July 11, 2009, 5:17 PM — Businesses are facing a fundamental dilemma. IT budgets and staffing levels will stay flat over the next couple years, according to a study by The Hackett Group, but at the same time, demand for IT services will increase by 17 percent.
The research reinforces the well-known fact that demand for IT services has always exceeded supply, and anybody that has been in IT for more than a year can tell you that. If there's not a backlog in the IT department, then something's wrong with the business. But that gap is increasing, and that's going to put a lot of pressure on the IT staff. What does this mean for the employment scenario in IT? First, it means that the pressure is on for the IT department to do more with less. Again, that's nothing new, but it's going to be more intense than ever, perhaps to the breaking point in some cases. And it means that businesses will be looking to make budget cuts.
How do businesses make budget cuts? For the pointy-haired bosses that don't know better, the approach is just to lop off a percentage from every department across the board. The Hackett study showed that those sorts of across-the-board cuts, which usually involve a mandatory cut of both budget and staff without any process improvement or rationalization connected to it, is widely used. It's an approach that is risky, and it's poor management, but nonetheless, it's what is being done.
The study also shows that the biggest opportunity for cost containment is outsourcing and offshoring. Of course, nobody likes to hear about that, but there could be a hidden opportunity here as well. Putting aside the offshoring element of it for a moment, an increase in outsourcing (and not necessarily offshoring) is really more of a job shift, than a net job loss. This means there will be more IT jobs in IT service firms, consulting organizations, and job shops, particularly for those staffers with specialties that are in demand. The greatest opportunity for a good IT job is no longer looking for employment from the big traditional employers, but rather, from the smaller consulting firms that service them. And just what are the specialties to focus on? According to the research, the growth of the 17 percent growth in demand is driven by things like the need for process transformation, business reorganization, regulatory compliance, and M&A activity. In other words, focus on making things run better, and putting together the pieces when a larger company eats smaller ones.
