Economic downturn will hurt IT hiring in 2009

A new survey shows fewer jobs, the possibility of layoffs, a flattening of salaries and a rise in the number of qualified IT job applicants ahead.

A new Dice Report out Tuesday suggests troubling times ahead for IT professionals. A survey of more than 1,000

IT hiring managers at corporations and recruiting firms reveals a toxic mix: fewer jobs in the next six months, the possibility of layoffs, a flattening of salaries and a rise in the number of qualified job applicants.

The Dice Report is issued monthly by Dice Holdings Inc., a New York-based online career site that bills itself as the leading site of IT professionals. It has roughly 90,000 jobs listed.

The email survey showed that 70% of the recruiters and hiring managers, who exclusively hire technology professionals, are scaling back IT hiring plans for the next six months. This is a sharp increase from the summer, when only half of the respondents said they were cutting back.

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The survey also found that approximately 50% believe layoffs are likely in the next six months. The impression is in line with a U.S. Department of Labor report issued last week showing November claimed the largest number of layoffs in the private sector in a single month since 1974.

Consistent with November's layoff numbers, seven out of 10 survey respondents noted an increase in job applicants. Dice itself reported it has noticed a 54% increase in the number of resumés posted in the fourth quarter as compared with the same period a year ago.

Fewer jobs and more applicants mean that starting IT salaries, at least, will not rise next year. Indeed, half of the respondents expect salaries to be flat and more than 25% even believe salaries will actually decrease.

One sliver of hope is that human resources professionals who work for corporations are less pessimistic about IT layoffs than outside staffing, recruiting and consulting organizations. Whereas 63% of consultants and recruiters believe layoffs are likely in the next six months, only 27% of corporate hiring managers said the same.

Tom Silver, senior vice president and chief marketing officer at Dice, provided a potential explanation for the discrepancy.

"In an age of streamlining, technology has never been more important."
Tom Silver
senior vice president and chief marketing officerDice Holdings Inc.

"While the coming months will undoubtedly see more layoffs as companies streamline costs, areas such as virtualization continue to show promise, especially as technology departments seek ways to save money and tighten budgets. In an age of streamlining, technology has never been more important," Silver said.

Can the push toward virtualization and other technology-driven efficiencies help IT professionals stay employed at time when layoffs seem to be going up at a very fast rate in the private sector?

Analyst Andrew Bartels, who covers tech-sector economics at Forrester Research Inc. in Cambridge, Mass., said the companies Forrester is talking to by and large view IT staffs as core assets. The picture may well be different for outside contractors.

"It is very likely IT staff will probably decline by 1% or 2%, but we're not expecting big declines at the IT department level. You may see some at the vendor level" Bartels said.

"There is a strong sense at a lot of companies that IT staff are core assets they want to hang on to, because they know the business, the systems and know what we need," he said.

Let us know what you think about the story; email: Linda Tucci, Senior News Writer

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