Outsourcing

Reports indicate IT staff jobs will drop in 2009

For the last few months, reports have indicated that IT seems to be exempt from the dismal budget. But new reports are painting a different picture.

For the last few months, reports have indicated that IT seems to be exempt from the dismal budget. But new reports are painting a different picture.

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I've seen countless reports in the last few months proclaiming that, despite a dismal economy, IT jobs seem to be immune from downsizing. I read things were still rosy for IT because every business needs to keep the systems up, the processes moving, etc. In fact, late last autumn, in a survey conducted by Goldman Sachs & Co., IT managers said they expected to cut zero percent in-house staff.

But look how things can change. Now survey results are coming in that indicate things aren't quite as optimistic as first expected. Here are two reports that I've seen just this week:

1. Advisory firm TPI, which tracks large outsourcing trends, released a report saying that the number of outsourcing contracts awarded in the first half of this year is the highest it's been in more than 10 years. In fact, the value of those contract deals should pass that for all of 2004. While the folks at TPI were jumping for joy, what this means is that a lot of companies are outsourcing the responsibilities usually handled by their lower-level IT staff (all the stuff they can categorize as a commodity). In other words, lower-level help desk folks might find themselves in the firing rifle's scope.

2. According to another survey released last week, this one conducted by Goldman Sachs & Co., CIOs are planning to cut IT jobs and start economizing on IT initiatives. These are the same managers that were polled in the report last fall.

The report indicates that contracted employees were at risk, with 48% of the respondents saying that those staffers would be cut. Thirty percent of the responders said on-site third-party service provider staffers would also be cut for application-related development or maintenance work.

And, lastly, the economy seems to be putting the kibosh on last year's beloved keyword: innovation. With most of the budget being devoted to firefighting and just keeping the systems up, you can expect some technologies, like grid computing, open-source software, and cloud computing, to fall by the wayside.

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.

29 comments
grobeson
grobeson

Wow! What took so long? Anyone working in the rank-and-file knew there was trouble two years ago.

yagzygee
yagzygee

we will just wait and see

fernando.garcia
fernando.garcia

IT careers are no different than any other skilled position. Our country, lifestyle, and government is based on getting the biggest bang for the buck. If it is cheaper to have a job performed in another country with acceptable losses of quality, brand loyalty, and market share, it will be done for the betterment of shareholder wealth. The best one can do is take hold of personal responiblity for oneself, get better educated, do your job to the best of your ability, look out for yourself and your own. Stop bitching and moaning and blaming your boss, government, immigrants, or everyone else for your situation, it is a WASTE of TIME. BE A MAN (or WOMAN) you live in the greatest country on earth. GOD BLESS AMERICA!

chuck
chuck

will it happen to me i lost my job to cuts

jkameleon
jkameleon

First 3 months: Intensive search for oher IT job. Keep sending that resumes out. 3 to 6 months: Start preparing yourself for non-IT career. Get whatever non-IT skills that are currently in demand. Don't waste too much time for IT job search anymore. 6 months: Time to bail out of IT completely. With more than 6 months gap in your CV, your chances of getting back into IT are next to nil. Every resume scanning software on earth will filter you out. Concentrate all your efforts on getting non-IT job. It's not as bad as it looks. Many if not most of my colleagues, which abandoned IT profession in the recent years are better off now. One of them became a dog food salesman, first provisionally, then permanently. He's scoffing at the very idea of getting back into IT. I even came across story of a guy, who accepted the job as a forklifter operator, quickly made it to the management (pretty simple, really, at a no brainer business such as warehousing), and soon he was making a couple of times more money for far less demanding work.

ralph
ralph

It's fairly likely if your IT skills are eclipsed by your lack of language / communication skills.

reisen55
reisen55

Lack of language and communication skills is precisely why workers in distant Bangalore (and other countries) are failing to support many back office jobs here in the United States and England. (Oh, we speak a version of your English here too). Back office jobs are not just IT, but also embrace human resource and accounting. Have you called, for example, any support phone number and been dealt a conversation with somebody who CAN barely speak English?? If you did, you would not make such a blanket statement on this very intelligent board. Lack of skills, too, means nothing to management, both here and in your country too. Look up some of the health care outsourcing disasters in England. CSC has a huge one. EDS has a few too I think. Skills mean zero, only salary and expense matter to management in back office considerations. Cut those and get others at 1/4 salary and half a world away to do the same job (...note, not the same QUALITY job, just a job) and off you go. Be careful posting personal comments on these boards. Hurtful. I proof-read this to eliminate any typos that I could have created. I note that your sentence construction is broken too. "It's fairly likely if your IT..." which should read "It's fairly likely that your IT" skills etc. You have an if\then statement.

