Demand for IT Workers Drops Sharply

The U.S. IT workforce has grown less than one percent since the start of the year, while the demand forecast by IT hiring managers for new workers has dropped sharply according to a newly released update to the Information Technology Association of America (ITAA) annual workforce study, Bouncing Back.

The Arlington, Va.-based ITAA’s quarterly update finds that the overall size of the IT workforce has grown by a net 85,437 positions since January, from 9,895,916 to 9,981,353. Employers added 782,466 IT workers and dismissed 697,029 IT workers during the period.

The update also found that hiring managers have adjusted their 12-month hiring outlook considerably since earlier in the year. In January, these individuals indicated their intent to fill 1.1 million IT positions over the subsequent 12 months but by July, the volume of demand had dropped by 27 percent, to 834,727.

At the same time, the study found that the rate of hirings to dismissals of IT workers improved substantially over the previous 12 months, moving to a net gain compared to full year 2001 in which dismissals exceeded hirings.

“Today’s survey results are one more indication that where the overall economy may be recovering, the IT marketplace is still coping with recession,” said ITAA President Harris N. Miller. “Hiring managers appear to be less bullish than at the start of the year — even as many forecasters have predicted an IT industry turnaround in 2003. My concern is that a sluggish job market today could turn off many prospective information systems and computer science students, resulting in rampant IT talent shortages a few years down the road.”

Included among the more notable findings of the ITAA quarterly update are:

• Despite the uncertain economic outlook, the worst may be over for currently employed IT workers. The number of IT worker dismissals has dropped substantially in the last 12 months. Between January and December 2001, companies released 2.6 million IT workers or more than 218,000 per month. Between July 2001 and June 2002, the monthly total dropped to 116,000. According to the ITAA report, this suggests that companies may have made the cuts necessary to their IT worker rolls and current employment levels are in tune with current economic realities;
• IT jobs are harder to get. Companies hired far fewer IT workers in the last 12 months. Between January and December 2001, companies hired 2.1 million IT workers, compared to 1.6 million workers between July 2001 and June 2002. Hiring dipped 25 percent during this tracking period;
• IT companies are hiring fewer workers. At the start of the year, IT companies (as opposed to companies not primarily in the IT business) accounted for almost 20 percent of all IT worker hiring. By July, that percentage had dropped to less than five percent. Hiring by large IT companies is off 85 percent and hiring by small IT companies is off by 79 percent. This suggests, according to the report, that IT companies continue to be buffeted by unfavorable economic conditions, and that IT job prospects are more favorable outside of the IT industry;
• IT workforce growth will remain relatively flat through 2002. If current hiring trends hold, the total U.S. IT workforce will reach just over 10 million workers by yearend, 10 percent below expectations earlier in 2002;
• Tech support specialists remain the most often hired workers. Of 440,282 IT workers hired in the last three months, almost one-third 147,649 were in the tech support category. Web developers were the next most popular hiring category, with 93,410 added to work rosters, followed by network design/administrators with 47,463;
• Top skills holding stead. Top in-demand skills haven’t changed much since the release of the Dice Tech Skills Profile, compiled for the ITAA from dice.com job listings data. Hard tech skills including C++, Oracle, SQL and Java remain at the top of the list, and demand for these skills has held steady or increased slightly.

“ITAA’s findings indicate that IT hiring managers have adjusted their initial expectations for 2002 to the current economic situation. Most interesting are the findings that the rate of layoffs has declined and that even in a tech recession, companies, especially those outside the IT industry, still need skilled technology professionals,” said Scot Melland, president and CEO of Dice.

The update, sponsored by Dice, complements ITAA’s annual study, intended to present data that better reflect current market conditions. ITAA contracted with Market Decisions Corp. of Portland, Ore., to collect the workforce statistics. The survey is based on telephone interviews with 300 hiring managers, selected at random at IT and non-IT companies. Results have sampling variability of plus or minus 6 percent at the 90 percent confidence level.