Companies Look to Add Jobs in 2010, Inside IT and Out

January 4, 2010 Timothy Prickett Morgan

As The Four Hundred reported a month ago, the U.S. economy stopped hemorrhaging jobs in November and the unemployment rate actually went down a smidgen and could do it again when the Department of Labor’s Bureau of Labor Statistics puts out its jobs report for December. And it looks like business in general and their IT departments in particular are getting ready to add some jobs.

Let’s start generally and work our way into the IT part of the jobs market. If you take a gander at the latest quarterly economic survey from the Business Roundtable, which is comprised of 161 of America’s largest companies (with a combined workforce of 12 million and $6 trillion in aggregate revenues), the recovery is under way among those large companies. But the expectation is that capital spending will more or less follow revenues up in 2010, but it may take some time before big companies feel comfortable enough to actually hire more employees.

“The economy is in the throes of a long transition back to health; recovery will be long, extending beyond 2010,” said Ivan Seidenberg, who is the current chairman of the Business Roundtable and who is also chairman and chief executive officer of telco giant Verizon. “The outlook of our CEOs reflects that reality: We see noticeable gains in sales and capital spending, but employment growth continues to lag.”

According to the fourth quarter 2009 CEO Economic Outlook Survey, which you can see here and which is based on responses from 111 member companies, some 68 percent of the CEOs polled among the peer group said they expect their revenues to increase in the next six months, with 15 percent saying they would be flat and 17 percent expecting a decrease. This is a far cry better than the Q3 survey results, when only 51 percent of members polled said they expected to see sales bump up in the next six months, and 26 expected a decline. With revenue expectations on the rise, capital equipment spending is projected to rise among these large companies. In the Q4 survey, 40 percent of those polled said they would boost their capital spending in the next six months (only 21 percent said this three months earlier), with 44 percent saying there would be no change in spending and 16 percent expecting a decline. In the September survey, 35 percent of CEOs said they would be cutting spending in the following six-month period, so this is a pretty big swing even if the largest portion of the survey respondents (44 percent) expect to hold capital investment steady.

As noted above, these CEOs may be getting more bullish about the economy–averaged across all CEO responses, the group expects real gross domestic product in the United States will rise by 1.9 percent in 2010–but they are only slowly warming up to adding more employees. However, the CEOs at our country’s largest companies seem less inclined to cut jobs, which is progress. In the fourth quarter, only 31 percent of the CEOs polled said they would be cutting jobs in the next six months, down from 40 percent in the third quarter, and 19 percent said they would be adding jobs, compared to only 13 percent when they were asked that question in Q3. About half of the companies expect no change in their payrolls looking ahead six months from December, up a smidgen from Q3.

The Business Roundtable does some black magic with stats and cooks up a CEO Economic Outlook Index, which ranges from -50 to 150 and which takes into account projections for revenues, capital spending, and employment levels among the peers. In the fourth quarter of 2008, the index stood at 16.5, and as the economic meltdown heated up in the first quarter, it went negative to -5. (An index of 50 or lower means we are in an economic contraction, and a negative number means a serious contraction.) In Q2, the index recovered a bit to 18.5 and in Q3 it climbed to 44.9–still a contraction, but a much less severe one. The good news is that in Q4, the CEO Economic Outlook index sat at 71.5, which means the economy is growing again as far as these 111 CEOs can see. By the way, as you can see from the Q1 report, the last time the index was under 50 was in the first quarter of 2003, when the economy was coming out of recession and the IT sector was still in recession.

Over at jobs site CareerBuilder, which has a much broader view of the U.S. economy than the Business Roundtable, the company has just finished up a survey of 2,720 human resources managers of companies of all sizes and industries in the United States, caution is the word as it is among the big boys.

“There have been many signs over the past few months that point to the healing of the U.S. economy, especially the continued decrease in the number of jobs lost per month, a trend that will hopefully carry over into the new year,” explained Matt Ferguson, chief executive officer at CareerBuilder, in a statement accompanying its 2010 job forecast report. “Although 20 percent of employers plan to add headcount in 2010, up from 14 percent last year, they still remain cautious in regards to their hiring. We’re headed in the right direction, but should not expect to see actual job growth until at least Q2 2010.”

According to the CareerBuilder 2010 job forecast, which you can see here, some 9 percent of those surveyed said they plan to cut full-time employee headcount in 2010, which is a lot better than the 16 percent who said they would this time last year. However, 61 percent of the companies polled said they expect to keep their payrolls the same, 20 percent expect increases, and 10 percent say they are not sure. This is not exactly what would be called a jobmore (as opposed to jobless) recovery in the making. Part-time work is only going to be a little easier to come by as well in 2010. Some 11 percent of those polled expect to increase their part-time workforce (up from 9 percent in the year-ago survey), with 8 percent expecting to still make cuts in the part-time payroll, 69 percent holding steady, and the remaining 13 percent unsure what they will do. (There’s some rounding in those numbers.)

The good news for IT workers is that among the IT companies polled, 32 percent of those contacted by pollster Harris Interactive on behalf of CareerBuilder said they would be adding full-time employees–a level that was much higher than other industries, including healthcare. And across all industries, when asked where in their organizations they would be adding people, about a third said they would be adding technology experts. (Not all of these are IT people, of course, but a lot of them are.) About 23 percent of the HR managers surveyed said they would be adding sales people, 28 percent said they needed customer service reps, 18 percent needed researchers and developers, 17 percent wanted to add to business development teams, 15 percent needed people in accounting and finance, and 14 percent needed marketeers.

In general, those talking to CareerBuilder said they were interested in shedding their lowest-performing employees and in rehiring whatever good employees they were forced into letting go by the economic meltdown. Some are even planning on offering increased compensation or other benefits to key employees who they don’t want to lose to retirement.

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