War, economic woes put drag on IT hires in US

Weak business conditions and fears about the potential impact of a war with Iraq led many US companies to hold back on hiring IT employees during last year's fourth quarter, according to a report released this week.

          Weak business conditions and fears about the potential impact of a war with Iraq led many US companies to hold back on hiring IT employees during last year's fourth quarter, according to a report released this week.

          The report by Dice and the Information Technology Association of America (ITAA), which conduct quarterly surveys of more than 300 hiring managers, says companies added fewer technology workers from October to December than they did in each of the previous three quarters. A total of 265,000 IT workers were hired in the fourth quarter, while 168,000 were let go -- a net gain of 97,000 jobs.

          The job market isn't expected to change much for the better this year, according to the report. Dice and the Arlington, Virginia-based ITAA predicted that companies will hire a total of about 874,000 IT workers this year.

          "January was very strong for recruiting, [but] hiring has pulled back since then, largely driven by the economy and the situation in Iraq," says Scot Melland, president and CEO of Dice, a New York-based provider of online recruiting services for IT professionals.

          No recovery yet

          Some IT executives say the findings jibe with their current workforce strategies. "Our hiring plans have decreased," says Malcolm Fields, CIO at HON Industries. The Muscatine, Iowa-based maker of office furniture and fireplaces was anticipating an economic recovery "that hasn't come," Fields said. As a result, all hiring within HON's IT department has been put on hold, with the exception of a few replacement workers.

          Diane Morello, an analyst at Stamford, Connecticut-based Gartner, says she expects IT hiring in the US this year to be even weaker than what Dice and the ITAA are forecasting. They "subtly assume that demand will be filled by permanent hires in the US," Morello says, characterising that as a false assumption.

          The increasing shift of IT work offshore "shows how companies are filling demand -- at considerably lower [compensation] rates" than they would have to pay US workers, Morello says. She adds that many IT managers are increasing their reliance on contract labour and supplemental staffers as part of their efforts to control variable costs.

          Tom Pohlmann, an analyst at Forrester Research in Cambridge, Massachusetts, says he expects IT staffing levels to remain flat overall on a year-to-year basis. Even if the clamps are taken off of technology budgets, IT departments "will still be pressed over the medium term to deliver more with less," he says.

          It's also far from certain that companies will free up their spending on IT this year. Framingham, Massachusetts-based IDC this week says it is now forecasting a growth rate of 2.3% for worldwide IT spending in 2003, down from an earlier prediction of 3.7% growth.

          Losses drop

          Although fewer IT workers were hired during the fourth quarter than in previous periods, there were also fewer job losses, according to Dice and the ITAA. By comparison to the 168,000 IT workers who were let go in the fourth quarter, 211,000 were dismissed during the third quarter, and about 350,000 were pared during both the first and second quarters, they said.

          At year's end, there were about 10.2 million IT workers in the US, Dice and the ITAA say. That's a 3.3% rise from the number at the start of 2002.

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