, check out Global CIO.

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