Where Are The Jobs?
To find work in today's economy, IT pros have to reassess their lifestyles and skills
There are more than 400,000 unfilled IT jobs in the United States, according to the Information Technology Association of America, a Washington lobbying group. Rich Snow doesn't believe it. The unemployed technology manager has been looking for work since February without any luck. Snow isn't merely firing off E-mails haphazardly to companies and posting his background on job boards. He's mailing hard-copy resumés with individual cover letters addressed to specific hiring managers at businesses with known openings. The result: He's had only a handful of job interviews in the past eight months and no offers.
"It was totally dead this summer," Snow says. "It only got worse with Sept. 11."
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Like many unemployed technology professionals, Snow can blame part of his problems on the dot-com boom and subsequent bust. After 16 years as MIS manager at Adaptive Optics Associates Inc. in Cambridge, Mass., which designs and engineers optical products for astronomy and military applications, the 43-year-old decided he wanted some of the riches that seemed to be filling the pockets of IT workers who were joining the thousands of startups launched in the late '90s to cash in on the growth of the Internet and E-commerce. So late last year, he joined a four-person startup called CentralOutpost, a voice-messaging company, where he served as director of operations.
Bad move. CentralOutpost's funding dried up after a few months, and the company was dissolved in February, putting Snow on the street in the midst of the worst job market for IT professionals in many years. Because it hadn't been that long since recruiters were calling, Snow didn't think it would take him much time to land on his feet. "I had to get over all those expectations," he says, as well as another myth: "I was fooled into believing if a job is listed on the Internet, it's a real job."
What was a bad IT job market keeps getting worse. For the past two months, the Bureau of Labor Statistics reports that one in 20 IT professionals was out of work. The last time the nation saw such high unemployment among IT workers was September 1991, when the jobless rate hit 4.3%. More significant, IT unemployment outpaced that of the workforce at large for the first time in more than a decade--a major turnaround in employment trends. Since 1989, the average IT unemployment rate has been 2.5 percentage points lower than that of the general workforce. In September, it was higher by 0.3 percentage points. Last month, the Labor Bureau says, IT unemployment remained at 5%, which was 0.4 percentage points higher than the general workforce.
Out of work since February, Snow, a former technology manager, started a support group for unemployed IT professionals and a consulting practice.
Overall, the Labor Bureau reports that nearly 250,000 new jobless claims were filed in September and another 415,000 were filed in October. The number of layoffs in all industries announced since January is almost 1.7 million as major businesses in most sectors reduce their workforces.
The growing number of unemployed technology professionals has shifted IT hiring from a seller's to a buyer's market. A year and a half ago, businesses were desperate for talent, and technology professionals could pick and choose from several job offers, usually demanding--and getting--large salaries and generous benefits. Today, businesses get hundreds, sometimes thousands, of resumés for each opening and are more selective. Unemployed IT workers know the power has shifted, and applicants have turned into supplicants.
Ed Taylor, CEO of IT consulting firm Collective Technologies in Austin, Texas, recalls getting a letter from a Perl programmer and Web developer who pointed out broken links on the company's Web site and proposed possible fixes. "It's a sign of the times. Think about how much effort she put into that," Taylor says. "Not that long ago, no one would have done that."
The trend benefits hiring managers such as Ursula Conway, VP of IT at Ameristar Casinos Inc. Historically, it's been tough to get good IT help in Las Vegas, but suddenly it's a different job market. She receives many inquiries from people who went off to make their dot-com fortunes, only to soon find themselves out of work. "They're more willing to negotiate; stock options no longer matter the way they once did," she says. As for the new-found interest in working for a casino in Las Vegas, compared with the sizzle of the E-commerce environment, she laughs: "There's something to be said for slow-moving organizations with traditional business channels."
Despite the gloomy numbers, there are some bright spots for IT professionals looking for work, especially for those who can adapt both their skills and lifestyles to an ever-shifting economic landscape. For example, the defense and pharmaceuticals industries were expanding before the terrorist attacks of Sept. 11 and are now growing even faster. Another hot area: hospitals and health care. The government has imposed new requirements for protecting the security and confidentiality of medical records, which has created a rush in the sector to upgrade computer systems and networks to meet a 2003 deadline. There also are openings in many industries for those with specific skills in security, disaster recovery, storage, high-end networking, databases, and Web development. IT workers may also have a better chance of landing a job if they're willing to move from traditional technology centers such as the Northeast and Silicon Valley to emerging tech hot spots such as Atlanta, the Research Triangle around Raleigh, N.C., and Washington, D.C.
