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ROI, Security Driving IT Employment Trends

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After several false starts in the economy since 2001, the overall outlook is now more positive. The information technology sector has entered a more stable period characterized by infrastructure upgrades and increased interest in projects with near-term payback.

As a result, IT professionals who kept their eye on long-term career plans, stayed abreast of changes in technology and kept their skills current should find themselves better positioned to take advantage of the industry’s future growth.

To better understand where the IT market is headed as the economy shifts into a new cycle, we need to first take a quick look at what happened during the past few years.

Industry Trends: Past, Present and Future

The Y2K-, ERP- and Internet-fueled IT bubble of the late 1990s has long-since burst, yet the long-term trend toward increased use of technology is still intact. According to the Information Technology Association of America (ITAA), U.S. companies laid off more than 500,000 IT workers in 2002, dropping the size of the high-tech workforce from 10.4 million to 9.9 million.

Those who weren’t handed pink slips often saw their responsibilities multiply with no corresponding jump in salary as raises and bonuses were all but eliminated. In fact, the ITAA reports that IT compensation declined by an average of $3,000 to $10,000 depending on the position held.

Another study, this one from META Group, Inc., found that 47.5% of respondents had cut IT staff, with the majority eliminating between 10% and 15% of their staff. Finally, research firm IDC weighed in on the issue with its report showing that the worldwide IT industry suffered its largest decline ever in 2002, recording a negative growth rate of 2.3%.

Yet in spite of those dismal numbers — and META’s additional finding that reducing costs continues to be the top priority for U.S. businesses — indicators point toward stabilization in the IT market. IDC forecasts an increase in IT spending of 5.8% worldwide and 4.4% in the U.S. in 2003, while a 2002 Forrester Research study showed that 80% of employees describe their executive officers as enthusiastic users of information technology. A 15% increase over 2002, this is considered a positive indicator of the direction of future IT spending.

ITAA reports that IT managers expect to create 1.1 million jobs in the coming year, while Gartner warns that the demand for skilled IT professionals will increase quickly, leaving many employers desperate for talent in select areas.

In fact, statistics indicate that the demand will double over the next seven years for IT professionals skilled in the following areas:

  • Software engineers
  • Computer support specialists
  • Network and computer systems administrators
  • Systems analysts
  • Information systems managers
  • Employment Outlook and Trends

    In an interesting twist, it appears that the growing demand for IT professionals will be driven in part by the same cost-cutting impetus that led to the previous reductions in the IT workforce. And there are other trends at play as well, including ongoing webification, an increased focus on ROI, a greater emphasis on data security — even the growing popularity of Linux.

    The biggest driver, however, is the need to find applications that will reduce costs, as well as ways to integrate existing software systems and improve overall security. As such, what you wont see anytime soon is a return to the huge ERP implementations that characterized the IT industry a few years ago, nor has CRM implementation taken off as originally expected.

    In fact, what remains missing from the current IT picture are the “big bang” projects and emergent technologies that prompted companies to move en masse to the next level or application. Instead, the focus is on the implementation of technologies that offer a return on investment and address the basic “nuts and bolts” IT needs such as infrastructure and support.

    Over the next few years, companies will continue to spend billions on e-business infrastructure and development as they try to analyze and protect their customer data. Specifically, beginning in late 2003, companies will be recruiting security professionals more aggressively than ever before, a prediction recent salary trends appear to support. Even as pay for the average IT position declined nearly 6% in 2002, security pay increased by 23% and is expected to continue to outperform the market.

    Another growth area, web metrics and usability, is a field that is still being defined. As companies place greater emphasis on web services and increase their focus on ROI, understanding what is effective and why will become more critical than ever.

    Recognizing this trend, companies have already begun to shift resources to metrics and usability testing, positions which require both business and technical skills.

    On a parallel track, as retailers rely more and more heavily on web site sales, they will increasingly depend on web support services to help track shipments and allow customers to track order status. In 2002, there was a 14% increase in retailers’ ability to track shipments of their products on the web, a number that is expected to continue increasing over the next several years.

    Following are several other industry trends that should impact employment:

  • Linux is one of the few growth areas in technology. Almost one-fifth of all server computers sold by Dell now have Linux installed, and Sun Microsystems has also begun offering Linux.
  • Profits will shift from hardware to software, services and consulting, which will account for 58% of industry profits by 2005.
  • Spending on computer and peripheral equipment as well as on services and outsourcing will be up slightly beginning in 2003.
  • Well-established vendors will have an advantage in selling to wary customers. Known brand names that offer “modular” precuts to be installed one step at a time will be most successful in a market where customers are likely to move more slowly in any direction.
  • Staying Focused

    As the industry recovers and new employment patterns emerge, it’s easy to assume the best career strategy is to jump into whatever position or specialty offers the best, most immediate opportunities. That would be a mistake.

    Losing sight of a long-term career plan to take advantage of the latest blip on the economic radar can quickly come back to haunt. It’s important to remember that information technology has been (and always will be) an extremely cyclical industry. Technology advances so quickly that what is in vogue today quickly becomes yesterday’s news. IT professionals who fail to understand this will generally find themselves on the wrong end of the boom-bust cycle.

    The wiser choice is to base career decisions on macro trends. Start with the premise that the role of technology in society is continually increasing. (Think of it this way — on any given day there will be more computers in use than the day before.) That, in turn, means opportunities will continue to grow for IT professionals who have positioned themselves for long-term success — and that’s regardless of the cyclical nature of the industry.

    To do that type of forward-looking positioning, it’s critical to keep skills current and to stay on the leading edge of technology. Commit to continuous improvement, keep abreast of the constant changes in technology, and always keep the following fundamental truths in mind:

  • The value of skills is the best hedge against layoffs.
  • Highly valued people are paid more.
  • Each individual is personally responsible for maintaining his or her value in the marketplace.
  • People make businesses successful.
  • IT professionals who keep these fundamentals in mind, understand what’s happening on a macro level and look beyond the current cycle will always be of value to companies that value them in return.

    Steve McMahan is group president for major markets for Kforce, Inc. Based in Tampa, Kforce Inc. 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.

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