Bad Economy but Bright Future for Some Info Technology Pros

Software as a service, mobile applications and data security should continue to flourish during the recession.

That’s the gist of a story posted on The Wall Street Journal website:

While the spending slowdown is expected to hit many technology categories, some pockets of tech—such as online software, mobile applications and security—may see increased investment and attention.

Companies investing more in all three of these tech categories make sense. Also known as a variation of cloud computing, software as a service—online apps that replace those housed on PCs, laptops and servers—provide similar benefits at much lower costs. With more people using wireless devices, creating new mobile applications helps drive productivity. And, as The New York Times reported earlier this month—in an article entitled "Thieves Winning Online War, Maybe Even in Your Computer"—securing corporate computers and networks are more crucial than ever.

With vast resources from stolen credit card and other financial information, the cyberattackers are handily winning a technology arms race. “Right now the bad guys are improving more quickly than the good guys,” said Patrick Lincoln, director of the computer science laboratory at SRI International, a science and technology research group.

The Journal's report concurs:

The economic downturn is heightening cyber security problems. Phishing attacks—emails that pretend to be from banks or some other legitimate source—are growing in sophistication. Cyber criminals capitalized on the collapse of several financial institutions this year by sending emails claiming that customers of failed banks needed to log on to a Web site and update their account information. The Web sites were really controlled by cyber criminals.

With the right skills, prospects for many IT pros look solid in these recessionary times.

IT Skills Essential in Recession

An article Tuesday in The Wall Street Journal confirms a tenet of this blog: employers need IT skills especially during an economic downturn:

There are also key areas where businesses—including those that are struggling—can’t go without help, says Jon Zion, president of eastern U.S. operations at staffing firm Robert Half International Inc. "There's still work to be done," he says. "And in bad times, [some] functions become even more essential."

Information technology is one such area, says Mr. Zion. Indeed, there are more than 62,000 employment ads currently listed on the technology job site Dice.com. IT positions are plentiful—even at companies that outsource jobs overseas. Systems administrators, network security specialists and help-desk technicians are still in demand, says Mr. Zion.

As we have noted, IT is so critical in keeping businesses functioning that among the last to be fired and the first to be hired are IT pros. "Today,” says Stevens Institute of Technology IT professor Jerry Luftman, “companies are going to IT and asking them for ideas as to how IT can be leveraged to reduce the costs of other parts of business.”

Recession Be Damned! IT Services Jobs Rise

American businesses cut 533,000 payroll jobs in November, the biggest monthly job loss in over 30 years as nearly every sector eliminated jobs. But one sector bucking this trend—computer systems design and related services firms, commonly known as IT services—increased payrolls last month.

In November, an analysis of U.S. Bureau of Labor Statistics data by The IT Job Analyst blog shows, IT services firms added 2,700 jobs. IT services firms employed in November some 1,435,900 people, a record high. Since November 2007, employment at IT services firms rose by 48,400, or 3.5%. As a comparison, all American employers shed 1,870,000 or nearly 1.4% from their payrolls in the past year.

In past recessions, IT services firms suffered along with the rest of the economy as business leaders didn’t highly value information technology. From March 2001 through August 2003, IT services firms payrolls shrank by 18.4% or 248,300 jobs.

Why is this recession different? Companies can’t function without IT. Today, IT know-how and the efficiencies technology brings business are among the last thing companies forfeit in troubled economic times.

Here’s what Jerry Luftman, a Stevens Institute of Technology IT professor who surveys CIOs for the Society for Information Management, told me earlier this week (read a fuller version of Luftman’s observation at our previous blog posting):

“This economic downturn is very, very different from previous ones. Today, companies are going to IT and asking them for ideas as to how IT can be leveraged to reduce the costs of other parts of business.”

But the recession is having a mildly negative impact on IT services employment. Payroll growth is slowing. A year ago, IT services payrolls rose by 5.8% or 76,300 jobs. Since January 2005, IT payrolls have consistently risen each month, except for one, this past March. Few other sectors can make that claim.

The computer systems design payroll numbers reflect the relative strength of IT employment when compared with the rest of the economy. The national unemployment rate jumped 2 points to 5.7% in November, a 15-year high. The government doesn’t furnish a separate IT jobless rate. It does release specific occupation figures on a quarterly basis, however. And, my analysis of those numbers from the third quarter shows IT unemployment hovering near record lows. In the third quarter, IT joblessness rose one-tenth of a point to 2.4%, with 4,010,000 Americans employed in the profession, a record high.

When the current quarter's employment figures become available next month, don't expect IT unemployment to remain so low. IT professionals aren't immune from this recession. But it would be surprising if IT joblessness came anywhere near the levels of overall unemployment. If it does, our nation would be in even worse shape than it is today.

What Recession?

IT recruiter Robert Half Technology's quarterly IT hiring index foresees a net 8% increase in IT hiring for the first quarter of 2009. Not bad in a recession.

Click on chart to enlarge

It's not surprising, though. Companies run on computers, and that means managers can't automatically layoff IT pros when staff levels must be reduced. Here's what Jerry Luftman, distinguished professor of at Stevens Institute of Technology, said to me in an interview earlier this week:

"In previous economic downturns, IT used to be the first place to cut, slice and dice: 'It’s expensive, no value, get rid of them.' This economic downturn is very, very different from previous ones. No, I’m not going to say that IT is not going to get impacted; it clearly will, it’s going to depend on the severity of recession. But clearly, this time is different, because now IT isn’t the first place being asked to be cut.

"Today, companies are going to IT and asking them for ideas as to how IT can be leveraged to reduce the costs of other parts of business. Innovative IT leaders are being proactive and going to the business people and saying here are some ideas you might want to consider. This is how we can work together in leveraging IT to help improve productivity, to improve processes, whatever, which in these trying times is critical as companies are trying to figure out how to reduce costs and survive during this downturn.

"It’s very, very different than previous downturns, which is excellent news ... but they better deliver because here’s an opportunity to make lemonade out of lemons, and really turnaround and take a giant leap forward. Because if IT can be successful during these trying times and help the company internally, the next logical step would be looking at more strategic initiatives externally to the paying customers."

And, I guess there are paying customers, considering the Robert Half Technology survey shows that nearly one-third of respondents from companies that plan to expand their IT staffs next quarter are doing so because of business growth. That's something you don't hear a lot about these days.