Fewer job cuts and positive predictions offer hope for IT jobseekers

News Analysis

Fewer job cuts and positive predictions offer hope for IT jobseekers

Rebecca Thomson

There are several signs that the IT job market is beginning to improve, with fewer high-profile, large-scale lay-offs and more job market surveys producing reasons to be positive. But are these just misnomers, or are things genuinely looking up?

The first quarter of 2009 was a bad one. E-skills' quarterly bulletin found demand for permanent and contract staff fell 27% and 32% respectively on the previous quarter. Unemployment for IT professionals increased from 2.4% to 3.4%.

But the second quarter of the year, while still painful, held several hopeful signs. For a start, research found the number of IT jobs on offer is increasing. The Chartered Institute of Personnel and KPMG say in their quarterly report that IT vacancies are set to increase in the third quarter, having interviewed 900 employers.

Other research does not completely agree with this, but does support the general, more positive trend. Salary Services Ltd produces a quarterly study into the number of IT vacancies. Its latest study found thatwhile jobs are still falling, they are doing so at the slowest rate since Britain's economic problems began. Job advertisements were down by 10%this quarter, which is still a big slumpbut a substantial improvement on the peak rate of decline of 26% during the winter months. It may be too soon to say there are green shoots in the IT jobs sector, but they might soon appear.

In the financial services sector, which is generally taken as an indicator for what will happen in the rest of the industry, demand for IT contract staff has risen 0.5% since the beginning of the year. In inner London, where the financial servicessector's problems have hit hardest, recruitment was down just 1.9% in the second quarter of this year, compared with a spectacular fall of 68% in the six months to March 2009.

Software houses and consultancies also provide a good indication of the health of the IT recruitment market, constituting as they do nearly 60% of the IT job market. Recruitment at these companies was down just 6% quarter on quarter. George Molyneaux, director of Salary Services Limited, saysanother hopeful sign is that advertised salaries havestopped declining."The figures for permanent IT recruitment activity this quarter may not be showing green shoots, but equally it has not had the roots die."

Matt Smith, regional managing director at recruitment firm Harvey Nash, sayshe is starting to see signs that business may be picking up again."I spend most of my time with clients, who are managing directors and CIOs. Formany of them, there is a sense that they have cut everybody they need to cut. They are now looking at the next step."

While the initial reaction to the credit crunch and resulting recession was to cut costs, Smith says most people have reorganised their business and are looking to the future."I think there is a sense that the market is picking up. It has only just started happening, but several countries have officially come out of recession and I think we are going to see a reasonably positive return."

It may not come as much comfort to those who have been affected, but the technology industry has, in many ways, been one of the lucky ones, and does not have quite as far to climb as others to reach its former strong position. The IT unemployment rate may have grown to 3.4% in the first quarter of 2009, but the national unemployment average was 7.3%. IT is no longer seen in the majority of companies as a service that can be cut - it is recognised as a way to reduce costs and providebusinesses with a competitive advantage.

"IT has not had it quite as hard as other functions and it will play a huge role in helping companies grow after the recession," says Smith.


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