Banking

Media giving mixed signals on economy and tech sector

Every day that you read an article or listen to a news report, you're likely to get a different picture of what effect the current economy will have on the tech sector.

Every day that you read an article or listen to a news report, you're likely to get a different picture of what effect the current economy will have on the tech sector.

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Depending on the day, the publication, the writer, and how the planets are aligned, you are likely to hear any of these predictions about what effect the dreary economy will have on the tech profession:

  • Tech will remain largely unaffected.
  • Tech will suffer a fate worse than death.
  • Tech will only suffer in terms of new initiatives.

So which is correct? Apparently, none of them and all of them. There are so many conflicting reports, it's hard to get a read on the real picture.

One article you read will say that companies will abandon all of their planned new initiatives in order to ride the immediate financial crisis. Then you'll click another link, and you'll be told that virtualization skills are in high demand because "virtualization deployments are maturing from tactical server projects to strategic enterprise initiatives, and companies are finding that IT personnel with the necessary skill sets are in short supply." Does that mean a company still pursue an initiative if it's already been started?

Maybe it's just specific industries, like Financial Services, that will feel the pinch more. Richard Koman, in a piece for ZDNet, Tech will suffer from financial meltdown, quotes Jay Bhatti, cofounder of people search engine Spock:

The big players like Oracle, Sun, Microsoft and SAP ... will feel an immediate impact. Financial Service firms are some of the biggest spenders of IT budgets around. I can imagine memos coming from the top to CIOs at banks telling them to cut costs ASAP. Naturally, they will start to push back on upgrades to new software (sorry Vista), ask for greater concessions on license pricing, and in some cases, abandon plans for new technology deployments such as new hardware or new ERP applications.

Then you have reports from the U.S. Labor Department that paint a rosier picture. The data sets released in June indicate that IT jobs are not growing, but staying steady.

Confused yet? Just wait.

Back in July, Ashlee Vance was decidedly pessimistic in a piece she wrote for The Register, And so we begin the tech sector's journey into the Heart of Darkness, when she wrote:

Does anyone else remember when technology companies were propping up this economy? Yeah, that's right. Oil prices were surging. Housing prices were plummeting. But there was the resilient technology sector, making us think things might be okay. No companies missing earnings. No layoffs. Hope at the end of the fab. Um, well, I don't know how to put this, but the technology sector - as one of my Wall Street friends likes to put it - has blown up.

So what's your feeling about the effect the economy will have on IT in the not-too-distant future?

About

Toni Bowers is Managing Editor of TechRepublic and is the award-winning blogger of the Career Management blog. She has edited newsletters, books, and web sites pertaining to software, IT career, and IT management issues.

12 comments
megabaum
megabaum

I agree, there are conflicting messages... Some sources claim that the IT market is "hot", growing and jobs are plentiful. Unfortunately this is mis-information provided by the uneducated, illogical and/or apathetic public. We're (the US) is in the dumps when it comes to the technology, as demonstrated by a decreasing morale amongst technology professionals. Unfortunately, it seems companies are holding off on technology projects, cutting IT budgets and waiting for the November elections before moving forward with major initiatives. Unfortunately, those companies that ARE actually moving forward with large technology projects are either "outsourcing" the work to India/China and/or "insourcing" this work to H1B temporary foreign contractors. Subsequently, thousands of IT job opportunities are eliminated each month, $rates and salaries are waaay down, up and coming students of technology are steering away from "techie" degrees and all the while, as though there's not a care in the world; the US government/ corporations continue to transfer jobs, knowledge and training opportunities to India and China. In the past, as you mention in this article, the technology industry offered hope, prosperity and a promising career. Today, as US workers/students come to realize the harmful impacts of corporate greed, globalization and US policy which "disfavors" US workers, ... well they begin to think of ways to get out of IT altogether. Globalization is a bunch of media hype - supported by the US government, so corporations and can sell more products overseas. However the truth is, we (the US) are not dealing in a global market at all; in fact you'll find outside of the U.S., there is NO other country in the world (not India, not Japan, not China...) that allows such a high number of "cheap", unregulated products and labor to enter the country! So the US practices a policy of "globalization" which is killing the Middle-class, while dealing with other countries that practice a policy of "protectionism"! Sadly all the while, the US is able to convince a good majority of citizens that "globalization" is good for the economy! PURE RUBBISH!! Essentially, US voters are partially responsible for being apathetic because they either do not understand these issues and/or they do not do anything about it. Anyways, if you want to line $$ the pockets of US corporations will dollars; while endorsing unregulated "cheap slave labor" and dangerous products in the US; while watching the demise of the Middle-class; by all means support "globalization" and buy-in to the hype. **If not, please write your congressmen and speak out against the unethical and undemocratic H1B non-immigrant Visa program in the US! With the 2008 elections, the failing economy, outsourcing and insourcing; coupled with two 2 presidential candidates who support corporations and CHEAP foreign labor; well I guess the IT market is going to get much worse, before it gets better! I hope I'm wrong though... perhaps Pollyanna will come save the day =).

