IT Jobs Market Growing Modestly, but Hiring Is Still Slow

The good news is that the market for IT pros is growing at a better rate than the economy as whole. However, businesses are still reluctant to hire large numbers of workers.

Analysts use a variety of metaphors to describe employment and other business indicators in the technology sector: the glass half full, the silver lining or the beauty in eye of the beholder, to name a few.  Regardless of the comparison or catchphrase applied, number crunchers and market trackers say that IT employment is expected to continue to grow but modestly.

Tom Silver, senior vice president for IT careers Website Dice, compares the employment outlook and the overall business climate in the tech sector to the "best house in a bad neighborhood" because the IT sector outshines the overall economy, where prospects are grim. 

"In a slowing economy, the market for tech workers is good but not great," Silver explains. "I wouldn't call it friendly like 10 years ago during the tech bubble."

So, what is the good part?

In a hiring survey, released June 6, Dice found that 73 percent of IT-focused recruiters and hiring managers expect companies to add more tech staff in the second half of 2012. That's up from 65 percent six months ago, when respondents were asked about the first six months of this year, according to Dice.

But break the latest 73 percent figure down, and just 18 percent expect substantially more hiring in the second half of this year and 55 said they anticipate slightly more hiring in the second half. According to Dice, 27 percent said they expect no hiring during that period.

Similar caution is also reflected in a study conducted in April by audit, tax and advisory firm KPMG, which polled C-level and senior executives at technology companies.

"Technology leaders expressed overall optimism about their companies' U.S. employment plans, but shifted expectations toward lower growth rates," according to KPMG's annual "Technology Industry Business Outlook" report.   

A larger percentage of technology executives expect their companies' headcounts to increase this year, but most of them said growth would be moderate, KPMG found. More than half  (57 percent) of those polled this year said they expect their companies' headcounts to be up a year from now, compared with 49 percent in KPMG's 2011 survey who said they anticipated increasing their staffs within a year.

But here's the rub: Of the 57 percent of tech executives who expect their firms to expand their staffs this year, 42 percent said they anticipate a 1 to 6 percent increase, which is up from 28 percent last year, and only 15 percent said they anticipated an increase of 7 percent or more, compared with 21 percent last year.

Caution on the employment and revenue fronts has resurfaced in the last two years, according to analysts.

In 2010, technology companies were optimistic about hiring as they recovered from cutbacks due to economic turmoil in 2008 and 2009, said Gary Matuszak, an executive with KPMG's Technology, Media and Telecommunications practice. However, in 2011, IT departments were less sanguine about the jobs picture, he said, and that sentiment has continued.

Still, tech unemployment has been less than half national unemployment for several years, Dice's Silver noted.  He pointed to data from the U.S. Bureau of Labor Statistics showing the May unemployment rate for tech professionals at 3.5 percent, compared with the U.S. overall unemployment at 8.2 percent. The tech employment rate has been consistently hovering around or below 4 percent since February 2011, Silver explained.

Plus, Silver noted that an expected increase in job turnover among IT professionals has not happened.

Indeed, 63 percent of the corporations responding to the Dice survey said voluntary departures have not increased at their companies.

"It's hard to talk IT pros out of their jobs," said Silver, noting that the perception of weakness in the overall economy leads to caution.

"We don't have data saying people are worried about their jobs," said Silver. "In, fact, our data suggest the opposite. People read the headlines, and there is definitely some fear that if you are last in, you will be first out."

Caution over jobs is not surprising, given respondents' concerns about their company's revenue outlook and the overall economy, Matuszak said.

KPMG found that tech executives' projections for revenue growth showed a similar pattern to their expectations for employment: While 77 percent of those polled said their companies' revenue would be higher a year from now, only 10 percent said it would be significantly higher and 67 percent said it would be moderately higher.

Economists point to a lack of visibility, which could have a psychological effect on spending, including for new hires.

"Europe is the main reason for [the] sense of uncertainty and anxiety, but there's also a growing sense of unease about the U.S. economy, too," IDC said in a recent report. "IT spending is generally still pretty stable, but there have been reports of softening demand in some market segments (e.g. network equipment)."

The KPMG study bears this out. "Consistent with surveys we have conducted in the past two years," the KPMG report concluded, "technology executives again have pushed out their expectation for the U.S. economic recovery, as two-thirds don't see the economy recovering substantially until the end of 2014 or later."