High Expectations Leave IT Workers With the Blues

The economy is picking up. The IT sector is in recovery... so they say. So where are the high-paying jobs? Where are the glorious stock options? Analysts say the recovery is leaving many IT workers with the blues.
Online want ads for IT workers are slowly growing in numbers. Layoffs are less frequently in the headlines. Some IT professionals are even leaving one good job for a better one at another company.

Slowly but surely signs are pointing to new life in the tech sector.

But there's no sign out there of the kind of boom that lit up the industry at the end of the last century. The Internet boom. The dot-com bubble. Call it what you will... there's no sign of it here. While the layoffs and corporate shutdowns that traumatized the tech industry just four or five years ago now are behind us, the regrowth is on the slow and steady side.

Gone are the days when a programmer just out of college could name his price. Gone are the days of latte machines and Herman Miller chairs in the computer lab. Gone are the days of stock options that promised to make every techie a millionaire by the time she was 35.

Today the expectations are different.

And according to Hudson, a global staffing and outsourcing company, IT workers' confidence in their jobs and in the employment market dropped dramatically last month. A Hudson survey showed IT confidence at its lowest point in several years.

Industry analysts say a spike in layoffs recently hit the tech sector. The IT and computer industry had the most job cuts of any U.S. sector last month, showing 17,886 losses, according to John Challenger, CEO of Challenger, Gray & Christmas, a Chicago-based outplacement company. That's more than double the transportation sector, which has the second-highest number of job losses.

And these losses came on the heels of a year of slow job growth. The U.S. Bureau of Labor statistics show that the computer information industry employed 776,000 workers in 2004. Today that number is closer to 804,000. ''It's a little growth, but not much in a year when the economy created 2 million jobs,'' says Challenger.

This slow growth combined with the recent job losses certainly has quelled enthusiasm. But largely, industry observers say, the drop in confidence has a lot to do with expectations.

''Things have gotten better but they're not all that great, at least in a lot of places,'' says Gordon Haff, an analyst with Illuminata, an IT analyst firm based in Nashua, N.H. ''They may have a feeling that if this is IT in recovery, I'd hate to see it in depression... A lot of people hoped that the recovery would be a more explosive recovery, and now it's fairly clear that it is not and things are not going back to the Friday afternoon beer blasts. People are disappointed.''

The Hudson Employment Index, a monthly measurement, dropped 21 points last month, hitting the lowest reading ever recorded for the IT sector. This decline in employee confidence is being blamed on a decrease in optimism about personal finances and hiring intentions, along with concerns about job loss, according to Vic Velevis, director in the IT and Telecom Practice at Hudson's Dallas office.

''We see the IT sector being more volatile just because of what the IT workers have been through in the past couple of years,'' says Velevis.

Changing Expectations

Haff says despite the turmoil and financial wreckage that followed the death of the dot-com boom, some IT workers still are waiting for the tech sector to revert back to the wild times of the late 1990s. And if that's what they're waiting for, this economic turnaround is going to seem mighty anemic.

''That time was atypical and it was not sustainable,'' says Haff. ''We are largely back to a cycle of normal, healthy growth... We still won't have the kind of employment opportunities and salaries that we had during the boom.

''If anyone is waiting for things to return to the way they were in 2000, that's just not going to happen,'' he adds.

An IT manager with any business savvy would already have lowered those expectations, says MJ Shoer, president of Jenaly Technology Group Inc., a Portsmouth, N.H.-based outsourced IT firm covering small- to mid-sized businesses in New England.

''I think some people are expecting it and those are the people who don't have the business grounding,'' says Shoer. ''If an IT person has business savvy, he knows that won't happen again. If they got into IT thinking they were going to make an unrealistic amount of money, it's not going to happen again. Sorry.''

And business managers also have changed their expectations, according to Shoer, who says no CFO or CEO is going to sign off on a technology buy just for the sake of being cutting edge. And that kind of swing in mind set is affecting not only IT spending but IT hiring, as well.

''There's a realization that you have to be smart about your IT investments and you have to justify them from a business point of view,'' says Shoer. ''Is there a business reason to buy something? Should we allocate our money in other areas? There's no more buying technology because it's new and you want it before your competitors get it. Now you have to see if it will bring a return to the bottom line.''

And hiring in the IT sector has slowed because so many jobs are either being outsourced or offshored. And the IT people who are being hired inhouse aren't getting the salaries they once did. Shoer says someone who may have commanded a six-figure salary six years ago, may be bringing in closer to $60,000 or $65,000 today.

Challenger, head of the outplacement firm, says IT workers have lost some confidence because they're not fully participating in the economic recovery.

''The economy has been growing the past year, but technology workers are not participating in that,'' says Challenger. ''It's quite puzzling, really. In a period when companies are becoming more and more dependent on technology and their businesses are basically strong and they have more cash, you'd think they'd be investing in technology and they'd be putting people to work migrating to new technology and upgrading. For some reason, that doesn't seem to be happening.''

Challenger says companies are still 'digesting' the technology they have and they're putting their investments into other areas. He does think this may turn around by the end of the year, however.

''I'm still hopeful,'' Challenger says. ''At this time in the cycle, with the economy stronger, companies will recognize that this is the time to be investing in new technology. This is the time that technology will give them a leg up. In the next six months, there might be more work for technology professionals.''

And Shoer says the economy is slowly picking up and the tech sector will follow suit. People just need to get used to healthy growth -- instead of the gold rush mentality that defined the Internet boom.

''Certainly the people I've talked to have an expectation that the economy is improving and things are stabilizing,'' adds Shoer. ''That means back to normalcy and not back to those unrealistic levels. What we all experienced in the '90s was unrealistic. And now we're back to reality.''






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