megabaum
megabaum

Hello- I couldn't disagree more. Anyhow, I'm sorry if my comments hit a nerve with you. In my view your comments are somewhat hurtful and kind of rude. You seem to have some crystal ball as you try to convince people that their "skills don't mean anything" and "only those eclipsed by their communication/language issues" will likely be impacted by the loss of IT jobs. This is not even close to being on the mark and I hope that others don't buy into this; for the sake of morale alone. Sorry, I'm not trying to make it personal, that's just how I feel about it. We can agree to disagree. Anyhow, we, US "techies" already get the fact that language/communication issues can be problematic on the job, however unfortunately there are thousands of professionals with incredible communication skills that will be impacted by the labor issues discussed on this board. So your first comment, which I responded to originally, is off the mark. I may have made some assumptions about what you were trying to say though, however I'm still not sure. Anyhow, it's possible we may be talking about two different things here. And finally =) posters on this board don't need a lesson in grammar. Regarding the grammar error you pointed out above... It seems you were able to grasp what the poster was trying to say, so I don't see the usefulness of pointing out someone elses error =P. Anyhow, this isn't a white paper here - we're just having casual conversation. There are bigger fish to fry my dear... I've "gotta" run, but good luck to you. And, no hard feelings. M.

megabaum
megabaum

Good morning, You are way off the mark. Perhaps you don't have a "fresh" understanding of the IT market in the USA. Today, thousands of qualified, certified, well-educated, communicative, IT professionals are out of work because of preasures in the marekt. At this phase, it's quite arrogant to assume that these seasoned proffesionals "might" lose their jobs due to a lack of language and communication skills. Anyhow, you should spend a bit more time to educate yourself on the US market. Surly this will help you to understand how the US economy and politics are impacting the technology industry. As far as your statement on this blog. Perhaps your comments would hold more weight if you were a successful IT Manager, consultant or techie working in the USA over the last 10 years. Even then, being so brilliant and all, you would still need to put more thought and reasoning behind such a blind statement. =P If you are already working in the US market, good for you! Please continue to do your research, so you don't further demorilize our "techies" with gross generalizations and blind arguments. Singed, An IT Consultant

ezike_jerome
ezike_jerome

contracting companies still need the IT geeks, its a round robin

reisen55
reisen55

It is called OUTSOURCING and has been destroying American IT jobs for the past decade. And the root cause is always budget, control of expenses, economies, making shareholder value better, do it cheaper, faster, better......shell game. IT professionals know this. Also at risk are human resource jobs, accounting jobs, anything BACK OFFICE that does not contribute to direct profit. Any job that is an expense. Any expense can be cut. Get used to it. The IT industry is being torn apart day by day. Notice how many college grads are choosing this once lucrative career as their life path. Oh, my script always reminds me to add Would you like an email survey?

