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New job realities ahead for IT workers

Patrick Thibodeau | Jan. 18, 2016
Next time, an economic downturn may be different for tech.

worry concern
Credit: Bryan Rosengrant

The change in IT hiring was illustrated last week by General Electric Co., which announced it is moving its headquarters from Fairfield County, Conn., to Boston. In doing so, Jeff Immelt, GE's CEO, said Greater Boston is home to 55 colleges and universities, and "attracts a diverse, technologically fluent workforce."

Four months prior, GE announced formation of a new business, GE Digital, a $6 billion unit with a goal of becoming "a top 10 software company by 2020," said Immelt at the announcement. To help staff up for this initiative, GE is hiring technology workers capable of new product development.

This isn't happening just at GE. IT employment is broadly shifting away from infrastructure support, which is increasingly vulnerable to offshore outsourcing and migration to cloud services.

"GE is basically reinventing itself and trying to become the leading industrial software company in the world," said Erik Dorr, vice president of research at management consulting firm Hackett Group.

For GE this means building platforms to support new technologies, such as Internet of Things-enabled products. "They recognize that all of this is predicated on having access to top talent," said Dorr.

IT employment has, in the past, followed the economy. The Great Recession resulted in massive IT job layoffs, as companies cut back-office operations. But today's shift to "digitization" of products -- turning consumer wares into connected products, adapting to mobile and utilizing business intelligence, robotics and social media -- have all increased demand for people with these skills.

This means that if the global stock sell-off and crashing oil prices result in new waves of layoffs, tech workers who develop new products, markets and digital experiences may be in the best position to survive.

Firms "are going to hire these people no matter what happens to the economy," said David Foote, the CEO of Foote Associates, which researches the IT labor market. "If there is a downturn, they work even harder to keep the people they've got," he said.

Technology jobs are now embedded throughout organizations, and many CIOs may not have the control over technology spending they once did. But they still are responsible for a sizeable part of IT spending.

Estimates of the number of new IT jobs added last year range from 125,000 to about 180,000, similar to what happened in 2014. This is based on an analysis of government labor data by labor market analysts.

In 2016, IT budgets "are still growing, but only at 2% at the median," said Frank Scavo, the president of Computer Economics, a research firm. That's down from 3% IT budget growth in 2015.

 

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