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
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.
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
”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
”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
”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.
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