Projections on the strength of the recovery may be mixed, but most agree that 2004 will finally mark an increase in spending in the information technology sector — spending that should result in improved job growth for IT professionals with the right skills.
Even those pundits whose predictions of recovery in 2003 failed to come to fruition greeted the New Year with renewed optimism, and this time they point to a number of strong indicators to support their bullish views on tech spending. For starters, Economy.com is forecasting a 16 percent increase in IT equipment and software spending for 2004 as corporate America finally opens its wallet to replace the aging systems and software they have been nursing for the past several years. Further support comes from the latest Goldman Sachs IT Spending Survey, which found that 56 percent of IT managers expect to see a spending acceleration this year.
Unlike a decade ago, however, most expect IT spending to be far more focused on ROI. According to a Gartner/SoundView survey of CIOs and other technology executives, extravagant investments in large-scale enterprise systems have given way to shorter-term projects that will quickly generate value. Further, it is the small and mid-sized businesses that are expected to take the lead on spending as large corporations remains hesitant to increase expenditures too dramatically.
In addition to the need for hardware and software replacements, there are a number of other factors influencing IT growth expectations. First are the governmental influences, including the Jobs and Growth Tax Relief Reconciliation Act of 2003. As part of this federal stimulus package, large businesses are allowed to write off one-half of their IT investment rather than expensing it over time, while small businesses can write off up to $100,000 in IT investments annually, a significant improvement over the previous cap of $25,000. Because the incentives expire at the end of 2004, expectations are that businesses will invest in technology sooner rather than later.
New immigration laws are another key governmental factor. One law caps the H-1B visa quota at 65,000, down from 195,000, while another proposal would impose an annual cap of 35,000 on L-1 visas in 2004. H-1B visas allow U.S. companies to hire overseas workers specifically for the purpose of filling jobs in this country, while L-1 visas are meant for intra-company transfers and are valid for a maximum of seven years. Proposed legislation also would require companies to pay prevailing U.S. wages to visa employees.
Another positive sign is a renewed focus by companies on adding equipment that supports new services such as virtual private networks (VPNs). In addition, a Morgan Stanley poll of CIOs identified network security, application servers, storage area networks, storage hardware and enterprise resource planning software as the top spending priorities for 2004. In other words, the focus will be on improving the storage and distribution of information, as well as on how to better protect it.
In fact, that focus on security is expected not only to offset the impact of offshore consulting — companies are less likely to entrust the protection of critical data to offshore companies — but also to generate the biggest job growth.
A possible end to the ‘jobless’ recovery
Thanks largely to that desire to protect corporate data by keeping it onshore, the hottest IT jobs in 2004 are expected to be related to security, including chief security officers and other information security specialists. In highest demand are IT professionals with the ability to deploy firewalls, upgrade systems and perform just about anything associated with the open-source Linux operating system, which is less prone to the worms and viruses that crippled corporate networks throughout 2003 and is also less costly than proprietary systems.
Another potential growth area comes from the emergence of more hybrids of technical and administrative positions in areas like data management and systems architecture, as well as the merger of IT technical skills with business management skills — positions that are fairly immune to offshore outsourcing.
Web services is another bright spot for 2004. A Gartner/Griggs-Anderson survey found that 75 percent of respondents planned to use Web services intra- and inter-enterprise in the coming year.
Also, over the next several years, software and professional services markets will consolidate, requiring a revamping of skill mixes that ultimately will replace commodity technology skill sets with business process/management and technology. This will include:
Software design and engineering, which Gartners Technology Demand Index indicates is already the one application area that has shown the strongest current demand due to the growing interest in new standards such as J2EE (Java 2, Enterprise Edition), .NET and Web services. New business models are also expected to have an impact, such as software makers shifting to provide services over the Internet rather than via the traditional shrink-wrapped boxes.
Interactive media specialists, which a Gartner G2 survey showed will be in high demand as advertising and marketing agencies with $500 million or more in gross billings push interactive advertising. Among large agencies, 67 percent already recommend interactive media, while another 10 percent say they plan to do so in 2004.
Tech support, particularly for predicted priority expenditures such as wireless LAN connectivity, security, portal software, VPNs, storage management software and Web application server software.
Bioinformatics and nanotechnology, both embryonic growth areas that are expected to blossom to create new and strong areas of demand.
One final reason many are predicting a shift from a jobless recovery to employment growth is the impact of the aging Baby Boom population. In 2004, the youngest of this group will turn 40, while the oldest hits 58. There are 76 million Baby Boomers, but just 46 million Generation Xers. Clearly, the supply-and-demand situation created by the labor force shortfall will turn in favor of the American worker.
Positioned for the demand
With recent surveys showing that 72 percent of respondents plan to increase hiring efforts in the first half of 2004 while another 88 percent are looking specifically for experienced, hands-on technology professionals, those with the right mix of skills, stability and motivation are well-positioned to take advantage of the resumption in IT hiring.
So what are employers looking for? Most say they are interested in IT professionals with at least five years of experience in a particular field, as well as a solid understanding of business. They also are looking for signs of past job stability and a willingness to make a long-term commitment to employers.
In short, the same advice given in previous years holds true for 2004: Don’t lose sight of long-term career plans in favor of the latest technology fad.
IT remains an extremely cyclical industry. As such, the smart choice is to base career decisions on macro trends. Keep skills current, stay on the leading edge of technology and commit to continuous improvement. Those IT professionals who keep their long-term career goals in sight will be well positioned to take advantage of the coming job boom.
Steve McMahan is group president for major markets for Kforce. Inc. (www.kforce.com). Based in Tampa, Kforce is a full-service professional staffing firm providing flexible and permanent staffing solutions in more than 40 North American markets as well as through online services.