Layoffs Increasing, Software Coding Continues to be Outsourced?

By Donald Sears  |  Posted 2008-08-26 Print this article Print

The oft-quoted, recruiting-centric firm Challenger, Gray and Christmas has put out its latest outlook for jobs for the remainder of 2008--with a peek into 2009. I recently reported on a report from Challenger on layoffs so far for the year.

Information technology workers are seen to not be as affected by the overall economic trends, except for application- and software-centric skill sets, according to the firm.

But is that true for more advanced software development and management? Depends who you ask. The caveat here is that Challenger doesn't exactly specialize in IT but looks at overall jobs data and published reports on layoffs.

Here's what Challenger told me about IT specifically, since I asked for it:

"For companies and industries that are struggling through this downturn, the IT department is at risk, but maybe less risk than other departments. The reason is that companies still rely heavily on technology to operate on a day-to-day basis. It is far more efficient to have on-site technology professionals versus calling an outside provider every time these services are needed. This is good news for network administrators and analysts. Unfortunately, this offers little protection for software engineers and coders whose positions will continue to be outsourced domestically and internationally to the least costly providers," said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

"Job seekers in the IT industry may also have a difficult time going into the new year, as companies scrap plans for adding or updating technology. Companies will not start expanding their IT departments until the economy rebounds. Some will rely on H1-B visas to fill openings, but with a limited number of these visas issued each year, it is unlikely that this program will meet employer demand once the expansion begins," said Challenger.

My favorite part here is the H1-B visas argument that there still won't be enough people to fill the jobs. There are some folks at Duke University who think otherwise.

If you look at government data, IT jobs are up. But software development is a tricky area, especially where there is competition for talent on specific programming platforms and management skill sets, and those skill sets are being found in many parts of the world. But sometimes, the best skills are those you can communicate with in person or in a time zone that is nearby.

Here's more on what Challenger is reporting on the general state of jobs and layoffs:

Job cuts in 2008 are already on track to surpass the 2007 total of 768,264. In fact, if the pace recorded over the last three months continues through December, the 12-month total will exceed 1,000,000 for the first time since 2005, when employers announced 1,072,054 cuts.

If 2008 job cuts do surpass 1 million, it will be due in large part to increased downsizing activity during the summer months, a historically slow period for layoffs. From 1993 through 2007, employers announced an average of 60,762 per month between May and August. That is 18 percent lower than the 74,225 monthly job cuts averaged between January and April and 24 percent lower than the monthly average of 79,962 during the final four months of the year.

In 2008, summer job cuts are on track to surpass January to April layoffs. August job cuts have yet to be tallied, but employers already announced 288,589 cuts in May, June and July, nearly matching the 290,671 announced in the first four months of the year. If the May-through-July pace continues in August, the four-month total could reach 380,000.

What do you make of all this? How are things for you and your company?

Related items: CIOs now think business alignment is more important than staffing and retention, according to the Society for Information Management; Forrester thinks the hottest jobs are in security--as in security experts who establish compliance, governance and risk management policies and information architects; lastly, Computer Economics reports that flexible schedules and training are very important factors in retaining IT workers.

By the way, if you live in Seattle, the Post-Intelligencer has a layoff tracker page of technology companies in Seattle that it's been recording since 2000. |

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