megabaum
megabaum

You're right. Outsourcing has been a trend with CORPS over the last 10 years. But many CORPs (not all) have gone through this phase in software development and have brought the software DEV back home. The reason is communication issues and distance, lead to gross errors in Production, which leads to more errors and $$ lost trying to recover and fix these issues. All the same, many CORPS stick with Outsourcing and struggle through this ridiculous process, while accepting of the fact they are delivering crappy, flawed, non-quality software. The issue in the "techie" market today is caused by a combination of "Outsourcing" AND "Insourcing", bascially the approval of thousands of additional HB1/L1 foreign contractors - - by our Federal goverment. The result: THOUSANDS of IT jobs in the USA (both FTE and contractor positions) are lost to Indians that come to the client-site to work; subsequently hourly rates/ salaries for IT workers have been driven down by about 40%; subsequently more middleclass workers are losing their homes; subsequetnly more dollars are spent overseas rather than at home; and subsequetnly, US Companies, along with the US Governement continue this harmful trend, while transfering America's technical oppotunities, training, business/ technology proprietary data and overall knowledge-base to foriegners. WHAT CAN WE DO? If you are a job candidate for a Full Time or Consulting position, hold out for the BEST offer. Start driving $rates back up. Your biggest assests are your $savings account and history of failed Outsourcing/ Insourcnig projects. If you can hold out for the higher salary/or consluting rate DO IT! THIS WOULD BE A GREAT SERVICE TO EVERYONE IN THE IT INDUSTRY!! Also - do your research on Outsourcing/ Insourcing trends and everyone in IT, please educate potential employers. You need to be able to sell yourself, describe common pitfalls of outsourcing/ insourcnig. Be ready to tell a story about why you are worth more in the market. IT folks, this takes some "shutzpah" on your part. How can you increase efficiencies, save time, and save money for the company, over an HB1 candidate. On the other hand, if you have a unique skillset in the market (e.g. BI, Regulartory Compliance, Technical Architect, DB Architect, or a special area of Project Management), ... NAME your rate - - drive the rates up and help create more oppotunities in these specialty areas! IT Professionals need to stick together on this and try to carve new markets and drive our rates back up. After all, we all know that "outsourcing" (technology services) doesn't even work when you're dealing with a US company. Anyone ever heard of Unisys? Anyhow, as a techie work, if you have some experience, you know of the chronic issues that come with outsourcing overseas. Don't you? Let's draw on our history. If you are manager, influencer, or technology consultant, use this knowledge to keep jobs at home and please educate corporate America. Realistically, many times, you won't be able to do anything about it, since CORPs only see $$$$ that come with so called "cutting costs", regardless of the technology malpractice associated with insourcing/ outsourcing. Just do what you can. POLITICAL ACTION Does the government realize the impacts of the HB1 bill? I'm really not sure, but I'm going to be writing my Congressmen this week. After all, I'm on the "bench" and I have a savings, so I'm currently turning down the low-paying gigs and taking some time to dive into this issue. I am passionate about this, after all its huring me, as well as my friends and peers in the industry. Maybe you feel the same. The point: IF YOU HAVEN'T ALREADY WRITTEN YOUR LOCAL AND FEDERAL GOVERNMENT about the harmful impacts of HB1/L1 labor please do so! Please also do your research as you write your government and understand how it's impacted your metro area. Historically, the purpose of HB1 labor was to allow companies to bring in foreigners with "specialty" skills, in cases where that skill-set was not available in the US job pool. Hmmmm, it seems to me there are plenty of qualified, educated, certified, and skilled IT professionals out of work these days. Please write! This issue needs federal/ national attention if it's going to change. The government is going to need some type of "benefit" or a compeling "reason" to stop approving the HB1 loophole, while forcing the IT profeesional into economic turmoil. I don't need a "gas tax holiday" I need a job! Sadly, simply caring about the lives of middle-class America, in the an already failing economy, is not reason enough to stop this ridiculous practice. We're not talking about picking vegetables here, although I might be applying soon =), we're talking about middle-class US workers who were making between 40k-100k. These dollars are simply tranfered to foreign workers who turn around and build houses in their mother county or as they say "send money back home". So this deserves more attention and study. What happens when US-earned money is tranfered to foreign workers who spend the majority of that money in their native country? We need hard facts and answers and someone who cares enough to put together a study on this. Right now, the only voice I can see are the voices of the out-of-work "techies", with an ever-decreasing morale, who are posting their issues, thoughts, and concerns on our techie job boards. Check out the blogs on DICE.com, this issue is nationwide and it's stagering! Be realistic in what you can do. If nothing changes, you may need to find a new field or speciality area. But before you give up, ASK YOURSELF: Did I work my BOOTIE off the last 5-10 years, put in overtime, become certified, get my masters, go to traning, and learn OTJ only to get laid off, replaced by a foreign worker and pushed into a lower paying job? All the best, Signed, M.

