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Recessions are not depressing for everyone. Take Merrill Bryan. With an IT worker attrition rate thats swan dived from its headache-inspiring 1999-2000 level of 8 percent to its current level of under 2 percent, the CIO of Union Pacific Railroad Corp. is like a kid in a candy store when it comes to IT hiring.
“Its definitely an employers market right now,” said Bryan, in Omaha, Neb. “Were seeing a lot more candidates. … [And] if theres less competition, were able to hire in this market and get a little more experience and skill.”
Union Pacific isnt alone. Experts say that, across industries and in most regions of the country, companies are in the drivers seat when it comes to hiring. Although there are signs of a modest overall increase in hiring next year, right now employers are taking advantage of the skills glut to vigorously upgrade the skill sets of their IT work forces—and theyre certainly not using internal training to do so. Rather, in many cases, theyre firing IT workers and hiring lower-cost but more-skilled people to replace them.
Michael Mullarkey, chairman and CEO of Workstream Inc., a Kanata, Ontario, human capital management application service provider that hosts the career sites for more than 300 companies, said that since June,Workstream has seen client company postings of open positions increase by 36 percent. But that does not mean there are new IT jobs finally being created; it just means that companies are ditching current employees to hire cheaper, better-skilled—and fewer—new ones. “Companies are firing seven people and hiring five,” said Mullarkey. “Theyre paring salaries down from $100,000 to $75,000. They want to find the next IT hero.”
The flip side to this joie de hiring is an IT job market that has contracted painfully for many IT professionals. According to “Bouncing Back: Jobs, Skills and the Continuing Demand for IT Workers,” a report issued by the Information Technology Association of America, U.S. companies had shed more than 500,000 IT workers in the year preceding May 2002, when the report was released.
But the report also found some hope that the job market would improve for IT professionals next year: IT hiring managers forecast hiring needs that will exceed those of last year, as they dreamed of filling 1.1 million IT jobs during the coming year. The $10 million question is: Now that were almost through with this tumultuous year, will these optimistic visions of jobs-to-be turn out to be prescient? Or will they prove themselves to be mere pipe dreams?
Although recent IT spending proj-ections have varied considerably (see “2003 IT Budgets Pinch” at www. eweek.com/ links), some ex-perts are cautiously optimistic. Meta Group Inc. analyst Maria Schaffer, in Stamford, Conn., pointed to a Bureau of Economics report re-leased in late August that portrayed a slight uptick in IT spending—2 percent over the preceding eight months—that Schaffer said will inevitably augur renewed IT hiring. However, she said, “were still in for a rough six months.”
Other experts point to outstanding technology needs that will fuel a fire to melt hiring freezes. David Foote, president of Foote Partners LLC, in New Cannan, Conn., and an eWeek online columnist, said he foresees an information security job surge on the horizon (albeit the distant horizon), as companies finally patch security breaches that are now going unaddressed. But, based on historical lags between recessionary rebound and hiring, Foote predicted that an information security hiring boomlet wont happen until Thanksgiving of next year at the earliest.
Ouch.
That spells a lot of suffering to get through for IT people such as George Tselentis. A security and audit professional with 20 years of experience that spans not only many job functions but also several continents, Tselentis has found that income from his contracting work shriveled in the past year: Whereas his net income for six months of work last year was $69,000, this year, he has brought home a mere $10,000. That despite the fact that he is sending out in excess of 200 résumés per week to potential employers in town, out of town, overseas—you name it.
“Theres no question this year is unprecedented,” said Tselentis, also in Omaha. “Its the chaos theory: You dont expect everything to go bad at the same time, but, really, it does. All the telecom companies in Europe … WorldCom, Sprint here in the United States … everybodys laid off. … Ive never seen a situation where so many things all went bad all at the same time.”
But at least when he was interviewed for this article, Tselentis was on a contracting gig. Of course, its the population of IT professionals who cant get any job, be it contract or full-time, who most acutely feel the pain of the current contracted job market. Into that unfortunate category falls Jim Reinhart, who was laid off seven months ago after 15 years of working with Motorola Inc., in Chandler, Ariz. His most recent job description was senior programmer/analyst working on data warehousing.
Like Tselentis, Reinhart has sent out hundreds of résumés. The few interviews hes been on reinforce the idea that employers are demanding what would have once seemed like preposterously greedy laundry lists of skills in their hires.
