IT Staffing Cuts in 2010 Mirror 2009, Study Says

Budgets are not as robust as many analysts were expecting earlier in 2010, and technology workers are facing further job reductions and caution about IT spending.

Remember all the talk of the recession being over and companies being cautiously optimistic about hiring in technology? A report on IT spending released in June finds a whole lot more caution than optimism right now.
Over 40 percent of respondents from 200 companies in the United States and Canada said they are reducing IT staff in 2010, according to technology research group Computer Economics, which has been reporting on IT spending and staffing trends for 21 years. In the group's 2009 edition of this report, 46 percent of companies said they were reducing staff.
"This is more downbeat than we had anticipated," Frank Scavo, president of Computer Economics, said in a statement.
The report, which surveyed respondents in the first quarter of the year, also found operational budgets of technology departments to be increasing at slower rates that signal the recession has not ended. Less than half of companies (45 percent) are increasing operational budgets in 2010. Computer Economics said it finds this is what happens in a prolonged recession.
"For IT operational spending, the recession is still here," Scavo said. "Overall, fewer organizations are reducing capital spending this year and the reductions are smaller than last year. We take this as an optimistic sign, again, that the worst may be behind us."
As eWEEK's Jeff Burt reported in May, research company IDC expects capital spending on IT infrastructure to grow 3.8 percent this year to $1.47 trillion, with hardware spending increasing the most at 6.4 percent, followed by software at 3.1 percent and services at 1.5 percent.
If you're looking for a silver lining to the Computer Economics report, there are a few things to note. First, 28 percent of companies surveyed reported that they have been given budget to hire additional staff. Secondly, 58 percent said they do not foresee further budget reductions.
Yet, there is still worry among IT management: Almost 30 percent of respondents said they expect to have to trim their budgets in the remaining months of 2010.
In terms of sectors, government IT spending is showing a 5 percent decline, as are retail (1.5 percent decline) and discrete manufacturing (at a 1.4 percent decline). Conversely, health care, commercial banking and process manufacturing are all seeing operational spending gains in the 3 percent range.
This is not the first report to note a deeper sense of concern about IT spending and staffing in 2010. Foote Partners, which tracks demand in skills, certifications and technology spending priorities, recently reported the fluctuations in the market to be on an unprecedented scale.
"We're seeing 30 percent to 40 percent volatility in our surveys of premium pay for certified and noncertified skills, which is defined as the percent of the 438 skills we survey that change in market value-up or down-every three months," David Foote, chief research officer and founder of Foote Partners, said in a June 7 statement. "And that's unprecedented in our tracking going back to 1998. Typical quarterly volatility falls in the 14 percent to 19 percent range."