For IT Workers, How Bad Will It Get?

November 24, 2008
By

James Maguire

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It was with no small alarm that I perused the monthly Dice tech job report. Published on November 11, it showed that Dice listed 75,640 IT jobs. That seems like a nice healthy number – until you realize it typically hovers around 90,000.

Still worse, looking at the site on Nov. 20 I saw the total had fallen to 70,811. (Now on the morning of Nov. 24 it has dipped to 68,606.)

Such a steep drop in such a short period – what’s going on?

Tom Silver, Dice’s chief marketing officer, tells me that recent weeks have been the worst. While Dice’s job postings are down 20-25 percent from last year, for most of 2008 the site had its usual 85-90,000 job listings. “Roughly half of that decline has been in the last four weeks,” he says.

The figures from outplacement consultancy Challenger, Gray & Christmas are similarly grim. The firm reports that tech job cuts surged in the third quarter and now threaten to reach the highest annual amount since 2003, when cuts totaled 228,000. Through October 31, job cuts by telecommunications, electronics and computer industries totaled 140,000. Almost two-thirds of these losses have been since July.

What’s disconcerting is that these cuts aren’t, say, unskilled retail jobs that are unstable by nature. This is a sharply slowing job market among some of the most educated, skilled workers. Workers that hiring agents perennially complain that they can’t find enough of. (Which is why, they explain, they look overseas.) Apparently they’re not as hard to find as they used to be.

Which begs the question: if it’s this bad now, how bad is it going to get?

Dice’s Silver, who keeps close tabs on IT hiring trends, calls it a major unknown.

“The uncertainty is fairly widespread and nobody really has any sense where this thing bottoms out,” he says. “For the near term, anyway, things are going to be fairly slow as companies assess where they can cut back.”

Given the state of the economy, it’s no wonder that the downturn has dragged tech down with it. “One needs only to open up a newspaper to know what’s happening in the environment,” Silver says.

To be sure, the current cuts are nowhere near the horrific bloodletting of 2001-02, when a staggering million plus tech jobs were axed. (695,000 in 2001 and 468,00 in 2002, according to Challenger, Gray & Christmas figures.)

John Challenger, CEO of Challenger, Gray & Christmas, doesn’t expect this downturn to be nearly as bad for tech as was the dotcom bust.

“In 2000-02, tech really led the way into the recession and was at the center of that storm,” he tells me. “This time it’s more about banking and housing and automotive – tech’s been dragged into this instead of leading the way.”

Yet as is often the case, IT staffers will bear a greater brunt than management.

“I think it will be worse for the rank and file workers. When companies have to cut they still may need a manger for the department,” Challenger says. “But every area of the company can fall under the knife. So people really do need to prove they’re essential, that if they were to leave there would be nobody else who could do what they can do.”

“That’s the surest defense – if you were to leave there would be a big gaping hole in the IT department’s capabilities.”

IT hiring, of course, correlates with IT spending, and expectations are muted at best.

“It does seem like it’s getting worse right now, not better. Even the optimists don’t think the economy’s going to turn around until the spring,” Challenger says. “Certainly business spending, which tech is so reliant upon, is challenged right now.”

Stephen Minton, an IDC analyst, notes that the research firm has recently lowered its forecast for IT spending in 2009. Domestically, “Our new forecast is that the IT market will be pretty flat, either slightly positive or slightly negative…which is much lower than we’ve had over the last five years.”

He points out that observers can extrapolate from this forecast that if companies aren’t implementing as much new IT, their need for workers will be correspondingly lower.

There are, however, a couple of possible mitigating factors in the lackluster tech job market.

The dip in the Dice job numbers may be due partially to yearly seasonal trends, Dice’s Silver says. “Some of that drop happens every year, particularly in tech.”

Continued: Possible bright spots in tech hiring