megabaum
megabaum

You're right. Outsourcing has been a trend with CORPS over the last 10 years. But many CORPs (not all) have gone through this phase in software development and have brought the software DEV back home. The reason is communication issues and distance, lead to gross errors in Production, which leads to more errors and $$ lost trying to recover and fix these issues. All the same, many CORPS stick with Outsourcing and struggle through this ridiculous process, while delivering crappy, non-quality software. The issues in the market today are caused by a combination of "Outsourcing" AND "Insourcing", bascially the approval of thousands of additional HB1/L1 foreign contractors - - CORPS can line their pockets. The result: THOUSANDS of US jobs (FTE and consultants) are replaced by Indians that come to the client-site to work, hourly rates/ salaries are driven down by about 40%, and the US continues this harmful trend in our homeland, while transfering America's technical edge, knowledge-base, and business/ technology proprietary data and secrets to India. WHAT CAN WE DO? If you are a job candidate for a Full Time or Consulting position, hold out for the BEST offer. Start driving $rates back up. You biggest assests are your $savings account and history. If you can, hold out for the best position and highest salary/ or consluting rate, DO IT! THIS WOULD BE A GREAT SERVICE TO EVERYONE IN THE IT INDUSTRY!! Do you research on Outsourcing/ Insourcing trends and Everyone in IT, please educate potential employers. You need to be able to sell yourself, describe common pitfalls to outsourcing/ insourcnig and tell a compelling story about why you should earn more in the market. IT folks, this takes some "shutzpah" on your part! How can you increase efficiencies, save time, and save money for the company, over an HB1 candidate. On the other hand, if you have a unique skillset in the market (e.g. BI, Regulartory Compliance, Technical Architect, DB Architect, or a special area of Project Management), ... NAME your rate - - don't give any breaks. Somehow, we - - IT Professionals - - need to stick together on this and drive the rates back up. After-all, we know for a fact that "outsourcing" technology services to US Companies doesn't even work. Common - we have history to draw from. Now we need to educate. Realistically, sometimes, many times, you won't be able to do anything about it, since CORPs are only going to see $$$$ and regardless of the many issues and technology malpractice that come with outsourcing/ insourcing they're going to to that route any how. Just do what you can. Oh - and if you haven't written your local Congressmen/ Congresswomen about the impacts of HB1 workers, please do it! We need to help our government understand how these issues are impacting, middle-class America - e.g. your IT Professional making between $40k - $100K per year. All the best, M

kingttx
kingttx

With most of these types of jobs being outsourced, it will be harder for new IT workers to get their foot in the door. The traditional path is being dismantled. I can almost envision this spiraling out of control (as if it hasn't already). Shortage of new workers means shortage of skilled, experienced workers down the road, meaning even more outsourcing or "imported" workers. So what are new IT grads to do?

jkameleon
jkameleon

> So what are new IT grads to do? Seek a career outside of IT, what else can they do? It was seen many times before, in other professions, like auto making or electronics. Where the "metal banging" jobs go, everything else goes.

jkameleon
jkameleon

Shouting about IT talent/skill shortage gets loudest a couple of months before recession. As companies start to struggle, troubles pile up, and management looks for excuses. The shortage of the RIGHT (tech and business savvy, young, experienced, enthusiastic, and above all cheap) talent is the best excuse there is: "We can't reach our objectives, because we can't find the talent we need." Once repeated enough times, it starts to echo through media. So, when the "IT talent/skill/etc crisis/crunch/shortage/etc" starts yielding more than 100 hits on Google news each day, better take that MBA course.

bcarpent1228
bcarpent1228

while we "geeks" debate the merits of Linux/XP/Apple/Vista it appears that companies don't want any of us. The requirement for pure IT jobs is fading but the need for business training (accounting, legal, scientific, ...) with good computer skills is increasing. As always the more useful and varied your skill set the more you can cope. Unless you have an alternate "get rich scheme" - i.e. the lotto: $10/week * expectations / std.deviation * 10 ...

ryumaou@hotmail.com
ryumaou@hotmail.com

I think the skillsets for so-called "pure" IT jobs is changing, but I don't think IT, as such, will ever go away. There are always going to be systems and jobs that require someone working on them full-time, but just what those systems are and how they interact with users will continue to change. In the end, I think that people who over-specialize in some particular aspect of the IT business will have a hard time finding jobs. Generalists will come to the fore again and be the versatile multi-tool that business needs.

sjbourne
sjbourne

I agree somebody will always be needed to 'keep the lights on' but automation and stable systems - think Win Server 2008 and powershell will, at the least, limit the growth in jobs. From my perspective, at 46, I am 3/4s of the way through a university masters in IT with a focus on business. Going back to study after so long away has been difficult. The biggest lesson for me has been the change in my strengths from IT hard skills to softer skills in management and understanding business process. So I have to agree with the generalist point you make but don't ignore keeping your generalist skills relevant to the needs of IT.

