Careers: IT Hiring Slowdown Ahead?

Caution in IT hiring plans

IT hiring seems to have shrugged off the doom and gloom that's impacted the hiring outlook in many other industries. Surveys from staffing specialist Robert Half Technology, for example, have consistently painted an upbeat hiring outlook (see http://redmondmag.com/news/article.asp?EditorialsID=9995).

According to a new survey from research giant Gartner Inc., however, IT organizations are becoming more cautious about their hiring plans, largely in anticipation of looming budget cuts. This might not necessarily translate into an IT hiring contraction, Gartner stresses, but with a year-over-year decline in the number of organizations that expect to hire additional IT personnel -- it's certainly headed in that direction.

Gartner's conclusions are based on a survey of 285 U.S. IT organizations. It found that 58 percent of shops expect to increase their IT staffing levels (an amorphous category that includes both full-time employees, or FTEs, and contractors) between March of 2008 and February of 2009.

That's a good thing, right? Maybe, Gartner concludes. After all, a similar study in 2007 found that two-thirds of respondents -- a full 66 percent -- expected to add IT employees. What's more, Gartner indicates, there's been a precipitous decline in the number of shops making big hiring pushes. The 2008 survey shows that 12.1 percent of organizations expect to expand their employment rolls by 10 percent or more. That's a 23 percent drop from the year-ago total (15.7 percent). What it means, Gartner suggests, is that happy days are far from here again -- although (all things considered) the situation is by no means bleak.

"Even though the number of vacancies and turnover rates remain at levels similar to 2007, organizations are being cautious in their hiring practices," said Lily Mok, research vice president for Gartner's CIO workforce management group, in a statement. "We have not seen extreme measures being taken by IT organizations, such as hiring freezes, but we do expect to see enterprises take a more conservative and 'wait-and-see' approach to staffing for the rest of 2008."

If employee-initiated turnover is any indication, IT pros seem happy to stay where they are -- with some apparently forestalling retirement in the midst of prevailing economic uncertainty. The Gartner survey found that "the median employee-initiated turnover rate" (which also takes employee retirements into account) was 7.1 percent, a marginal decline from last year's 7.2 percent.

The survey also found that a majority (approximately two-thirds) of respondents don't have formal workforce planning processes. "This reinforces our concern that IT organizations are not proactively planning for their workforce needs," said Diane Berry, managing vice president for Gartner's CIO workforce management group, in a prepared release.

"In addition to growing concerns about the economy and potential budget cuts, IT organizations are also faced with the challenge of a workforce demographic shift," Berry continued. "This is a critical time for HR and IT leaders to start building a formal workforce plan that aligns with the IT strategic plan and proactively responds to market challenges."

For the record, Gartner has a workforce management practice, so its expression of "concern" might be self-serving.

In contrast to a Janco survey (see http://redmondmag.com/news/article.asp?EditorialsID=9995) that painted a picture of flat (or nearly flat) salary and compensation growth, Gartner found that shops are budgeting for pay increases just as they have in the past, with median salary increases pegged at 3.6 percent.

"We do see a relatively more conservative projection for 2009 across all sectors, with a budgeted median increase of 3.5 percent. Same budget amounts are reported for non-IT jobs for both years," said Mok.

In today's economic climate, Gartner researchers urge, rewarding high-value IT pros with higher salaries, bigger compensation packages, or other perks is critical.

"Cost-cutting measures, such as reduction in pay increases or pay increase freezes, affect the retention of high performers," Mok indicated. "IT organizations need to ensure they continue to reward and retain high performers through tough times so that they will have the right people when the economy improves. One way to achieve that is to differentiate the merit increase for your top performers versus average and low performers."