Tech jobs getting zapped

Posted by: Isabelle Langham

NEW YORK (CNNMoney.com) -- The tech industry, once one of the hottest sectors for job seekers, is falling victim to dried up spending as the recession takes its toll.

After three years of at least 2.5% employment growth in the United States, tech jobs are forecast to decline by 1.2% this year, according to Forrester Research. They have already fallen by nearly 1% since their November peak, according to the Labor Department. Year to date, 8,000 tech jobs have been slashed, including 4,100 just last month.

"As the economic situation gets worse, more and more companies are getting into trouble, and they're forced to cut [tech] spending," said Arpitha Bykere, jobs analyst for RGE Monitor. "We'd expect to see a growing number of layoffs due to slowing sales at [tech] firms."

Technology spending this year is expected to fall 3.8% worldwide and 1.6% in the United States, according to technology research firm Gartner. That's down significantly from 2008, which saw a 6.1% rise worldwide, and is nearly double the decline that occurred when the tech bubble burst in 2001.

One of the reasons tech spending held up pretty well in 2008 was because of strong demand for just day-to-day needs, said Forrester Research analyst Andrew Bartels. At the same time, job growth was relatively modest, leaving little "fat" to trim as the recession started taking a toll.

As businesses reluctantly began to slash their technology budgets this year, many technology firms and those companies that employ their own tech staff have had no choice but to cut tech-related jobs. That's especially true for hard-hit industries like services and finance, which combine to employ 50% of the nation's technology professionals, according to Forrester.

"Certainly, reduced spending will have an effect on [tech] jobs everywhere," said Ken McGee, a tech analyst for Gartner. "We've already begun to see it with many users and vendors."

Some tech jobs still 'safe'
Not all tech jobs are cut from the same cloth -- they encompass everything from systems managers to computer programmers to "help desk" support staff.

For the most part, those whose work is essential to the daily operations of a business, like systems experts for networks and communication, are expected to have more job security than others, according to Forrester. Very strong demand for communication, e-mail and video conferencing have put experts in those fields in high demand.

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"Jobs for systems analysts and network analysts will buck the downward trend and continue to grow in 2009," said Bartels. "The recession will cause a slowdown in job growth, but no downturn."

But those who work in fields that aren't as crucial to the day-to-day business, like research and development or software engineering, are expected to face steeper cuts. Help desk professionals are also expected to be among the first to get handed pink slips, as companies with large-scale layoffs need fewer tech support staff members.

"These roles are a bit of a luxury that both [technology] vendors and [technology] departments can afford in good times, but not so much in bad times," Bartels said.

2010 recovery?
There is a debate among experts about how quickly the sector will recover. Some experts believe the recovery will be slow, as businesses exercise hiring caution even as economic conditions improve.

"The jobs recovery will be very sluggish and prolonged, because companies will continue with their cost-cutting strategy until they are convinced that consumer demand is back to stay," said Bykere

But others say the trend will quickly and rapidly reverse in 2010. They argue that pent-up demand for technology projects will force companies to bring back spending to pre-2009 levels once the recession has ended, because businesses realize how integral technological innovation is to growth.

Furthermore, a recent Obama administration report forecasted the creation of 50,000 new tech jobs by the end of 2010, thanks in large part to economic stimulus package incentives to digitize health records.

Accordingly, Gartner estimates that tech spending will snap back 3.4% in the United States in 2010 and continue to rise through 2013.

"There will be so much pent-up demand in [technology], that the ramp up factor will occur just as fast as the demise," McGee said. "Companies will quickly turn to green-light funding for [technology] during the recovery."

First Published: April 8, 2009: 5:03 AM ET