IT employment situation

Hackett Study: 2009 Hurts Worst, But More IT Cuts Ahead

In a recent (11/16/09) report, the Hackett Group  forecasts that 3.6 million back office jobs will be eliminated by 2014 at companies with $1B or more in 2008 Revenue. The bulk of those cuts (2.2 million) will fall in the period between 2008 and 2014. For 2008 and 2009, cuts come to 964,000, so that means another 1.2-plus million still lie ahead. Hacket characterizes these jobs in the following figure as G&A (an abbreviation for general and administrative, which includes IT among its categories, along with Finance, Procurement, and HR).

2009 represent the nadir for job cuts at big companies (reproduced by permission).

Things start getting even scarier when the composition of those cuts is laid out. In almost any given year, somewhere around half of all the positions under the gun come from IT. In addition to forecasting losses of 649,000 G&A jobs for 2009, Hacket forecasts additional losses of 423,000 for 2010, 220,000 for 2011, 188,000 for 2012, 185,000 for 2013, and finally, 197,000 for 2014. Do the math (divide by 2) to figure the number of IT jobs that will be affected thereby. All I can say is “Ouch! Ouch! Ouch!”

I know we’ve all been hoping that eonomic recovery would mean a reversal in job losses, and improvement for those of us who toil in the IT sector. I’m sorry to report that here’s at least one firm that believes a turnaround will not buoy the IT job count in the biggest companies, for what I can say is the “readily foreseeable future” (up to 5 years out). Thus, any net gain in IT jobs will have to come from the SMB sector and smaller big businesses, and will have to more than offset the numbers shown in the preceding figure to result in positive job growth. Good thing that companies in the SMB sector significantly outnumber those at the top of the revenue heap, but this still paints a more gloomy picture than anyone could wish for.

For more information, please visit the website for the Hacket Group at www.thehacketgroup.com.

GDP Up, But Employment Keeps Dropping

If I understand things correctly a recession is considered to be over when a quarterly GDP report returns to positive terrritory. With a forecast return for this quarter to a positive growth rate, by some metrics that means the recession is over. But that probably explains why About.com includes these paragraphs in its discussion of recessions and depressions:

The standard newspaper definition of a recession is a decline in the Gross Domestic Product (GDP) for two or more consecutive quarters.

This definition is unpopular with most economists for two main reasons. First, this definition does not take into consideration changes in other variables. For example this definition ignores any changes in the unemployment rate or consumer confidence. Second, by using quarterly data this definition makes it difficult to pinpoint when a recession begins or ends. This means that a recession that lasts ten months or less may go undetected.

By the other metrics tagged in the quote’s second paragraph — namely, unemployment rate and consumer confidence — this recession is most emphaticallyl NOT over. Consumer confidence dipped in September and October, and unemployment rates have continued to climb by fits and starts all year long with decreases for both August and September as well. Many economists and even President Obama continue to predict that unemployment rates will top 10 percent by the end of the year or in the first quarter of next year (of course, with the current rate at 9.8%, that’s no huge jump in rates either).

What does this mean for IT workers? Repeat my mantras from earlier postings on this very same topic. For those currently employed in IT that goes something like this: ”Be cool. Stay put. Hone your skills. Wait for things to improve.” For those who want to work in IT, either on a first job or to get themselves back to work, it sounds like “Be cool. Look harder. Hone your skills (and consider some training or back to school). Wait for things to improve.” Given that the employment market is normally quiescent between Thanksgiving and New Years (except for part-time seasonal employment) that definitely means that “hunker down” remains the watchword of the day.

Please join me in wishing for improvement and real growth in IT jobs for 2010.

Interesting Employment Info Source

For this blog, I lean heavily on the monthly employment situation summaries from the US Bureau of Labor Statistics (BLS). But there’s another, more commercial source of employment information out there to which I’d like to point for today’s blog. It’s Manpower, Inc. a global player in the employment services industry. They publish a quarterly Employment Outlook Survey that takes a more global look at the employment situation, that helps to put the US numbers into a more comprehensive context. Their Q4 2009 Manpower Outlook Survey: Global is out, and it has some interesting tales to tell.

