Have IT vendors been hit harder than IT departments?
Comment: Less hiring, more firing, but still a net gain
Posted in Management, 11th March 2009 14:20 GMT
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As you can see, the trend for IT staff hiring and firing is not moving in the right direction over the past two years. Here's the RHT data showing that:
According to the latest poll, 21 per cent of the CIOs who said they will be adding IT staff (or about 1.7 per cent of the total pool of survey respondents) said they would be using a mix of full-time and project workers, and 8 per cent who said they would add people in Q2 2009 said they would only add contract workers.
Why are they hiring? About a quarter of the CIOs said "corporate growth" was driving IT hiring, while IT department expansion was cited by nine per cent; more workloads was cited as the reason by eight per cent of respondents, and another eight per cent said system upgrades was compelling them to hire staff. Help desk, technical support, network administration, and Windows administration are the jobs CIOs are trying most to fill.
For those letting IT staff go, 40 per cent said it was due to IT budget cuts and 21 per cent blamed the effect of the financial crisis on their industry. It is hard for me to separate these two, since they are related. If you want to see the full arts and charts that RHT put out, go here and scroll to the bottom for links to the graphics that provide more details.</p
IT vendors have clearly shown that sales are dropping, particularly for PCs and servers, the basic infrastructure for IT. But thus far, US companies seem to be putting off IT purchases so they can do IT projects that help their businesses. This is encouraging, so long as all of the work doesn't end up overseas. Some of it will, of course. That's just the 21st century. ®
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COMMENTS
No surprises here
The cost of delaying a purchase is only an opportunity cost to the business. Laying off people if you expect to recover has the potential to be a huge cost. First off, you have the increases in taxes (otherwise known as unemployment insurance rates) for laying off the employees. If you employ more than 50 people, you have regulatory costs involved in making certain you jump through all the right hoops, and potential legal costs if somebody decides your paperwork wasn't in order or you discriminated against them for some unfathomable reason or another. Finally, when you do recover, odds are your former IT employee has found another job somewhere else, which means you'll spend 6-8 weeks looking for his replacement, and a year or more training him to be useful within your corporate structure. So in the initial stages of a downturn (and make no mistake about it, despite it's depth, these are still only the initial stages) you cut purchasing, not people. That impacts the manufacturing sector (Dell, HP, Lenovo) not the service sector (Programming, Networking, Help Desk). Furthermore, the pause in purchasing allows the IT shop time to focus on some of those items that further down the To Do list that only require time but normally get pushed back because they don't want equipment idling.
Oh, and the unemployment numbers aren't behaving normally this time around either. Normally after some amount of time people do normally stop looking for work and wait for the economy to get better, and those numbers properly drive down the unemployment rate. This time they aren't. Whether people think this is really different from the last few downturns in that it is going to be a long hard slog like the Great Depression was so they'd better keep pounding the pavement, or if it is that their asset losses have left them hurting so much they HAVE to be out looking for a job, they are looking for a job longer.
@AC
What are you some sort of monkey? You are counting people that are retired and take a part time job as bein unemployed? Or students that study almost 40 hours a week and work 20 hours for a bit of pocket money as being unemployed??!! So you are cooking the books to inflate numbers, yeah, that is good, we need to count new borns as being unemployed as well as the retired. It follows your logic, BTW, maybe we should count the people that are not working after 1700 as unemployed too, becuase they are at that time. I mean that would boost the unemployment rate to almost 60 or 80%.
Paris, cos she is unemployed, but I have a job for her.
Sad but true?
Organisations with shareholders have responsibilities to shareholders and at a lesser extent to employees unless it is a co-operative type employer (based on UK stuff).
Departments have responsibilities to do what senior managers instruct them to do and in accordance with that oprganisations policies.
Upshot: directors of organisations will seek to make similar returns (eg match last business year returns) to shareholders and make the required changes in order for it to be so.
That's business?
In A Nutshell
IT: what was once lamented as grossly understaffed is now thankful for keeping what it has. Same numbers, just new paradigm.
Damn AC, is the Pope worried about you? I mean, he may be the good right hand of the wrong "person".
Experience?
Might be because, as an industry, IT has had more recent experience with recessions/contractions than other economic sectors. To wit, around 2001 when IT was double whammied by the deflation of the dotcom bubble and the completion of Y2K projects.
In short, we're ahead of the curve.
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