IT Hiring Down Year Over Year

Jul 31, 2008

CIO Update Staff

While the staffing numbers put out by Gartner on Thursday are hardly bleak, they do show a decline in hiring activity going forward.


As always, recruitment and retention of skilled IT professionals continues to be a key issue for organizations. Even under the current economic conditions, IT organizations will be cautious about their hiring plans in 2008 and 2009 in response to potential IT budget cuts.


According to Gartner's 2008 IT Market Compensation Study—a survey of 285 U.S.-based IT organizations—57.9% projected an increase in IT staff levels (including full-time employees and contractors as supplementary staff) during the survey time period (March 1, 2008 through February 28, 2009). However, this is a notable drop from 66.3% reported in the 2007 study. At the same time, the survey also showed the percentage of organizations projecting a greater than 10% increase in head count also dropped from 15.7% in 2007 to 12.1% in 2008.


“Even though the number of vacancies and turnover rates remain at similar levels as 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.”


The survey showed that the median employee-initiated turnover rate with retirements was 7.1%, down from 7.2% in 2007. The median voluntary turnover rate without retirements was 7%. IT organizations in other services, public, nonprofit and manufacturing experienced more retirement-related turnover than other industries over the past 12 months.


The survey also showed that approximately two-thirds of participants don’t have a formal workforce planning process.


“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 statement. “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. 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.”


Pay Still Increasing


The survey showed that current economic conditions have yet to have a material impact on compensation budgets. Enterprises are continuing to budget for pay increases in 2008 at a level similar to previous years, with the reported median salary increase budget at 3.6%.


The survey indicates that the top 10% of performers in the IT workforce on average received from 3 to 4% more in base pay increases in 2007 than the bottom 10% performers.


Companies that know where to invest their dollars in which reward elements based on their workforce demographic compositions, and closely align their rewards strategies with those of the business and IT, will gain a competitive advantage over their peers in the marketplace in attracting and retaining desired IT talent.


 “As organizations seek better ways to manage compensation costs while continuing to reward employees and drive superior performance, variable pay programs will play an even greater role in the total rewards strategy,” said Mok. “This year, 81% of respondents reported having some type of short-term incentive/bonus program(s) for IT. “



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