princetjoba
princetjoba

we are having lot of job issues over here. IT salary here is quit low.

cats
cats

Sorry! Perhaps the forum admin could delete two of the three responses, please?

cats
cats

We don't seem to be having the same problem in Canada, as in the US. We tend to follow in their footsteps, with regards to economic downturns, but not this time. Ontario is having problems in the manufacturing sector (large part due to auto makers crisis), but elsewhere (West and East), things are going very well. The credit crunch is not a factor because some of the triggering events, such as the sub prime mortgage fiasco, did not (and could not) occur here. In fact, our major concern is the opposite - organizations here are experiencing labour shortages and are having a difficult time filling positions of all kinds (including IT). These are good paying jobs in a country with a great standard of living.

cats
cats

We don't seem to be having the same problem in Canada, as in the US. We tend to follow in their footsteps, with regards to economic downturns, but not this time. Ontario is having problems in the manufacturing sector (large part due to auto makers crisis), but elsewhere (West and East), things are going very well. The credit crunch is not a factor because some of the triggering events, such as the sub prime mortgage fiasco, did not (and could not) occur here. In fact, our major concern is the opposite - organizations here are experiencing labour shortages and are having a difficult time filling positions of all kinds (including IT). These are good paying jobs in a country with a great standard of living.

cats
cats

We don't seem to be having the same problem in Canada, as in the US. We tend to follow in their footsteps, with regards to economic downturns, but not this time. Ontario is having problems in the manufacturing sector (large part due to auto makers crisis), but elsewhere (West and East), things are going very well. The credit crunch is not a factor because some of the triggering events, such as the sub prime mortgage fiasco, did not (and could not) occur here. In fact, our major concern is the opposite - organizations here are experiencing labour shortages and are having a difficult time filling positions of all kinds (including IT). These are good paying jobs in a country with a great standard of living.

simon.child
simon.child

Over in the UK i haev been awaiting the problems and woes that the credit crunch is supposedly bringing. Currently im working as a Internet Application Developer. As you well know this sits me on many fences within the IT spectrum. e.g graphic design, database's, programming, networking, seo and securty to name a few. With my varid skillset i was quite confident i could get a job if i had to take a walk down "it could be worse lane". But the crdit crunch seems to be passing over us in a strange way. With everyone else fearing the credit crunch we have had a boom in people looking for new income streams for their own business and seem to be looking at the internet to produce that stream. Currently we have just had our hours alterd to 6.00am till 5.30pm untill september to finish all the projects we have on to top that off whilst working the redicluous hours iv been having to work on 3 pitches for 3 more huge contracts. All my spare time i hae at home is also taken up with 'forigner projects' too. Bring on the credit crunch and job cuts so i can get some sleep!

albert
albert

I can see my job eventually going the way of the IBM Selectric technician. This is the price of progress and not necessarily just a result of tight economic times. I had always hoped that it would be much later rather than sooner. Total denial. If there is any solace to this depressing bit of news is that outsource companies will need to increase their payroll as demand rises. But, it won't nearly match the numbers that are predicted to be lost. Skills training is becoming more and more crucial -- though very expensive, time consuming and will be met with very tough competition. Since companies are looking to cut costs, it's unlikely that they would be willing to pay for that additional training; leaving it up to us to somehow pay the expensive fees with no guarantees that it will land you a stable job. Oh boy.

reisen55
reisen55

Training and keeping up with tech is the hard part. So many companies, and the outsource ones included, promise all kinds of good training programs but have little to offer, particularly as outsource firms run their techs to pieces during the day and leave no time at all for training. By the time we get home, we are wrecked. My solution: learn at home. I have finally thrown together a true Windows 2003 Server at home on my 23 station network. It takes alot of horse trading but I have something I can experiment with to my hearts content without wrecking my outside business. The Server, by the way, is actually a lovely Dell system, quite powerful, that somebody on the street tossed out because it has a BIOS password. Look around and see what you can find. I just confirmed that I can GHOST server images to a secondary hard drive - replace primary with a larger capacity drive and then GHOST back up without any issues at all. I recommend this as excellent Disaster planning and security.

T.Walpole
T.Walpole

The idea of a "Stable IT Job" is a complete oxymoron.

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