Displaced IT workers may see the light in 2004

November 2003
ComputerUser Magazine

A year ago, James B. Beeler was the director of information systems at a large company providing student achievement tests for departments of education across the United States. Since his October 2002 layoff, however, his personal savings have dried up. So, to bring in extra money, Beeler has sold his beloved 1974 Ford Bronco, as well some of his family's antique furniture. Of course, he has used the year to look for work in his field, too--sadly, to no avail.

"Unemployment benefits were some help," says Beeler, who lives in San Antonio, Texas. "They at least paid for my COBRA insurance; of course, that's gone now. "The latest phase of 53-year-old IT veteran's journey is now leading him to Home Depot and Best Buy, where he's seeking weekend or night shifts.

Beeler's story is hardly an anomaly. Independent career coach Michele Carbone, of Bridgewater, N.J., says nearly 50 percent of the attendees at her recent seminar on job search strategies were from high-tech professions. Every day she meets people who have been without work for six to 18 months. And many, such as Beeler, opt to leave technology, at least temporarily, to pursue some other field because the IT job market has been so tight.

Yet, if projections for IT employment in 2004 are to be believed, U.S. computer workers may see brighter job prospects in the year's first quarter, according to employment market watchers. Because of the volatility of the economy, it's difficult to say whether IT job growth will continue throughout the year. But analysts looking into the crystal ball say there may be hope in the second, third, and fourth quarters of 2004 in particular industries and areas of the country.

Faint rays of hope

Blips of light started appearing on the radar as early as July and August of 2003, with reports from three major industry watchers that revealed a dip in new layoffs and a bump in anticipated IT spending.

In August of 2003, the Chicago-based global outplacement firm Challenger, Gray & Christmas Inc. released figures that showed August marked the fourth consecutive month in which companies announced fewer than 100,000 layoffs. While announced job cuts could increase another 36 percent by the end of 2003 according to historical data, Challenger, Gray & Christmas Executive Vice President Rick Cobb says the overall direction of layoffs in the third quarter of 2003 indicates the economy may be improving.

Part of Cobb's optimism comes from the knowledge that even during massive layoffs, some employers continue to hire. Challenger, Gray & Christmas's examination of aggregate listings on job boards showed there were 83,000 technology jobs available in August 2003. Those few opportunities will go to the most talented and creative workers, says Cobb.

A Robert Half Technology poll of more than 1,400 randomly chosen CIOs supports Cobb's assertion that hiring happens even when companies cut staff. According to Half's August 2003 Information Technology Hiring Index and Skills Report, 9 percent of executives surveyed plan to expand their IT departments in the fourth quarter of 2003, and 4 percent anticipate staff reductions.

Follow the money

Finding the bright spots for IT careers is a matter of looking at spending projections.

"As the economy continues to improve and you see dollars being spent, you will see dollars being spent in IT," says Katherine Spencer Lee, executive director at Robert Half Technology. With headquarters in Menlo Park, Calif., Robert Half Technology is a provider of full-time and project IT workers for various technology initiatives.

One area likely to see spending growth is healthcare, says Lee. Many healthcare providers will be continue their wireless technology initiatives, giving doctors and nurses rapid access to patient information.

Another high priority for hospitals, insurance companies, doctors offices, and medical clinics is a continued response to federal regulatory demands for patient privacy, mandated under the Hospital Insurance Portability and Accountability Act of 1996 (HIPAA). Even if hospitals already have HIPAA programs in place, they have to maintain and update systems to remain in compliance, leaving continued opportunities for employment, says Lee.

Data from Wendover Corporations' Global Insight IT Spending Index also indicates that the healthcare industry continues to be a leader in IT spending. The company polls 65,000 U.S. executives each year about their technology spending initiatives and then sells sales leads to product and service vendors.

According to Larry Dillon, CEO of Philadelphia-based Wendover, an analysis of the index data shows it to be an accurate predictor of future spending trends up to six months into the future.

According to Dillon, healthcare ranks fourth among all industries in terms of discretionary IT spending, with a 14.8 percent decrease in the amount of technology spending from Q1 to Q2 2003. (In a down economy, even industries that reduce spending can rank in the top four.)

Real estate, construction, and the banking and finance industries ranked among the top three on the Wendover's index, showing 38.8 percent, 17.5 percent, and 4.8 percent growth in discretionary IT spending from Q1 to Q2 of 2003.

Each of these industries will be making financial outlays in technology in response to declining mortgage rates. The banking industry's continued consolidation will assign IT personnel to merge banking systems, according to Cobb. And regulatory requirements under Gramm-Leach-Bliley Act of 1999 will continue to drive initiatives tied to the privacy of customer data.

Employment on the map

Overall hiring projections across the United States aren't dazzling, but there are some glimmers in certain geographic areas.

According to CIOs surveyed for Robert Half Technology's hiring index, 5 percent of executives nationally said they'd be bringing on the workers — with the most promise in the east and some parts of the south.

Fifteen percent of CIOs polled in the East South Central states of Kentucky, Tennessee, Mississippi, and Alabama say they will be augmenting their IT departments. In the Mid-Atlantic states of New Jersey, New York, and Pennsylvania, 13 percent of CIOs surveyed anticipate they will hire as well.

For job seekers such as Beeler, the mixed employment prognosis holds no guarantees, however. So while he checks out opportunities at local retailers, Beeler has been trying to launch a management consulting practice.

It's a strategy that demonstrates good instincts, since the use of contingency or contract workers often precipitates economic growth. At Robert Half Technology, for instance, Lee reports that the company has seen an uptick in the demand for consultants over that for full-time technology professionals.

"Any time you're in an economically fluctuating time, organizations will tend to use consulting labor to help them defray the cost of full-time labor until they feel comfortable enough to make a full-time hire," says Lee. "It makes their labor a variable cost."

But in Beeler's city of San Antonio, 85 percent of the businesses have fewer than 100 employees with home-grown or off-the-shelf computing systems managed by a small team, making it a tough market for him to crack. "I can tell you that I don't have a client yet," says Beeler, who has been knocking on doors for consulting work since July.

So for now, he continues his job search and if he lands a client interview he also tries to parlay it into a full-time job offer. Demonstrating his pitch, he explains that with the right outsourcing and systems in place he could easily run a 100-person company's IT functions on his own.

"Unless there's something unique about your business, a 100-person employer these days can have an IT department of one."

That doesn't leave a lot of opportunity for many IT workers, but in a difficult market, a job is a job.