The job forecast: partly cloudy
published on January 1, 2003
in ComputerUser Magazine
A top-notch education won't get you a job if employers aren't hiring, as a Texas-based computer worker discovered when Enron laid him off in October 2001. The Microsoft and Sun certified software developer, with formal training in n-tier J2EE and a mathematics degree from Texas A&M, had been looking for suitable work for 12 months. He finally gave up and started freelancing--with limited success.
"Why can't I find a job?" asks the Enron casualty, who declined to be named out of fear of being blackballed. "In a nutshell, few if any available jobs, lots of laid-off competitor candidates, jealous, insecure managers, salespeople, and recruiters licking their chops as they laugh at computer nerds who made as much as them now out of work," he says. "Nobody wants to weed through the resumes, nobody really cares."
Unfortunately, the Texas techie is not alone in his frustration. According to data from the U.S. Bureau of Labor Statistics, computer scientists experienced a 178.9 percent jump in unemployment from the first quarter of 2001 to the second quarter of 2002. Electrical engineers, some of whom are in the IT ranks, saw a 269.2 percent jump in unemployment during the same period. Those figures translate to more than 1 million job losses in IT in 2001 and 2002.
The rash of IT layoffs in the past three years has offset virtually any hiring gains prior to the dot-com bubble, resulting in a miserable 1/2 percent increase in tech employment, according to BLS data provided by the IEEE-USA, a membership organization for IT professionals and electrical engineers. In lieu of data work, some IT workers have begun cashiering at Wal-Mart in some instances--a definite tumble down the career ladder. Some have opted for contract work, as the former Enron techie did.
Still others have remained unemployed. According to an August 2002 unemployment survey from the IEEE-USA, the techies were without work for an average of 49 weeks. Far from willing to accept just any job, most techies want work that meets their financial, intellectual, and creative needs. To help them find that work in 2003, we went knocking on the doors of technology associations, research firms, recruiting companies, and other experts on the IT job market. We found glimmers of digital hope for IT workers looking for full-time gigs--specifically in these data-intensive industries:
- Finance, mortgage banking, and real estate;
- Anything to do with health care, including biotech and health or life insurance;
- Consulting companies, especially those specializing in computer security and those contracting with government agencies; and
- The federal government itself.
Overall, the rule of thumb is follow the money. The real-estate and mortgage industries are still booming; health care is a growth industry; and jobs supporting security of all kinds will be in hot demand, especially at the government level. As far as general technology strategies go, adoption of new technology or optimization of existing enterprise tools may also create new opportunities for tech workers in 2003.
As for who will hire and when, here's a word of caution: The tech job market in 2003 will be nearly as elusive as it was in 2002. But the experts believe the massive layoffs of recent years may be at an end.
"We are starting to see some stabilization in the market," says Jeffrey A. Joerres, chairman and CEO of Manpower Inc., a Wisconsin-based global leader in the staffing industry. "We've stopped seeing the bleeding and have started seeing companies inch back with some job creation."
Despite the tough economy, the finance industry grew in 2002, largely due to an anomaly in the lackluster economy. Low interest rates spurred a continuous boom in home construction and remodeling, sales, mortgages, and refinancing. The finance industry will have seen a record volume in loans by the end of 2002: 5.5 million mortgages and 7.2 million mortgages refinanced, up from 5.1 million and 6.5 million, respectively, in 2001.
Spillover from 2002 to 2003 will make 2003 the third-highest year on record for loan origination volume, according to the Mortgage Bankers Association of America. Therefore, mortgage and real estate businesses may have ongoing IT hiring needs in 2003, says Jeff Markham, a manager for Menlo Park, Calif.-based Robert Half Technology.
The September 2002 semi-annual Robert Half Technology Hot Jobs Report, which surveys chief information officers on their hiring needs, reported that CIOs anticipated hiring 14 percent more IT workers in the finance sector by the end of 2002. Particularly in demand were people who handled networking/security, help desk support functions, and application integration, development or enhancement. The latest Robert Half updates state that IT hiring will continue at Q4 2002 levels into Q1 2003.
A Manpower Employment Outlook Survey for the fourth quarter of 2002 reported that finance jobs would be hottest in the Midwest, the South, and on the West coast.
A healthy outlook
Another hiring trend for 2003 could be the continued expansion of IT demand in the health care and insurance sectors. "Anything having to do with health care--health or life insurance, biotech, or medical equipment manufacturing" will have opportunities for technology workers, says Robert Half's Markham. Tech opportunities may lie in a one-person doctor's office, health clinic, or hospital--or a public health agency, or health and life insurer.
The rise in need is likely due to the ongoing pressure to implement Health Insurance Portability and Accountability Act of 1996 (HIPAA) regulations, which are due for compliance in April. Nirvikar Singh, professor at University of California-Santa Cruz's Department of Economics, says that until recent years, IT had tremendous barriers to adoption in medical institutions, largely because of the way doctors work with patient information.
HIPAA is forcing sweeping transformations in healthcare and healthcare administration, mandating standard methods for recording and sharing electronic patient health and financial data. In essence, many of HIPAA's provisions set out to protect patient confidentiality.