Las Vegas, for example, may seem to be an unlikely draw for IT professionals, but Ameristar Casinos is looking for some help. "We're up to our eyeballs in work," Conway says. "Somehow it never seems to run out." She's among the more fortunate IT executives--her budget is on the rise. One reason: New construction and a major expansion at the company's St. Charles, Mo., gaming facility. In addition to overseeing the installation and networking of 3,000 new gambling machines, Conway's IT team needs to install and support new telecom and storage systems. "It's part of the value of being with a company that's growing," she says.
Growing, yes--but she's not hiring many new people. Although she has a couple of open positions, Conway is more focused on redirecting her staff away from midrange platforms and toward technology areas, such as SQL Server and network management, that need additional resources. Conway has taken advantage of natural attrition to pare away extra staff and replace them with IT workers who have more current skills such as SQL, Cisco networking, and Microsoft Exchange. She's also looking to retrain about a third of her staff, focusing on those with natural aptitude and energy. "We're continuing to advertise 'Here's what we need' and ask, 'Who has the interest and aptitude?'" she says.
Some companies have used the current environment to upgrade their workforces. "Many companies took the opportunity to take nonperformers and move them out of the company, using the economic conditions as PR cover," says Hank Stringer, CEO of job Web site Hire.com.
There are some fields in which the demand for IT skills hasn't slowed. Most employment experts say experience and skills in security are almost a sure ticket to a good paycheck these days. The global market for IT security services will triple to $21 billion during the next four years, says a recent report from the SANS Institute, an association for IT security professionals. The demand for security skills "will go through the roof," Meta Group analyst Maria Schafer says. "It will become super-white-hot this year. Those folks are still difficult to keep."
High-level security experts, especially those with government clearances, can expect to be courted by recruiters and to receive multiple offers and high salaries, experts say. That's not just because of concerns about terrorism. The September attacks accelerated an existing trend toward greater information security, says David Van De Voort, principal consultant at human-resources firm William M. Mercer Inc. The trend is rooted in the shift from using closed-access computing systems to perform mainly administrative functions to opening up company information, networks, and systems to customers, suppliers, and partners as part of collaborative-business initiatives.
When Owens Corning senior VP Johns hires, he looks for people who will add business value, not those with just technology skills.
Terrorism isn't the only reason IT security skills are in greater demand. More businesses are boosting efforts to protect customer data and privacy. In some cases, they're being forced to. In the health-care industry, some experts say the Health Insurance Portability And Accountability Act of 1996 might generate more spending on technology systems than did the year 2000 rollover. The law gives health-care organizations a 2003 deadline to implement procedures to keep patient information confidential. To comply with those rules, the health-care industry will need to spend billions of dollars on IT systems, security software, services, and employee training. The regulations are so far-reaching that "even sending a floppy disk has to be secured," says Jim Wolken, a partner at New Work Media, which publishes two IT staffing magazines. "Once HIPAA hits mainstream America, there will be a real push for security specialists."
Defense and government work is heating up, too. The Washington office of IT staffing firm Kenda Systems Inc. experienced a slow period during the summer, receiving just a few new requisitions for IT professionals. But the firm, which places 70 to 100 people a year, began to see an increase in August. Things changed dramatically after Sept. 11: Business doubled from September to October, with most of the new requisitions coming from defense contractors and the federal government. "You've got military defense on the highest alert, and I don't see that shifting for the next 12 to 18 months," branch manager Jim Carter says. Companies that make missiles and develop electronic warfare systems are starting to get lots of business from the federal government, he says.
Most prominent among them is Lockheed Martin Corp. in Bethesda, Md., which recently secured a contract that could be worth as much as $200 billion to build more than 3,000 supersonic fighters for the armed forces over the life of the Joint Strike Fighter program. The plane, with some modifications, is designed to meet the disparate specifications of the Air Force, Navy, and Marine Corps, as well as the British Royal Air Force and Royal Navy. Lockheed's Fort Worth, Texas, aeronautics division alone will hire an additional 2,500 people, many of whom will come from systems engineering or computer-science backgrounds. The company had been getting a steady stream of inquiries from job seekers, but the numbers skyrocketed once the government awarded the contract Oct. 26, says Henry Levine, VP and deputy for the air system, Joint Strike Fighter program. "We've had a phenomenal number of resumés since then," he says.
