IT job axing may be coming to an end as economy recovers

As the latest Reserve Bank board meeting outlines a road of recovery for the local economy, will the spate of IT job losses come to an end?

The minutes from the latest Reserve Bank board meeting paint an overall positive picture for the economy. There are further signs of stabilisation in the world economy. The Gross Domestic Product (GDP) outcome for the March quarter had been surprisingly strong and even though business sector investment had fallen by six per cent in the March quarter, this was still a stronger performance than in many other countries, according to the minutes.

Yet the IT industry has already experienced large job losses, both internationally and locally. A recent Hudson report found that 40 per cent of organisations have cut jobs over the last six months and a further 58 per cent have cut contractors.

Thousands of jobs have been axed internationally from a number of companies including Cisco, IBM and HP. Local jobs have also been axed from a number companies including Microsoft and CSC.

Recruiters, however, are now cautiously optimistic about the IT job market and hope there should not be too many more jobs on the line.

Olivier Group director, Robert Olivier admitted that although statistically the job market has evened out recently, the IT sector has surprisingly performed worse than the overall market.

“Permanent jobs are still down over all, but contracting might start to pick up once there has been a pick up in consumer confidence. However we are not yet seeing the pick up in business investment and IT seems to be more aligned with business investment than any other occupation.”

Despite the general slump in jobs, Olivier does not think there will be further widespread losses.

“What we have seen from our client base is that they have tended to hoard their permanent staff, though possibly reducing their hours. You always get one or two exceptions but as a general rule, I don't think we will see too many more IT jobs axed.”

Chief Executive Officer of Candle ICT, David Stewart agrees.

“We are not anticipating any significant job cuts in the ICT sector going forward, as we believe most of the cuts in our sector happened in the last three months of last calendar year and the first three months of this calendar,” he said.

“While the demand for permanent employees has seen only a small recovery we have seen a significant pickup in demand for contractors in the Telco’s, IT services companies, State Government departments and Financial Services companies. This has accelerated further in July as budgets have finally been signed off for projects that had been put on hold until the end of the financial year.”

Stewart said that jobs in the Federal Government are a more complex picture due to the issues caused by the Gershon review.

“Government departments have been trying to cut back on their use of contractors, and transfer them to permanent employees where possible, with mixed results all around.”

Michael Page International spokesperson, Marcus Sandmann says the market is finally stabilising after what has been a difficult 12 months, but that does not necessarily mean there won't be further cuts ahead.

“We aren’t out of the woods yet so further job cuts are a possibility. Having said that, our view is that the majority of jobs cuts in the corporate sector have already occurred and further reductions are less likely,” he said.

“Conditions are certainly more stable now than they were in the second half of 2008 and the early part of this year. But there’s a difference between stabilisation and recovery. Business confidence levels are still too low for a recovery categorised by new job creation. Hiring activity is likely to remain consistent for the second half of 2009 with a recovery more of a realistic proposition for early 2010.”

Both Sandmann, and Randstad’s IT division COO, Malcolm Dunford said the contracting market is already showing signs of growth.

“As in previous downturns, businesses will start to use contractors in the early stages of the upturn to secure skills quickly without having to commit to permanent hires. So our prediction is for a strengthening contract market over the remainder of this year and early 2010. If business conditions improve beyond this timeframe employers will start hiring on a permanent basis,” said Sandmann.

Dunford said though contract roles were more in favour than permanent positions locally, the situation was quite different in New Zealand with companies there showing more interest in retaining and recruiting permanent roles.

"Definitely the IT space has continued to be strong for permanent positions in New Zealand."

Dunford said it was too early to tell whether there would be further job losses.

Hudson IT Director, Frank Wadsworth, said Hudson had not seen any major rounds of redundancies with large numbers involved and he is confident that this will remain the case.

“Organisations are still reluctant to let go of their top talent or niche skills and therefore these skills are still in demand. Individuals are working longer hours and there is more pressure to achieve KPI's than ever before,” he said.

“However, there are a few more senior roles still being made redundant as these obviously have an immediate impact on the bottom line.”

Computerworld approached several large employers in the technology space about whether there will be any further lay offs in the next six months. A Google spokesperson would not comment directly on job cuts but said that the company is continuing to hire, albeit at a reduced rate.

Dell, Cisco and Microsoft Australia were unable to respond by deadline.

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Tags RBAit contractingolivier groupIT jobsCandle ICTHudson

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