Gartner Is Projecting a Decline in IT Hiring This Year

Published: August 5, 2008

by Timothy Prickett Morgan

Remember that report out of the National Association of Computer Consultant Businesses I told you about a few weeks ago that said IT jobs were growing in the United States despite the wobbly economy? Maybe it is time to get a second opinion about how IT jobs are lining up this year. That's why the analysts at Gartner did their own surveys, and the news suggests that the IT job market is weakening a bit in the States.

This will come as little surprise, with the home mortgage mess and the intertwined effects on the financial services sector and consumer confidence. Last Friday, the U.S. Commerce Department said that gross domestic product rose by 1.9 percent in the second quarter, less than the 2.3 percent growth that Wall Street had been expecting, and added that, whoops, when Commerce said that GDP grew by 6/10ths of a percent in the fourth quarter of 2007, it actually declined by 2/10ths of a percent. First quarter 2008 GDP was shaved by 1/10th of a point, too, to 9/10ths of a percent, and I would not be at all surprised if the first quarter numbers are revised downward again 13 weeks from now. It might be surprising, but it is possible that such a revision will reveal we were, in fact, in a recession here in the States since September of last year, but appear to be on the mend (somewhat) thanks to the Bush administration's $168 billion stimulus spending ($48 billion of that is aimed at business investment). American Government Express--Don't Enter Congress or the White House Without It.

Anyway, given the state of things, it is no wonder that IT executives are backing off on their projected IT staff increases in 2008. That's not to say that they aren't hiring. It is just that the percentage of shops polled by Gartner that say that they are going to boost IT jobs is shrinking. Gartner surveyed 285 IT shops in the United States to take the pulse of the job market, and for the survey period (which covered from March 1 this year until February 28, 2009), 57.9 percent of the shops polled said that they would increase their IT staffs (including full-time employees and contractors in the figures). In the 2007 study during the same period, some 66.3 percent of IT shops said that they would be hiring. And the number of shops who said they are boosting their headcount in the data centers and related programming cubicles by 10 percent or more has dropped, too, from 15.7 percent of those surveyed in 2007's survey to 12.1 percent in this year's survey.

"Even though the number of vacancies and turnover rates remain at similar levels as 2007, organizations are being cautious in their hiring practices," explained Lily Mok, research vice president for Gartner's CIO workforce management group, who did the survey and accompanying report. "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."

Interestingly, the survey results show that the median employee-initiated turnover rate (including retirements) was expected to be 7.1 percent, down from 7.2 percent in 2007. The median voluntary turnover rate without retirements was 7 percent. Gartner says that IT organizations in other services, public, nonprofit and manufacturing experienced more retirement-related turnover than other industries over the past year. The Gartner survey also revealed that the current wobbly economic conditions have not yet had a big impact on salaries and other compensation. Companies are planning to budget pay increases for 2008 that are in line with increases in the past several years; the reported median salary increase budget was 3.6 percent across all respondents.

"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. "Cost-cutting measures, such as reduction in pay increases or pay increase freezes, affect the retention of high performers. 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."

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