For the Americas, the US is at the middle of the pack ahead of Costa Rica and Peu (both down more than 20 percent since this time last year), on par with Argentina, Guatemala, and Mexico (all down 11 percent or more, just like us). Canada is slightly ahead of the US at 9 percent down, while Brazil is way ahead of everybody else, even with its own numbers for last year.

In Asia Pacific, China and Taiwan are the leaders with numbers that are officially flat (though China is down 1 percent and Taiwan down 8 percent when seasonally adjusted factors are taken into account). In that part of the world, Singapore is doing relatively well at 2 percent down, while Australia and New Zealand are down 9 and 8 percent respectively. Other countries in that part of the world are down over 10 percent (Hong Kong, India, and Japan).

In Europe and the Middle East numbers are all over the place. Hungary and Italy are flat, with the UK nearly so (down 1 percent, but at 0 when seasonal adjustments are factored in). Belgium, the Czech Republic, France, Ireland, and Spain all fall between 3 and 5 percent down, and everybody else fits into two broad camps. Germany, the Netherlands, Norway, Sweden and Switzerland all fall between 6 and 9 percent. Other European countries fall between 12 percent (Austria and Greece) to 14 percent (Poland) to South African (?, 16 percent) with Romania bringing up the rear (at a whopping 32 percent).

Overall, this report characterizes US employment as weaker in terms of movement for the coming year, and relatively stable when comparing this quarter to those immediately preceding and succeeding it. What does this mean? We’re down, and can’t expect massive relief any time soon. But then again, things shouldn’t get too much worse looking forward, either. After the roller-coaster ride we’ve had for the past 18 months, maybe this isn’t too bad but it looks like it will be a while before things genuinely start to improve in the US.

Even UT takes an IT layoff hickey

Part of my morning ritual consists of listening to local NPR affiliate station KUT, which intersperses snippets of local news along with the national and global news that NPR reports on “Morning Edition.” This morning, I heard that big local employer UT Austin just laid 25 people off in its Information Technology Services office. Sure enough, I just checked the local news headings on the station Web site and there it is: “UT Lays Off IT Workers.” The official explanation reads “…the staff reduction is part of UT efforts to cut costs during the economic recession.”

This is pretty interesting, and of course, also tragic for those involved (though the story does say that 3 out of the 25 people affected will be offered other campus IT jobs). Here are some interesting nuggets of information — factoids, if you will — that this news suggests to me:

• The latest data I can find for university endowments by size is for 2007, which shows Texas at Number 5, behind Harvard, Yale, Stanford, and Princeton in that order. Interesting that an institution with what was then a $15 endowment feels the need to trim IT staff. Disclosure: I have at least one degree from UT Austin (two, if you want to count the bachelor’s equivalency in CS I earned there in 1981) and remember the school fondly.
• Enrollment at UT is up 2.1% for 2009, as of the start of the fall semester. Talk about “doing more with less” — perhaps that should be “serving more with less” in this case!
• As of August, unemployment in the Austin area stands at 7.2%, 0.8% better than the Texas and 2.5% better than the US national unemployment rates for that same month. If anything, this argues that the recession is a bit less severe here than in other parts of the country and the world.

I’d love to know more about the reasons for this move, and to understand how and why these cuts were made at this particular time. One thing’s for sure: when a well-run, financially sound institution like UT Austin feels the need to trim IT staff, you can bet they aren’t convinced that the recession is over, either. Ouch!

More on Bernanke: It’s No Pleasure to Be Right

In following up from my preceding post “Bernanke at Brookings,” I’ve noticed that my reaction to his news about the technical end of the recession mirrors lots of other reactions. I saw a great political cartoon on the editorial page in my morning paper today that showed somebody holding an umemployment sign responding to the remark by Bernanke that the “recession is likely over” by saying “No, it’s not!”

I have to agree that while technical measure may be important to economists, and that while leading indicators may signal the end of a recession, it’s only when trailing indicators — most notably, employment and consumer confidence — participate in an upswing that the “person on the street” starts to put some credibility into claims that the situation is improving.

