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ITAA Report: IT Job Market Is Slowing

IT hiring is likely to remain relatively stagnant for the rest of the year, according to a survey.

InformationWeek Staff

September 9, 2004

3 Min Read

The big breakthrough in information technology job-market growth is still somewhere out in the future as IT hiring is likely to remain relatively stagnant for the rest of the year, according to a survey of 500 hiring managers conducted by the Information Technology Association of America (ITAA.)

"The conclusion was pretty unexciting," said ITAA President Harris Miller in an interview Wednesday. "We continue to expand the IT workforce but by a small percentage." Miller cited some reasons for the slow pickup in hiring, but he found some hopeful signs in the survey, too.

Keeping a lid on hiring, Miller said, were three main factors led by the rising cost of employee benefits, particularly health care benefits, which he said have been rising dramatically.

Secondly, the ITAA found that companies are very careful in their spending, even though many have large cash hoards. Miller said the fact that many firms are cash-rich could play out in the future if and when the companies decide to invest heavily in IT again.

Finally, Miller took note of global competition and said that offshore outsourcing, although not a major impedance, still works to put a lid on IT hiring in the U. S. In an earlier survey this year, the ITAA found that 2.3 percent of IT jobs have left the U. S. The ITAA predicted that the offshore outsourcing of IT jobs will increase to 6 percent over the next five years. "The U. S. workforce is not giving up its edge without a fight," Miller said, "but as an industry and as a nation, we must become more competitive if we are to retain our standing as the world's innovators."

The survey results revealed that IT employment grew a slim two percent from the first quarter of 2003 to the first quarter of 2004 with the IT workforce creeping up from 10.3 to 10.5 million jobs in the period. A total of 79 percent of the IT workforce is centered in business segments like banking, finance, manufacturing, food service and transportation. Slightly more than 20 percent is in the IT industry itself.

There were regional differences in hiring with the Northeast adding to its IT workforce by 5 percent and the South by 4 percent while the West lost nearly 1 percent. In the Midwest, IT employment crept up 2.6 percent.

Some job classifications, however, enjoy bright futures. "Networking jobs seem to be on an uptick," Miller said. "That seems to be a reliance on networks to make enterprises (operate.)" He added that security-related IT positions are likewise in fairly high demand. IT enterprises also seem to be hiring "high level software engineers" " people who create new software within enterprises " Miller said. Tech support was cited most often by the survey respondents, who cited a future demand of 67,000 for those positions.

IT hiring managers also noted their preferences in job candidate skills mentioning most often that candidates' interpersonal skills are important attributes. Employers also like to see previous experience in a related field and a college degree in a related field.

The stalemate in hiring doesn't appear to be affecting IT suppliers. Miller noted that IT spending for both hardware and software rose by double digits early this year. He added that the spending will probably be in the single digits in 2005. In another report released Tuesday, IDC said IT vendor marketing budgets are increasing 6 percent in 2004.

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