New Sign Emerges of IT Job Weakness

One stalwart of IT employment is showing signs of weakness.

For the first time in nearly three years, the number of people employed by IT services firms has declined, albeit by a minute 200 workers from January to February, according to a CIO Insight analysis of U.S. Bureau of Labor Statistics data. Still, it ends a string of 32 straight months of employment gains in the sector the government tags computer systems design and related services. (January and February data are preliminary and may be adjusted.)

In February, 1,393,400 people worked for IT services firms. Why is this bad news for IT?

Since the recovery from the dot-com bust, IT services has been the most stable sector of the business-tech economy. Look at other sectors in IT—ISPs, search portals and data processing and computer and peripheral manufacturing—and you'll see less stability in employment over the years. Though employment among ISPs, search portals and data processing firms is at a 4.5-year high, at 275,600, month-to-month employment movement has been inconsistent, up for a few months followed by a decline. Similar inconsistencies can be found in employment gains and losses occurring among manufacturers of computers and peripherals. Though up a bit last month--to 185,600 workers--employment in that sector is hovering near record lows.

Plus, IT services is the industry CIOs turn to when they must fill taps in needed skills because tight budgets won't allow them to hire additional full-time staffers.

Of course, not all employees in each sector are IT pros. According to a 2006 Bureau of Labor Statistics report, IT professionals represented 61.5 percent of employed IT services workers. Managers made up nearly 17 percent of the sector's employed workers. The remaining workers held jobs in sales; office and administrative support; and installation, maintenance and repair. So, the payroll losses might be among non-IT workers. Still, the halt in employment growth is troublesome.

Our analysis is based on the latest BLS survey of some 160,000 businesses and government agencies covering about 400,000 individual worksites that represent roughly one-third of all non-farm worksites in the United States.

BLS conducts another monthly survey of some 60,000 households in which it derives the unemployment rate. Because of the sample size, monthly data for IT professionals are deemed statistically unreliable, so BLS only makes available household statistics on IT employment quarterly. Our analysis of the latest quarterly household survey data, last October through December, shows that IT employment is at an all-time high of 3,758,000, with an unemployment rate last year of 2.1 percent, the lowest it's been since the government adopted a new way of tracking employment in 2000. But we're a month away from knowing whether the impact of the economic slowdown has adversely affected IT employment.

Other recent surveys suggest there's some life left in IT job growth.

A Robert Half Technology hiring survey last week found that while the vast majority of businesses expect IT staffing to remain stagnant next quarter, a net of 12 percent say they'll add workers.

And, long-term prospects for IT employment remain strong. Five IT specialties are among the 25 fastest-growing jobs anticipated by 2016, according to a BLS forecast released in December.

How do you see the health of IT employment in the coming months? Share your thoughts below.

Posted by Eric Chabrow on March 7, 2008 1:34 PM