U.S. gov't report: IT industry growing again

The U.S. technology industry is growing again after two years of layoffs and low profits, according to a report on 2003 released Tuesday by the U.S. Department of Commerce's (DOC's) Economics and Statistics Administration.

The report, "Digital Economy 2003," estimates the U.S. IT industry grew by 6.4 percent in 2003, compared to 1.6 percent in 2002 and 0.9 percent in 2001. The IT industry's total output of goods and services was US$1.24 trillion in 2003, up from an estimated $1.17 trillion in 2002. The growth of the IT industry doubled the rate of growth in the total U.S. economy, which is an estimated 2.9 percent in 2003, according to the report.

"Technology is clearly on the comeback trail," said Phil Bond, undersecretary for technology in the DOC. "The real story is (the report) chronicles the comeback of the IT sector." Bond praised efforts by his boss, President Bush, to turn the U.S. economy around, including a package of tax cuts, as central to the IT industry turnaround.

The 110-page report, available online at http://www.esa.doc.gov/DigitalEconomy2003.cfm, does not deliver good news for IT workers, however. While IT spending among large companies seems to be picking up, that hasn't yet translated to increased IT hiring, said Kathleen Cooper, DOC undersecretary for economic affairs. But IT employment in the U.S. seems to be stabilizing, and she predicted that IT employment would soon begin an upswing.

"It is very recently that we've seen a turnaround in total employment," Cooper said. "It's encouraging to me, given that the overall economy has turned, that there has been a stabilization (in IT employment)."

Critics questioned whether the economic turnaround described by the DOC will mean more jobs for U.S. workers. The Institute of Electrical and Electronics Engineers-USA (IEEE-USA) has seen some evidence of more IT jobs being advertised, said Ron Hira, chairman of the IEEE-USA's research and development committee. "But the market is still pretty bad in terms of employment," he said. "There's a lot of insecurity among our members."

If IT spending picks up, U.S. jobs may not follow, because of a growing trend toward moving IT jobs overseas, Hira said. "It looks like companies will start spending," he said. "The question is what those jobs will be and where those jobs will be located."

The DOC is trying to work with private groups to get a good understanding of the offshore outsourcing trend, Cooper said. Analyst firms have been making predictions, but the agency wants to have accurate counts of current offshore outsourcing trends, as well as reasons for the outsourcing, she said. Better numbers on offshore outsourcing will help the agency decide policy directions, she said.

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