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Is Your IT Job Safe in 2009?

By Jeff Vance

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If you’re in a hard-hit sector like retail or financial, start updating that resume. Even if you’re in a relatively safe sector, such as energy, the changing nature of IT may very well mean that, at the very least, you’ll need to modernize your skill set.

 

The only workers who shouldn’t lose sleep are those involved with the few technologies that should benefit from a recession: virtualization, utility computing and green IT are all relatively safe. However, when disruptive technologies collide with disruptive economic conditions, all bets are off.

 

Outsourcing Will Continue

 

While utility computing, SaaS and cloud computing aren’t usually thought of in terms of outsourcing, it is an integral part of the model. If you subscribe to applications from a service provider, chances are you’ll call their help desk when trouble hits, not your own. Analysts believe that broader outsourcing trends will continue as well.

 

“Outsourcing is interesting in that it is a strong trend in both boom and bust times. In a down economy, people who haven’t looked to outsourcing start to consider it as a way to save money. They have no choice,” said Frances Karamouzis, research VP with Gartner.

 

She added that most organizations will only outsource pieces of IT, not the entire end-to-end IT process. Storage, security and other types of infrastructure are the most likely candidates. For in-house IT, this could be a good thing. While fewer IT jobs will remain in house, those that do will tend to be mission critical or will have a more strategic role in the future of the business.

 

“It’s a challenging job market, but some positions remain hard to fill,” said John Estes, a vice president with the IT staffing firm Robert Half Technology. “The most skilled IT professionals are in demand for positions in areas such as web development, applications development, network administration, and help desk and desktop support. While employers are making tough decisions and are in a cost-conscious mode, job seekers with specific, hard-to-find skills continue to have opportunities available to them. In this type of market, it becomes essential for them to understand which skills are in demand and find ways to acquire them.”

 

IT Spending in 2009

 

While the analysts are all busily updating their spending forecasts for 2009 because the recession hit harder and faster than any expected, the numbers aren’t as grim as you might expect.

 

It’s important to remember that analysts don’t make money selling doom and gloom. Without multi-billion dollar market forecasts, few clients will be able to justify paying for their services. However, their optimism can’t be divorced from reality or no one will believe them or value their research. Suffice it to say, in this economy, reality is trumping optimism and analysts are wary. “IT spending will slow, but we believe that overall spending will still increase in 2009,” said Karamouzis.

 

Other analyst firms agree. Forrester Research predicts that in the U.S., IT spending will grow at 1.6%, down from 4.1% growth in 2008. IDC has also revised its projections, forecasting a paltry 0.9% increase in IT spending in the U.S. for the coming year, down from its pre-crisis forecast of 5.9% growth. Slower growth translates into $35 billion less spent worldwide on IT in 2009, but overall spending will still increase over 2008 spending levels.

 

“Although all the economic forecasts went from up slightly to down drastically in a matter of days, the good news is that IT is in a better position than ever to resist the downward pull of a slowing economy,” said John Gantz, chief research officer at IDC. “Technology is already deeply embedded in many mission-critical operations and remains critical to achieving further efficiency and productivity gains.”

 

Regions and Industries

 

“The U.S., by far, has been hit the hardest by the economic crisis, with Europe a close second,” Gartner’s Karamouzis said. Gartner sees certain regions, such as Asia/Pacific and Latin America, doing fairly well, at least in terms of the economy’s impact on IT. “Many businesses in Latin America, for instance, don’t rely on credit the way we do, which will insulate them to a degree.”

 

As for the impact on specific industries, analysts pretty much follow the conventional wisdom. Financial, manufacturing and retail will suffer, while energy and health care should do fairly well. Gartner believes that enterprises in several other key economic sectors, including communications, the government, transportation and utilities, will all reduce IT spending in 2009. Whether that translates into job losses or just a slower adoption of new technologies is not clear.

“Organizations spend their IT dollars in three main ways: running the business, growing the business and transforming the business,” Karamouzis said. Running the business means keeping the lights on. In normal times, this type of activity accounts for 65% of IT spending.

 

Growing the business usually involves new technologies, such as the adoption of CRM or salesforce automation applications. Transforming the business is more radical; often meaning the adoption of entirely new models such as SaaS. Growing and transforming businesses usually accounts for about 35% of IT spending.

 

“Organizations will focus on trimming that 65%,” Karamouzis said. “Transformational technologies could actually benefit.” Take SaaS, for instance. The benefit of SaaS is that you pay for what you actually use, with no over-provisioning and no excess licensing fees. You also hand IT management burdens off to someone else. The downside is that applications aren’t as customized to your specific business needs as with the old model, where you owned the application and hired a consultant or VAR to tailor it to your needs.

 

“With the utility model, software is configurable rather than customized,” Karamouzis said. “The problem has long been that clients want customization. A prolonged recession could force the issue and drive complacency and inefficiency out of the IT model. The recession could very well serve as the tipping point towards SaaS, cloud computing and the overall ‘consumerization’ of IT.”

 

IDC also predicts that the bad economy will help to transform IT. IDC sees cloud computing, virtualization, green IT and information access and analysis technologies all benefiting, while mobile devices and the telecom sector in general will suffer.

 

What does this all mean in terms of jobs? Although they didn’t come out and say it, it’s safe to surmise that Gartner and IDC both see fewer IT jobs in the coming year or so. If your organization decides to cut down that 65% of IT dollars dedicated to running the business, it probably translates into automating or outsourcing a number of IT jobs. Similarly, transformational models like SaaS mean that there will be fewer in-house IT jobs, with many of them handed off to service providers.

 

Jeff Vance is the president of Sandstorm Media, a writing and marketing services firm focused on emerging technology trends. If you have ideas for future stories, contact him at jeff@sandstormmedia.net or visit www.sandstormmedia.net