IT Services' Job Growth Stalls: A Blip or Sea-Change?
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Every month, when viewing IT employment data from the Labor Department, it's almost a given that job growth for IT services firms would be on the uptick. The IT services sector—tagged by the government as computer systems design and related services—has proven to be one of the strongest sectors in the economy in recent years. |
Indeed, except for November 2006, job growth among IT services companies has risen every month for the past 34 months, till last month. In January, the sector's payrolls remained virtually flat, according to a CIO Insight analysis of the latest U.S. Bureau of Labor Statistics data.
IT services firms last month employed a seasonally adjusted 1,394,100 million people, down 400 from December, statistically no change. Figures for both months are preliminary, so they might be adjusted.
One month's change doesn't necessarily signal a sea-change in the IT services sector's fate. Still, the annualized job growth rate among IT services firms has slowed to 5.4 percent in January from 5.8 percent in November and 5.7 percent in December. It's not the lowest annualized growth rate this past year; IT services jobs grew at 5.3 percent each in September and October.
In the late 1990s, as the year 2000 remediation problem loomed, and companies began to adopt enterprise and Web systems, employment at IT services firms soared by nearly 20 percent a year. By March 2001, employment among IT services firms reached 1,352.400. But by mid-2001—with Y2K a fading memory, the dot-com bubble bust and a recession—the sector began to shed jobs. By July 2003, nearly one-quarter million jobs vanished. The next month, the industry began to add jobs, reaching record levels in December, at 1,394,500.
In August 2006, IT services' annualized growth rate reached a post-recession peak of 8.9 percent. The sector's post-recession nadir occurred in May 2005, when it experienced a month-to-month decline of 600 jobs, or 0.1 percent.
The minute job loss last month doesn't necessarily mean IT services firms are cutting back in IT employment. Not every employee in the sector is an IT pro.
A 2006 government report estimates that 53 percent of IT services firms' workers hold IT jobs such as programmers; software engineers; computer, network systems and data communications analysts; database, network and systems administrators. Another 3 percent are computer and IS managers.
The remaining employees—about 44 percent of payrolls—encompass non-IT managers and administrative and operational support personnel, including those in finance, human resources and sales.
The latest numbers don't show which occupations within the sector lost jobs.