Hundreds of computers will be installed in support of the effort, says Lory Arghavan, the Joint Strike Fighter program integrator for IS. Although the project will involve some new hires, Lockheed won't determine the precise number of positions until later. Lockheed will implement the Joint Strike Fighter program in stages and take advantage of an existing IT infrastructure that it uses to build F-16s, F-22s, and other aircraft. "We'll use a lot of the same people," Levine says. The number of IT workers needed to build the other aircraft "is coming down as we ramp up for Joint Strike Fighter."
As IT jobs open up in fields such as health care and defense, they aren't necessarily in the traditional IT hot spots such as Boston, Austin, and the San Francisco Bay area. The IT downturn has hurt those areas badly because they had so much to lose, says economist Richard Florida, the H. John Heinz III Professor of Regional Economic Development at Carnegie Mellon University. However, they have the infrastructure and skilled workforce to rebound strongly when the economy turns around, he adds. Other cities that are suffering badly include Chicago, Houston, and New York, whose economic base of large companies--with big IT departments--were forced to make major layoffs as sales and profits fell.
Broken down geographically, the ITAA's 400,000-plus job number, which is based on a survey of 685 hiring managers, finds demand is highest in the Midwest, with 141,000 positions open, followed by Western states (116,000), the South (88,000), and the Northeast (78,000). If the economy continues downward, the survey results will be lower next spring, says Harris Miller, the ITAA's president, but supply still won't equal demand. "I believe jobs still exist in the IT market," he says.
But Florida doesn't believe second-tier cities will absorb much of the unemployed IT talent. "People who say, 'Oh, Pittsburgh is doing fine!' miss the point," he says. "It wasn't that hot a market to begin with." Nor will many people relocate just to get jobs, he says. "I don't see a wholesale migration from San Francisco to the Kansas Cities of the world," he says. "IT workers are now focusing on their lives, not just their careers. They're looking within more."
But when out-of-work IT professionals have a hard time paying the mortgage or feeding their children, moving to another city may not seem like such a bad option. Technology talent can improve their chances of getting hired if they're willing to make substantial adjustments, experts say. Accepting lower salaries or job titles, relocating to other parts of the country, moving to different industries or different work cultures--any or all of these may be required.
The days of stratospheric salaries and country-club perks are a thing of the past. Compensation and benefits are in more of a holding pattern, Meta Group's Schafer says. Raises remain higher than those given to non-IT professionals, but the differential has declined. "Before, IT raises were around 8% to 10% and more in some skill areas; it's now closer to 6% to 8%," she says. "We could see it get to parity with non-IT." A study released late last month by William M. Mercer finds raises topping out at 8.5% for software-systems engineers, but most other IT job titles are in the 5% range.
For new hires or hired guns, salaries and contracting rates have stagnated or even gone down, as much as a 30% drop, some reports say. Statistics don't offer much detail, but job hunters frequently cite examples of jobs in small to midsize companies that once paid upwards of $80,000 now going for $45,000 and people are lining up, hoping for offers.
Yet salary demands may be keeping some IT professionals from landing jobs. Cleve Rowley, partner at executive search firm MattesonPartners.com, says he knows of some CIOs who've been looking for jobs for a year or more. Some are unwilling to face the harsh truth that they're not worth as much money as a year ago. "Some people come to the realization sooner than others," he says.
In recommending candidates, Rowley says he pays attention to the psychological dimension of the issue as well. If he has an open IT position for $105,000 and two equally qualified candidates, one who was making $85,000 and the other making $115,000, he views the $85,000 candidate as a better risk. The higher-paid executive might end up resenting that he was forced to accept a lower salary, while the other candidate is more likely to view it as a step up.
Though technology skills are what define an IT professional, they aren't always what makes an employee most valuable to a company. Owens Corning's IT needs have undergone a substantial transformation as the company has deployed an SAP enterprise resource management system globally. Now the technology focus is on supply-chain productivity, improving services to customers, and increasing corporate revenue. When senior VP Johns hires, he looks for people who can add business value more than deep technology knowledge. "We look at IT as business-process experts, communicators, project managers, and problem solvers," Johns says. "If your interest is pure technology, focus on that and get as expert as you can--but the opportunities will be less and less. There are fewer jobs that focus on pure technology skills."