The latest (Apr. 14, 2003) deadline to meet HIPAA's privacy provisions has many institutions scrambling out of fear of hefty fines--as high as $250,000--if the U.S. Health and Human Services Department for Civil Rights find certain kinds of infringements.
HIPAA affects some types of insurance, too. But by and large, the insurance industry has seen business grow for a different reason--individual concerns over personal security. "The fear of war and terrorism has made people go and add health care and life insurance, flooding the industries with new data, and thus opportunities for IT workers," says Markham. The trend might continue into 2003 as people try to protect their families' health and financial future. Biotech, especially in the pharmaceutical sector, is another aspect of the health care industry that will continue to see employment gains. As companies like Amgen and Genentec expand their need for experts in validation software, quality assurance, and statistical process control, these skills will see heightened demand.
Thawing free-agent market
IT consulting looks promising for 2003 as well. Robert Half Technology predicted that business services would lead all other IT areas in hiring activity during the fourth quarter of 2002 based on interviews with CIOs. Twenty-one percent of the CIOs at consulting firms said they planned to increase their staffs by a net of 20 percent.
IT consulting will likely remain strong in 2003 because of the way companies react at the end of a recession. Companies tend to have a backlog of important projects that they want completed, and, as the work is project-based, companies are somewhat reluctant to make a permanent commitment to employees largely for cost reasons.
"It's the same IT work whether its done in-house or not," noted John A. Challenger, CEO of the global recruiting firm Challenger, Gray & Christmas, and a member of the labor and human resource committee of The Federal Reserve Bank of Chicago. "They're still spending money on IT work." People with skills in database management and administration, networking, and (to a lesser degree) Internet and intranet development were said to be in highest demand, with net growth of 22 percent, 17 percent, and 15 percent, respectively, in the last quarter of 2002.
Uncle Sam wants you
Another sector expected to release a rush of dollars for IT workers in 2003 is the federal government. The work will appear as full-time opportunities and as contract work with the U.S. government.
The U.S. government is expected to need some 45,000 IT workers within the next 10 years, according to Frederick Thompson, assistant director of Customer Service Consulting/CIO Office with the U.S. Department of the Treasury. No one seems to know how many new permanent IT workers the feds will need in 2003. Natural attrition is just 2 to 3 percent. So it's likely that many of next year's new federal jobs will end up going to the commercial sector, i.e. more work for consulting firms.
"If they're not working directly for the government, they're going to be working on government projects," says Thompson. "The bottom line is that competitive sourcing leads to more private sector jobs with the government."
As such, 2003 may be a banner year for contractual work with the government. Part of the credit for that can go to President Bush. The Federal Activities and Inventory Reform (FAIR) Act of 1998 dictated that federal government agencies must examine their job openings for work that could be performed in the commercial sector through outsourcing. In 2003, President Bush has asked that 10 percent--as many as 85,000--of all federal jobs be offered in 2003 to the commercial sector.
A spokesperson for the U.S. Office of Management and Budget says that although the OMB doesn't have exact figures about how many of those 85,000 federal jobs will be in IT, it's likely to be a sizable amount.
Expect to see most of the opportunities with the Fed associated with homeland security, airport transportation, the Department of Education, and veteran's health care, says Marcel Legrand, the senior vice president of product at the Massachusetts-based Internet job board Monster, formerly Monster.com, which has been monitoring this area.
This old enterprise
The last frontier for IT job growth in 2003 could well come from any sector willing to be creative with technology. Unlike years past in which one or two enterprise-wide initiatives caught fire, this year those companies that have spent millions on Enterprise Resource Planning systems now want their money's worth. They'll need ERP experts to help them build reports that can tap the wealth of data these system collect--data that give a window into business operations, enabling companies to further maximize their return on investment.
"I think companies are utilizing the technology they have," says recruiting expert Challenger. "But I think we'll see applications people being asked to come in and tap more of the potential of PeopleSoft or SAP-like enterprise applications."
There's also a chance that the latest Microsoft e-commerce platform, .Net, may gain wider acceptance, creating a demand for .Net skilled developers. After all, .Net is a way to maximize existing IT resources by enhancing functionality and helping legacy systems talk to each other more easily.
Already major Internet players, such as ComputerJobs.com, have adopted the technology, according to Michael Turner, vice president of marketing and ComputerJobs.com. ".Net is probably the biggest thing that I would see coming in 2003," says Turner. "I think a lot of commerce sites are going to convert to .Net as it's able to replace ColdFusion and slower technologies that just aren't keeping up."
Regardless of the industry sector in which techies may find themselves in 2003, one thing is certain. When computer workers do get a solid job offer, they should prepare themselves for an entirely different scenario than they experienced in the past. Gone are the signing bonuses and the inflated paychecks of the mid-to-late '90s. According to the IEEE-USA survey cited earlier, only 1 percent of recently re-employed workers said they got a fatter paycheck. Usually, the opposite was true--nearly one fourth (24 percent) said they were actually offered less than they'd earned previously.
This highlights the changed dynamics in the job market for 2003--one in which employers hold nearly all of the cards. Workers have to readjust their expectations in terms of money and attitude on the job.
"You have to be realistic and bring your expectations down," says Turner. "You can't go in and say, 'I want a pool table and free soda,' and expect to get whatever you want. It's all over. It's time to get serious."