My understanding is that we have anywhere from six to twelve months still ahead where other signs of improvement will begin to appear here and there, leading ultimately to a general sense of better times and conditions. But until the IT employment situation turns around and actual job growth begins to show itself, I don’t think most people (including myself) will be feeling too sanguine about the state of the economy and the technical status of the recession or any subsequent (technical) expansion.

The Economist Echoes July 09 Job Situation Conclusions

One my favorite and most trusted news sources, in addition to NPR, is the British weekly news magazine known as The Economist. I’ve been a subscriber since the early 1990s, and have never had much cause to regret the $100-plus it costs me to get it delivered to my mailbox 51 weeks a year. I was therefore pleased to see the conclusions in my last Friday’s blog subtantially echoed in a recent story from their August 1 issue entitled “First, the good news.”

Although this story deals with the euro-area economy rather than the US economy, many of the same observations and conclusions emerge from its coverage. Although things still aren’t exactly good, and such recovery as we’ve seen still can’t be characterized as either strong or vigorous, indeed things lately aren’t as bad as they’ve been in the past. In some EU member countries, and some industry sectors, unemployment remains a pressing problem, particularly in Spain where rates in excess of 18% (!) are reported.

In European IT likewise, I suspect that bunker mentality (”hunker down and wait for things to improve”) also prevails. In e-mails from Europeans and Americans working in European IT-related jobs, I’ve confirmed that things aren’t completely dire, but that it’s still not time to be looking for a high-paying new position just yet, either.

Sounds like the situation on both sides of the pond is about the same for IT professionals. Let’s look for more signs of improvement when next month’s Employment Situation posts on September 4, just before Labor Day.

June 09 Employment Situation Summary

As usual, the US Bureau of Labor Statistics published its Employment Situation Summary for June early on this month (7/2/2009). Though it shows no big changes from the previous month, it does show an unexpected spike in job losses: up from 345,000 in May to 467,000 for June–a 35% jump in a single month. This probably explains why US stock markets freaked out before the long Independence Day holiday weekend, with all major indices suffering losses of 2.4% or higher (Dow, S&P 500, NASDAQ, and so forth). This morning, Asian and European markets are down as well, following the US lead set yesterday. What’s it all mean for IT workers?

For sure, things are not improving much. Overall unemployment is at 9.5% as the BLS measures same, and measures that include those unemployed long enough to qualify as “discouraged workers” or “out of the workforce” could pull measures up to around 11% or so. Personally, I think that IT isn’t faring quite so badly, and that the worst of the decline has already come and (hopefully) gone. The TechCrunch Layoff Tracker shows that numbers are down from the previous three quarters, and nowhere near the bloody end of 2008. Anecdotally and statistically, IT job postings appear to be at least modestly up in most major US metropolitan areas, with DC continuing to lead that pack toward recovery.

So why the big downswing in the markets? From my perspective, it has to be the sharp resurgence in job loss numbers causing an emotional reaction. The big picture isn’t as dire and the overall trends continue along the path of “no recovery yet, but not as bad as it was before”–perhaps this is just another exception that proves the ruling that a real recovery still remains some ways off?

EU in more or less the same boat as the US, employment-wise

Just for grins, I decided to jump over to the other side of the Atlantic to take a look at the employment picture over there to see how we stack up against the world’s largest aggregated economy. Given the state of global markets and economic trends, it should come as no huge surprise that things aren’t terribly different in Europe than they are here in the US, except perhaps to observe that where some of our (un)employment curves seem to be flattening out, theirs are still climbing steeply, whether viewed in terms of overall unemployment or youth employment.

To see and ponder some numbers for yourself, check out the EU employment situation and social outlook for June 2009 (click the PDF link for “Related Documents” to grab this report). The report analysis does, however, point to “deceleration in the page of the labour market deterioration” — in other words, the same phenomenon of things not getting worse as quickly as they did at the end of last year or in Q1 2009. That said, at 8.9 percent for June, EU overall unemployment isn’t quite as bad as US unemployment, which the US Bureau Of Labor Statistics posted at 9.4 percent for the same period. FWIW, it also looks like IT employment in Europe isn’t quite as hard hit as here in the US, either (see page 8 of the EU report cited above for more info). I was also  a little tickled to see that the EU reports more directly on employment in the IT sector as “Computer and related activities.”