US CIOs plan sharp reductions in contract staff, professional services, and hardware -- and almost no investment in cloud computing.

IT staff jobs are at increasing risk -- both for contractors and in-house workers -- according to a survey of top CIOs by Goldman, Sachs & Co released last week. Global services companies will also feel the pinch because of the slowing economy.

A second survey showed that basic PC and network hardware, as well as professional services providers, would bear the largest proportion of spending cuts. It also showed that CIOs planned to emphasize economizing measures over investments new technologies, with cloud computing emerging as the last item on their priority lists, despite the hype around it.

IT contractors to bear the brunt of cuts

"Demand for discretionary IT projects dropped to its lowest point" in the 41-study history of the Goldman Sachs staffing survey, which asked 100 managers with strategic-decision-making authority (mainly CIOs at multinational Fortune 1000 companies) about their about IT staffing plans for 2009.

The Sachs report states that "in a cost-constrained IT budget scenario, CIOs will most likely look to cut their resources first from lower-value augmented [contract] IT staff." The company also describes its survey as "an early warning flag" for service providers' 2009 bookings of new projects.

These intended cutbacks are a change from last fall. When the managers were asked in October which area of IT service delivery resources they would cut for application-related development or maintenance work, the answer was 0 per cent for in-house staff. However, with a declining economy, a February survey's results saw 8 per cent of respondents saying in-house IT programming staff would be cut. In April, 15 per cent of respondents said in-house staff would be cut. That dropped to 11 per cent in the June survey (the most recent), which was released last week.

But contract staff fare much worse, with 48 per cent of the respondents saying that such staff would be cut. And 30 per cent of the responders said on-site third-party service provider staff would also be cut for application-related development or maintenance work. Twelve per cent of the managers said they would cut staff from offshore third-party service providers.