catpro-54
catpro-54

I agree with most of what you wrote, megabaum, except your statement about the candidates: Mr McCain has stated that there is a shortage of IT professionals and he supports outsourcing and increasing issuance of H1B visas. Mr Obama wants to give tax breaks to corporations who do NOT outsource jobs. Excellent information, otherwise. Thanks.

leketee
leketee

ALL IS WELL. Again, I say All Is Well! And this is truth to all those who has faith enough to believe. I do admit that we all are being inundated with so much negative opinions, ideas, predictions, etc. by the news media and others who just really don't know. Mind you, they are just their opinions, guesses or what have you. The Nation and this world has more than enough resources, and it's being proven everyday, to take care of the masses of population. Our resources are being mismanaged and controlled by the unwise. Integrity and prudence goes a long way. Let's not lose that in IT. IT is doing well...

briant11
briant11

This economic downturn is like waking up to a nightmare. I dread to know how much hardship people are going through in the US but things are just as tough here. Who knows what's lurking around the corner (i.e the future) but we got to be resilient and rise above this economic down swing. But you hear about these American financial institutions going bust and you just think about how much this can affect us and you can't help but lose hope and get a little depressed.

rmlounsbury
rmlounsbury

From my view of the world I work at an SMB which is not in the tech industry. Our existing initiatives will continue to push forward but it is unlikely we begin any new major projects. As for the Portland, OR. from what I understand tech is still doing well. I haven't been in the job market as of late. Like everyone else has mentioned it all depends on where you live!

ITIL Citizen
ITIL Citizen

One thing to keep in mind is all the press lately on the bad state of the economy descibes the overall picture. It may or may not be entirely accurate for an individual's situation. Personally, I am out of a job in about 3 months as a result of a cost cutting / Service transformation / ITIL implementation. My feelings are that it is necessary for the company. It just makes our industry more competitive. Some certifications start to become valuable differentiators for employees. Experience becomes more important.

cats
cats

That's awful! How has ITIL cost you your job?

wlportwashington
wlportwashington

From where I sit, the tech sector is dying a slow and painful death as jobs are offshored to third world countries like India. Where I live, the tech industry is dead where it once was very vibrant. High taxes and the cost of living started to ring the bell. Add the fact of cheap wages with no benefits offshore with tax incentives to corporations only nailed the coffin shut. With more tech people losing their jobs on a daily basis in my area, one has to wonder where do these so called experts get the idea that tech is alive and well? The old saying, 'move' does not hold water when the cost of moving a family to untried area is a very, very, risky gamble at best.

cupcake
cupcake

I have seen too many large companies shifting from 'hometown' entities to only have a skeleton crew of middle managers and higher on the corporate chain managing huge groups of people in India, Malaysia and China. I am still a huge believer that if they laid off a handful of the "directors" and "VPs" from most companies, they could retain the talent that made them who they are... and for each one it would retain the salaries of at least 25 dedicated employees.

megabaum
megabaum

Sounds familiar... We're experiencing the same in my Metro area. It's pretty is obvious there's no loyalty to US workers =P

nightskywriter
nightskywriter

...on where you live, in my opinion. The market seems to be a lot more greater in neighboring states/cities, but where I live (just outside of Detroit), there's not much to go for if you don't want a 45 mins commute or so.

megabaum
megabaum

Based on my research IT is crashing all over the country and more than ever experienced "techies" are unable to find work.

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