Are Technology Workers Safer in this Economic Downturn?

Question

A few weeks ago at out local .Net User Group meeting we had our sponsor from TekSystems give a quick speech in return for the pizza and soda. He mentioned that Software employees are less affected by the down-turn. He threw out a figure that Software Apllication developers were still experiencing an unemployment rate of only %1. He also mentioned that it's still a good time to seek career opportunities. I think he was being honest but I also recognize he's trying to keep his revenue stream running.

Can you share what you are experiencing. Do you feel or are you safer than your non-Software co-workers? Have you seen more layoffs among friends and colleagues outside our sector? Do you think there is some truth to our sector being more insulated from the current economic troubles?

Answer 1

As any Austrian Economist will tell you, this 'downturn' or 'recession' or whatever you want to call it is a correction. In a correction, things that were inflated, bloated, or otherwise 'out of whack' (to use a highly technical term) are brought back to 'normal'.

What this means is that if you're good at what you do, you probably won't experience any issues in this recession. If you're in a shaky technology, or you aren't 'good', then you'll probably be laid off.

Answer 2

I'd say those in programming are amongst the most vulnerable. The reason I say that is because our industry lives or dies by capital expenditure on IT projects by companies and governments. Governments are relatively more inelastic. Companies fortunes ebb and flow based on the economy. This can have pretty interesting effects. Google, for example, is laying off staff and vastly cutting back on contractors (apparently most of their 10k+ contractors will go). Is Google losing money? Nope. But the economy goes down and companies are expected to trim the fat whether or not they actually need to.

I went through the downturn following the tech wreck 5+ years ago and I can tell you it wasn't pleasant. In London in 2003 the unemployment rate amongst IT contractors was 39%. Now that didn't include the people who had retrained to something else (quite a few became plumbers actually). From 2001 to 2004 it was pretty unpleasant I can tell you and the general market downturn was nowhere near as bad then as it is now. So I fully expect that it's going to get worse before it gets better and that it won't get better for a couple more years at least.

Answer 3

I'd ask for some citations for those numbers. 1%? Please. It's the glib response that somebody who has little idea what they're talking about will fire off.

I don't see that anyone's safe. If you depend on large companies to pick you up, my perception is that those aren't doing so well. Try applying for a job at GM, Boeing, or Citi and see what I mean. Microsoft just laid off 5,000. I don't think an application will get far with them for the near future. Even Google has slowed down from their breakneck pace.

It could be that smaller, more entrepreneurial companies are picking up talent where they can. But it won't be in the volumes that large companies do.

Another issue is how outsourcing has affected the industry. If your job was outsourced, and you changed fields, are you still counted against IT unemployment?

Markets are local things. Your view of employment possibilities depends on your geography. Blanket statements like "1%" ring hollow for me.

Answer 4

In finance they seem to make people redundant in pretty uniform way (the rough percentage in different departments seems to be the same)

Answer 5

I don't think I ever remember any of my more talented peers ever being out of work.

I do however know of many, many of "McProgrammers" (graduates of McSoftware school X) who seemed to be out of work almost every time the economy took a turn for the worse.

Answer 6

We're definitely better off this time, although we're not unaffected. When the dotcom bubble burst, it was because of a large number of ill-run IT companies, meaning that a lot of techies were redundant. This time around, it's financial institutions that screwed up - IT actually did pretty well. Things aren't as sweet as they were a year ago (customers are less willing to spend), but things are generally pretty OK for IT. There are still job ads in the newspapers, I still get contacted by recruitment agencies every once in a while, those who have been laid off have found new jobs pretty quickly, etc. IT also has the advantage that we can be the driving force in rationalisations, so companies can actually increase IT spending when downsizing, so I'd say we're going to do better than average in this downturn.

Of course, I can only speak for Sweden, but that's how things look here.

Answer 7

The answer is mixed.

1. There are still a number of open positions out there, although the number has dramatically decreased (not a scientific metric; just an observation).

2. A number of firms cutting staff have reduced IT spending, because it can be easy to cut or put off projects, without impacting overall business operations.

3. IT is spread across so many industries, that the impact is felt on an industry by industry basis (financial probably more hit than government IT services, for example)

4. IT, while still faring better than some other professions, is showing to be fairly cyclical overall...when the economy tanks, firms reduce IT budgets; in boom times, firms spend more on IT improvements.

Just my professional observations. Your results may vary.

Answer 8

I wish I knew the answer to this question. I can only testify about what I have seen my own company do.

1. My company immediately laid off 4 workers right around Sept 15. Every single one was a worker with problems. Moderate to poor skill sets. Ambitions to move up the chain of command. Unhappy with less responsibility and less pay, despite questionable skills and work habits. Not one of these four was a member of the IT or Developer groups.
2. One of our developers quit in early October. He was a very nice guy, but very insecure. He was afraid that he was going to be laid off due to a SQL Injection attack he set us up for.
3. Two of our business analysts left during September/October. They both wrote specs for us developers. One left to return to school. She was afraid she was in a dead-end position and wanted an MBA to 'break through the glass ceiling'. The other was a little on the crazy side, and just decided this wasn't the place for her.
4. So far, our CTO is adamant that everybody else is in good standing and he has no intentions of laying anybody off. He claims he would like to cherry pick a couple of great developers, because they are on the market right now, but he is concerned about the money. He feels it is prudent to wait unless he finds a 'perfect' candidate.

There are times when I am very concerned because our firm is in the financial sector. We sell market research to banks. You would think that we would be in trouble, but so far we are not. The first 9 months of 2008 were kinda stinky financially, but when the chaos hit, our business went up and stabilized. The survivors wanted more information about this rapidly changing market, not less.

I guess I can't be all that worried about my status, because the recession hasn't changed my actual buying behavior much at all. I am still buying whatever I fancy. I don't feel insecure about it either. I guess in my heart of hears, I believe I am securely attached here, even though I may wonder if it is really true (at times).

Answer 9

I found an article here that was interesting: http://www.tmcnet.com/usubmit/2009/02/04/3965089.htm.

The thinking is that since the .Com bust and the technology outsourcing scare that many students chose not to enter the Software career path. This since 2000, there has been increasing demand in the job market for or skills. The hope is that this stron demand may mean understaffing that keep layoffs low. And potentally, many companies are still under staffed and will keep on hiring a bit.

I am a little more optimistic based on some of the feedback. I had a bit of panic this week. Thanks!

Answer 10

Another potential answer in the affirmative for the question: http://www.foxnews.com/story/0,2933,507587,00.html