IRVINE, Calif.--()--Mirroring the economy as a whole, layoffs among IT workers are accelerating this year, with almost half of all IT organizations reporting that they are budgeted for fewer staff members than last year, according to Computer Economics, an IT research and advisory firm.
“This is an IT-intensive sector, and it takes resources to merge systems.”
Computer Economics 20th annual IT spending and staffing study shows that 46% of all IT organizations plan to reduce headcount this year, compared to 27% that are increasing headcount. Another 27% of IT organizations report their staffing levels will remain the same as last year.
Some sectors are showing continuing growth in IT staffing. For example, nearly 63% of survey respondents in the healthcare provider sector reported they were increasing IT staff this year, while nearly 50% or organizations in the utilities and energy sector are growing staff. In those sectors, median staff levels are up 2% this year over 2008.
Retail is suffering the most IT job losses. At the median, budgeted IT staff levels are down 8% over the prior year, while only 12.5% of retailers plan to increase staff. Other sectors showing staff level declines at the median include discrete manufacturing, down 5%, process manufacturing, down 3%, and insurance, down 3%.
In related findings, the study also shows that while IT budget cutting is spreading this year from capital spending to operational personnel, banking and finance organizations at the median are actually increasing spending on IT operations.
“It may seem counterintuitive, but in the commercial banking area it appears consolidation activity is actually driving an increase in IT spending,” said Frank Scavo, president of Computer Economics, Irvine, Calif. “This is an IT-intensive sector, and it takes resources to merge systems.”
Across all sectors, IT operating budgets at the median are showing no growth over the prior year, a departure from typical years when spending tends to grow with normal business expansion. About 38% of companies are cutting their IT operational spending. Certain sectors, however, are showing positive growth in their 2009/2010 IT operational budgets. These sectors include banking and finance at 4.9%, healthcare providers at 4.7%, professional and technical service firms at 4.0%, and utilities and energy at 1.3%.
Sectors showing the sharpest decline in median IT operational spending include discrete manufacturing, process manufacturing, and retail. In those sectors, median IT budgets are down 5.5%, 2.5%, and 1%, respectively.
Other findings from the Computer Economics IT Spending and Staffing Benchmarks 2009/2010 study:
- The worst may not be over. Many IT executives expect further budget reductions in the future. About 49% reported that they expect to spend less than the amount allocated in their 2009/2010 IT spending plans compared to only 9% who anticipate being able to increase their IT budgets.
- Median IT spending per user rose slightly to $7,284, from $6,924 the prior year, after adjustments for inflation. The slight increase reflects reductions in employee headcount rather than a rise in IT spending.
- Despite budget reductions, most IT managers (57.2%) find that their IT budgets are at least adequate to support their businesses.
- The use of contract or temporary workers for staff augmentation is unchanged from last year, indicating contract workers are not taking the brunt of the layoffs. The typical IT organization relies on contract workers for 5% of its full-time equivalent (FTE) headcount, the study shows.
- IT organizations are cutting training budgets, possibly in response to improved retention rates and reduced spending on new initiatives. The typical IT organization, at the median, is budgeting $1,422 per employee for training, down from $2,500 last year.
The annual study is based on an in-depth survey of more than 200 IT executives who provide detailed breakdowns of their budgets, staffing, and technology adoption plans for the 2009-2010 period. The survey sample includes a roughly equal number of small, medium, and large enterprises. The respondents are stratified according to 12 industry sectors to provide a representative sample of IT organizations across all industries.
A free copy of the study's executive summary is available on the Computer Economics website.
About Computer Economics
Founded in 1979, Computer Economics provides metrics and advisory services on the strategic and financial management of information technology. The firm's clients include major consulting firms and end-user organizations in North America and over 30 countries. Its IT Spending and Staffing Benchmarks study, published annually since 1990, is the definitive source of IT spending and staffing metrics across multiple industry sectors. Computer Economics reports are available from its web site at www.computereconomics.com.
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