“Theyre really pushing the envelope,” said Reinhart. “They want somebody who is a business analyst but also a systems analyst and application programmer and a client/server specialist with knowledge in mobile databases. The last possibility I had was with an insurance company that wanted IMS, DB2, Oracle, CICS—the whole gamut. On another interview at another health insurance company, on the client/server side, they particularly wanted you to have knowledge of SQL Server, [Active Server Pages], [Component Object Model], Visual Basic, WebSphere, Java and .Net, which they dont even have a server for yet.”
After 23 years in IT, Reinhart is giving up. Hell try his hand at getting some small-business Web site and e-commerce contract work, but when it comes to knocking on doors for a permanent job, he is tired. If you ask him when he thinks the IT job market will turn around, he is despairing. “Its not going to turn around any time soon,” he said. “The people Ive been laid off with … are having an extraordinarily hard time finding … jobs. Ive been fairly lucky. Ive been getting a few calls regarding my résumé, but that seems to be almost an exception.”
Unfortunately for out-of-work IT professionals, the experts vision of a lag between infrastructure spending and IT hiring is borne out by at least one key economic sector that has been most battered by the recession: retail. According to more than 600 respondents surveyed in Meta Groups 2002 IT Staffing and Compensation Guide, IT turnover—most of it involuntary—in the wholesale/retail sector has leapt to 11 percent, compared with 7 percent last year. This is a reflection of many actions brought on by a softened economy: belt-tightening, restructurings and layoffs, to name a few (see chart, right, for a list of factors affecting IT turnover this year).
Not that retail is the worst-off sector. The distribution/transportation industry is experiencing a 20 percent IT turnover rate, reflecting lower sales and higher costs for energy. Media/publishing, reflecting plummeting advertising, is seeing an IT turnover rate of 18 percent.
But Cathy Hotka, vice president of IT for the National Retail Federation, in Washington, sees the retail sectors dilemma as a particularly vexing dichotomy. On the one hand, retail companies such as Staples Inc. and Crate and Barrel are, and have been, gobbling up technology as if it were truffles. For example, at such companies, POS (point-of-sale) systems are enabling massive data collection, as retailers track customers purchases and spending habits. The problem is, a painful IT staff squeeze means that, at many retailers, theres simply nobody around to collect—let alone analyze—all that data.
“Were seeing that if someone leaves, in many cases, theyre not replaced,” due to a need for immediate cost savings, Hotka said. “[Many retailers] have systems with features they paid for that were never turned on. Data hasnt been cleaned. Features havent been honed. All the projects saved for a rainy day havent been turned on.”
The odd thing is that, in many cases, IT budgets in retail havent gone away. At a recent meeting of the NRF CIO Council, Hotka surveyed 50 CIOs. When asked if their budgets would increase next year, two-thirds of the CIOs responded that spending was already up or had never decreased.
According to Hotka, this indicates that hiring will recommence as soon as company executives feel a bit more optimistic about revenues. “Software and hardware vendors should get ready,” he said. “Retailers that werent necessarily buying new things before have been avidly shopping and will be looking to staff up to man those projects.”
Those hirers-to-be are going to be looking for skills that match their customer-facing projects, Hotka said. CRM (customer relationship management), integration, customer data mining and POS deployment specialists will be high on the to-be-hired list, Hotka said.
Outside of retail, the skills that were needed last year are still going to be critical this year—its just that theyre needed at half the levels of last year, according to the Meta Group survey. They include, in order of ranking by responding companies: e-commerce/Internet/ extranet/intranet, Oracle, application development, Java, project management, networking, business skills, security, communications skills, database management, CRM, technical skills, legacy skills, SQL, Visual Basic and XML.
If and when IT hiring does show an uptick, experts expect cautious job seekers to target stable, time-tested employers first—employers such as Union Pacific. The 48,000-employee transportation company has been around since 1862, which makes it quite attractive to those soured on the dot-coms and their hollow, stock-option-sweetened promises.
“Were hearing constantly from students [when the company conducts on-campus recruiting] that theyre looking for a company with some stability,” said Marcia Blum, a human resources specialist at Union Pacific.
Meanwhile, experts who advise IT professionals on career issues have less-than-cheery advice for weathering this job market and preparing for an upswing. The No. 1 tip from Robert Chope, a professor of counseling at San Francisco State University, in San Francisco, can be articulated in two words: Aim lower. That can mean taking a job for which an IT professional is overqualified, often for pay that is lower than has been typical. “At least for the short term,” Chope said, “the issue is just to try to get your foot in the door.”
Senior Writer Lisa Vaas is at lisa_vaas@ziffdavis.com.