That jibes with consultant Van De Voort's research: IT managers tend to focus on technology experience when hiring, but the ability to communicate is the No. 1 skill for IT pros who want to advance. "We no longer build technology for its own sake. The days of the killer app are gone," he says. "Now it's about how to create value. The supertech will always have a place, but the ones to get ahead are those who can communicate."
CIOs and other IT executives aren't only reassessing their compensation, they're also taking a hard look at their career tracks. They're more willing to make lateral moves. "The thought that 'I have to find a career-maker job'--forget it," says recruiter Beverly Lieberman, president of Halbrecht Lieberman Associates. "In a job market with fewer openings, they're more humble now."
Often that means talented people end up chasing jobs for which they're overqualified, which evokes a wide variety of emotional responses that range from anger to desperation to perhaps even relief for those who came from pressure-cooker environments. Some fear it will look bad on their resumés to take what appears to be a step backward. But Meta Group's Schafer calls such concerns overstated. "If ever you take a job beneath your level, this is the time," she says.
The current job market also means more people are keeping their jobs, even if staying put represents a new way of thinking. Java programmer Ryan Ackley has been on a contract assignment since January at the Kennedy Space Center in Titusville, Fla. In his last job, the 27-year-old recalls, he was always looking for the next thing, but not this time. The job market is too tough.
Still, he's preparing himself for the future. He routinely checks job boards to monitor demand for programmers. "I'm always trying to learn what people want," he says. "Enterprise resource management pays the most, but that market--PeopleSoft and Siebel--wants people with more experience."
Ameristar Casinos' Conway says that's the right approach. "Every person I talk to, I want to know how they keep current," she says. "If they say something like 'I go to seminars when my employer pays for it,' then I'm not interested." She advises job seekers to do some learning on their own, follow their industry of choice and learn the applications involved, and then project their value during an interview. For example, customer-relationship management and direct-marketing skills would be very useful in her industry and would go a long way toward enhancing the appeal of an IT pro who may not know the gaming industry firsthand.
One thing hasn't changed: A candidate who shows initiative, a history of hard work, and a demonstrated willingness to embrace challenges has a better chance than someone who has excellent skills but may not be flexible. "It comes down to attitude," says Hire.com's Stringer, who's been recruiting since 1979. "Show me the individual with the right attitude, and that's the individual you want to go with."
As for benefits, gone are the excesses of previous years. They're hard to justify while budgets are being slashed and people are being let go. But they're still important in some cases, such as keeping a star performer. "As companies pare down, they're desperate to hold onto their IT talent," Schafer says.
That means, in special cases, companies pay bonuses and provide other kinds of benefits. Most of these rewards are dealt with quietly, one to one, and many managers don't want to discuss them. But they agree that this is no time to risk losing their very best people. Keep them happy now, or they'll jump at the first sign of an economic rebound.
Companies must always be aware of their top performers, Stringer says. Even if they can't afford cash and lavish perks, the smart IT manager pays attention. "Go to lunch, communicate, ask the right questions," he says. "There are lots of reasons people will stay with a company--the culture, its vision, access to technology, their own success--but at the end of the day, it's good management."
Another issue: Good managers must be on the watch for burnout. After a layoff, the remaining workers often have to shoulder the work left behind by their former colleagues. "Companies have to keep up the productivity no matter what," says John A. Challenger, CEO of outplacement firm Challenger, Gray and Christmas Inc. "Wall Street demands it."
But those problems are easier to deal with than a shortage of IT talent. And some experts say there may be an abundance of technology professionals for some time. "I don't see a big change," Florida says. "The slowdown will be a lot longer and more enduring than people want to think."
That's not good news for Snow, who has decided that he can't wait for the job market to turn around. Instead of loafing on the couch and watching the soaps, he started a support group for unemployed professionals. He also started his own consulting practice. His new company, Business Network Consulting in Belmont, Mass., will do network implementation for businesses too small to have their own IT departments. "The economy can be down, but people are still doing things like repairing monitors," he says. "The short-term, get-it-done kinds of projects still exist."
But what he really wants is a full-time job.
--with Eric Chabrow, Elisabeth Goodridge, and Mary Hayes
Photo of Snow by Jason Grow/Corbis SABA