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While the recession officially ended in June 2009, many IT jobs have yet to return. Now, however, the IT employment scene finally appears to be strengthening. Nearly half of all IT organizations in North America plan to increase the size of the IT workforce in 2014, a sign that businesses finally appear ready to commit to sustained growth in IT operational spending.
According to the annual Computer Economics outlook survey, 49% of IT organizations anticipate getting the go-ahead to augment staff headcount in 2014, as shown in Figure 18 from the study, IT Spending and Staffing Outlook for 2014. Also encouraging is that only 9% plan to reduce staff, for a net positive trend of 40 percentage points. That is up from a net trend of 25% in the previous year’s forecast.
IT staff headcount has been slowly improving over the last two years among large organizations, but much of those gains have been in the form of an expansion in the use of temporary contract IT workers. It is not clear whether this trend will continue. The study counts both temporary and permanent workers as part of the IT staff headcount.
In the survey, the majority of IT executives felt the outlook for their business has been improving over the previous three months and were anticipating a bump in their IT operational budgets in the year ahead. “We found very little concern that budget and debt ceiling gridlock in Washington, D.C. would derail the improving outlook for IT jobs growth and IT operational spending,” said John Longwell, vice president of research for Computer Economics. “That may be the single biggest reason for optimism.”
The consumer appears to be in charge at the moment. The sector forecasting the strongest growth IT operational spending is the retail and wholesale distribution channel. “We are very positive and confident,” said an IT executive with an automotive service company. “The business is growing, and IT is falling into place with and increased emphasis on operational performance improvement and process optimization with BI.”
Financial services organizations in North America and abroad are forecasting above-average growth in IT operating budgets. IT organizations in manufacturing and professional services are set to make investments in IT on par with most other sectors. Utilities and transportation companies remain laggards, however, and IT executives in the public sector are gloomy. “IT is not important to the organization and will be defunded until it is completely outsourced,” a CIO for a state housing agency lamented.
The outlook has other blemishes. In North America, large IT organizations are forecasting lackluster growth in IT capital spending. The political gridlock in Washington, D.C., may have created a climate of caution, and a few IT executives said capital spending was declining as they focus toward cloud solutions. Whatever the cause, in the U.S., large IT organizations, defined as those with IT budgets in excess of $20 million, are shifting available resources away from IT capital budgets and into IT operational budgets.
This annual outlook report provides guidance for IT executives as they firm up spending plans for the coming year. The report is based on our survey of 137 IT organizations worldwide, including 82 IT organizations in North America. The full study assesses the spending and staffing actions IT managers currently have under way, the budget actions they took over the past year, and what they are including in their budget plans for the year ahead. Our outlook report provides 2014 forecasts for IT operational spending, IT capital spending, and IT hiring. It also forecasts pay raises for IT workers.
This Research Byte is a brief overview of our report on this subject, Outlook for IT Spending and Staffing in 2014, The full report is available at no charge for Computer Economics clients, or it may be purchased by non-clients directly from our website (click for pricing).