The Information Technology Association of America (ITAA) has released its annual survey of IT hiring managers. If you're looking for some encouragement in your quest for new employment, what you'll find is a mixed bag that reflects a flawed report in a terribly flawed IT economy. And how accurate the report will prove to be--considering the ITAA's history of misinformation--is open to speculation.

First the bad news! According to the recent ITAA 2003 IT Workforce Survey presented at the National IT Workforce Convocation on May 5, 2003, the total IT workforce in the United States peaked in 2000, losing half a million jobs in 2001. That's old news, of course. But, according to the study, the IT industry today is nowhere near recouping those historic high employment levels and is, according to the report, headed for continued trouble.

Weak Momentum for New IT Hiring

The survey reports a total of 10.5 million IT workers at the beginning of 2003, up 4.2% from the preceding year, but the strength of the hiring momentum is quite weak, reflecting a number of disturbing trends. For instance, last year in the final quarter of 2002, companies added over 97,000 IT workers, but this year, in the first quarter of 2003, they added only 86,500 workers. According to the report, "Gains have been made not so much in response to companies adding new workers but to a slowdown in the rate at which workers have been let go." Furthermore, the report documents the industry trend of companies moving their professional IT development overseas.

No Silver Lining

Now the good news!

Well, actually, there isn't much good news!

According to ITAA, though the worse part of IT downsizing may be over, the times ahead will continue to be rough. For instance, comparing this data to the 2002 baseline, tech support personnel scored the largest net gains in employment within the IT sector with an increase in hiring of 8.8%. However, tech support people were the first ones laid off when the recession started, so it's difficult to know if their rehire is a reversal of trend or a reflection that IT cut too many positions in the past.

The report also makes a dividing line between IT industry workers and IT workers employed by non-IT companies. According to the report, IT industry workers--workers who create or support IT products--are experiencing a much weaker job market than those IT workers who are employed by non-IT industry companies. For instance, IT companies have cut their hiring projections by 53%, compared to 47% for non-IT companies. And demand for IT workers generally is lower at the start of 2003 than at any point measured in 2002.

Surveyed managers don't see much improvement for the rest of the year either--not only within their own organizations, but within the marketplace as a whole. When asked to look ahead 12 months at the prospects for IT workers, 67% of respondents predicted that demand for IT workers would stay about the same or decline.

Again, the study points to a division between the IT industry and non-IT industry companies. IT companies were slightly more optimistic than non-IT companies, with 39% vs. 31% more positively inclined about hiring prospects.

No Hurry to Fill Vacancies

Meanwhile, these employers expressed only a modicum of urgency for filling jobs that were presently open: Only 31% said that they intend to hire in the next three months. IT industry employers told the survey that they were somewhat more likely to fill their slots in that same time frame than their non-IT industry counterparts (37% vs. 26%). Large IT companies said they were the most likely of all to fill vacant spots (57%.) Small non-IT firms said they were the least likely (only 8.4%) to fill jobs in the next three months.

According to the report, "On a quarter-to-quarter basis, hiring and layoff activity produced significant variations between IT and non-IT employers. [R]eductions in staff by IT companies dropped almost 50%, almost twice the slowdown of non-IT companies. IT companies laid off 41,219 employees between first quarter 2002 and first quarter 2003, compared to 438,924 for non-IT firms. IT company hiring was flat over the 12 months. These data suggest that the IT workforce is stabilizing (if not bouncing back with dramatic resilience). For IT companies, who cut total employment last year from 960,000 to 800,000, the downtick in layoffs is an indicator that the era of downsizing may be over. Having made their cuts, it remains to be seen whether new business will support new hiring."

History of Questionable Analysis

So how much credence should we give the ITAA's predictions? The history of its annual survey has been plagued by complaints that it has been too Pollyannaish, too optimistic, and too focused upon the IT manufacturers' political agenda. For instance, last year's report projected that there would be an overall aggregate demand for more than a million IT workers. This enabled ITAA to justify its lobbying efforts with the United States Congress to push for more H-1B visas for IT guest workers. This lobbying effort was going on during a time of extreme downsizing within the IT workplace itself, causing many United States IT workers to gripe that ITAA spoke up only for the large industrial complexes that wanted cheaper, less permanent labor.

In this year's report, ITAA actually acknowledges that its past predictions were spurious:

"[Last year,] demand for IT workers appeared to be recovering from 2001 lows, and the tapering of force reductions seemed to provide grounds for cautious optimism," the new 2003 study says. But then the ITAA concedes that it was wrong:

"Wrong. Data collected through 2002 and for this survey indicate that demand for IT workers is down dramatically. Hiring managers say they will seek to fill just 493,431 IT jobs over the next 12 months--down from 1.6 million at the start of 2000. Demand projections are a clear indication that confidence in the future is lacking for many employers."

So what was the value of the 2002 report if its premises were inaccurate? And what if the ITAA is wrong yet again in 2003?

This year's report is based upon telephone polls with 400 hiring managers (versus 532 in 2002) in IT and what ITAA calls "non-IT firms." It confidently says that the study is a stratified, "projectable" sample, with a margin of error for survey results +/- 4.9% at the 95% confidence level.

However, the interviews were conducted between March 27 and April 15, 2003--just weeks and days after the United States invasion of Iraq. The influence of global political and military events was at that moment driving markets and business confidence in wholly unpredictable directions in nearly every sector of the United States economy, with the fortunes of companies riding a roller coaster of uncertainty. Furthermore, IT departments throughout the country had just suffered the most disheartening years in history, while CIOs were in no position to accurately predict what its management will require in future sacrifice, with NASDAQ and the Dow at their lowest points all year. Any study of hiring intentions garnered during that critical period must be viewed with a jaundiced eye.

Subsequent to the close of the survey, with the successful actions of United States troops in Iraq, the economy made a modest rally and has been pushing the stock market into positive ground. One ventures to guess that if the same ITAA study were conducted today, the results would yield a different spin on hiring that reflects the current state of cautious optimism in corporations.

Is the ITAA Study Flawed?

Indeed, if we are to learn anything from ITAA projections of the past, it is that its current predictions will probably be off by yet another half million IT positions.

What's unclear is if those unaccounted IT positions will be shed from the overall economy or added in a mad rush to respond to new business pressures as the economy surges.

Why? Why is the ITAA study so flawed? Because this annual study only measures hiring projections based upon stated IT hiring intentions; the study has no mechanism to link IT optimism or pessimism with any larger economic projections. And it's this Ivory Tower approach to issues that has made the ITAA's past performance at representing the interests of the IT industry seem so unprofessional and out of touch.

How ironic! On the one hand, the IT industry needs a better means of projecting hiring trends, and this report offers us some hope that the ITAA has begun to address its past mistakes. But on the other hand, we fervently hope that the ITAA's current projections--based upon data that is highly questionable--are wrong again. We need the industry to rebound, and we inherently want to staunch the doom and gloom predictions that the study is offering.

Thomas M. Stockwell is an industry analyst and Editor in Chief of MC Press. He can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it..