2009 Technology Staffing Outlook

NOW IS THE TIME 2009 ConsultNet

Technology Staffing Outlook

www.consultnet.com California Office Phone: 949.242.3522

Colorado Office Phone: 303.759.4440

Texas Office Phone: 214.461.1720

Utah Office Phone: 801.208.3700

National Office Phone: 888.215.9675

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TABLE OF CONTENTS 2009 ConsultNet Technology Staffing Outlook

Overview................................................................................................................................................ 1 IT Spending and Staffing Projections for 2009................................................................................ 1-4 ConsultNet Hiring Manager Survey & Analysis.............................................................................. 3 What’s Hot for 2009: Aligning Skills with Upcoming IT Trends..................................................... 5-6 A Supplemental Workforce Keeps Projects Moving During an Economic Slowdown............ 7-9 Communication is Key......................................................................................................................... 10-11 Addendum 1: Orange County, California IT & Engineering Forecast........................................... 12 Addendum 2: Denver, Colorado IT & Engineering Forecast......................................................... 13 Addendum 3: Dallas, Texas IT & Engineering Forecast................................................................ 14 Addendum 4: Utah IT & Engineering Forecast............................................................................... 15

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NOW IS THE TIME. 2009 ConsultNet Technology Staffing Outlook Overview News headlines tell us economic times are tough, but now is not the time for standing on the sidelines hoping to make it through the year. Now is the time to take advantage of your competitors, many of which are waiting for times to improve, and leap-frog ahead. Recessionary conditions are ripe with opportunity to forge career paths and strengthen business strategies. In the following report, ConsultNet provides a concise outlook for the Information Technology and Engineering industries in 2009 and offers suggestions to IT professionals and organizations alike on how to take advantage of the opportunities still available.

IT Spending and Staffing Projections for 2009 Despite the “doom and gloom” message of the current economy taking center stage, we need to look deeper at how decision-makers are responding to current economic conditions to fully understand what to expect for the coming year. A recent survey conducted by Computer Economics questioned IT executives about their spending plans for 2009. The results of the survey paint an interesting picture: “More IT organizations are cutting IT spending this quarter than was the case earlier this year, but the cost-cutting is not nearly as draconian as one might assume by reading the business news headlines. Furthermore, IT spending cuts do not include widespread reduction in IT staffing levels. Essentially, at the median, IT executives expect IT spending and staffing growth to both be flat in 2009.”1 To help illustrate how the turmoil in the financial markets has affected IT spending and staffing levels, Computer Economics surveyed IT organizations to provide a quick glimpse of how their budgets were currently being affected2. ———————————————— 1

http://www.computereconomics.com/article.cfm?id=1409 2009 IT Spending Forecast: No Growth http://www.computereconomics.com/article. cfm?id=1409&tag=rbspot 2

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2009 ConsultNet Technology Staffing Outlook This survey helps prove two things. First, that it’s not time to panic. Budget cuts are being made, but not drastically enough to foresee any major IT unemployment crisis. Second, stagnating IT budgets present IT execs and professionals with an opportunity to prove how their skills are vital to an organizations’ success. In addition, according to the Computer Economics survey, 39% of IT organizations are adding to their staff levels this year, while 24% are cutting IT staff headcounts. In comparison to last year’s study, 52 % were increasing staff levels and only 16% were reducing headcount3.

Although current studies and analysis demonstrate that IT staffing and spending are not expected to see much growth in 2009, the fact that drastic cuts aren’t on the horizon is good news not only for the IT industry, but the economy at large. Technology analysts agree that spending on technology products and services will continue to grow next year — just at a slower pace. “Although all the economic forecasts went from up slightly to down drastically in a matter of days, the good news is that IT is in a better position than ever to resist the downward pull of a slowing economy,” said John Gantz, chief research officer at IDC. “Technology is already deeply embedded in many mission-critical operations and remains critical to achieving further efficiency and productivity gains. As a result, IDC expects worldwide IT spending will continue to grow in 2009, albeit at a slower pace.”4 IDC analyst Stephen Minton also reports that tech spending is actually faring better this time around than it did in the previous downturn, following the Sept. 11 attacks. The recession of 2001 and 2002 followed a tech bubble that was characterized by companies overspending on technology products. This time around, however, there is no such bubble to burst. So while companies are scaling back technology spending as part of broader cutbacks in response to the recession, they still tend to see technology investments as an important part of their business. ———————————————— 3

IT Spending, Staffing & Technology Trends: 2008/2009 http://www.computereconomics.com/temp/ISS2008Ch1ExecSum072508.pdf 4 http://www.idc.com/getdoc.jsp?containerId=prUS21517508

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2009 ConsultNet Technology Staffing Outlook ConsultNet Survey & Analysis

49% 28% 44% 36%

43% 57% 46% 46%

8% 15% 10% 18%

OVERALL IT & ENGINEERING FORECAST In May 2009 ConsultNet conducted it’s own survey of Hiring Managers for IT- and Engineering- related workers in four geographies including, Orange County, Calif., Denver, Colorado, Dallas, Texas and Utah. The questions were aimed at identifying hiring and budget trends in the marketplace. Overall findings indicate that hiring managers feel that their budgets and headcount will stabilize and increase looking ahead to the next six months of 2009. Under Budget, survey participants indicate an overall improvement of more than 20 percent in their budget expectations, including seven percent who expect a budget increase, an increase of 14 percent who expect budget to have no change – and a significant 21 percent less hiring managers expect to decrease in the next six months, when compared the past six months. Under Headcount, ConsultNet found those surveyed expect a shift from a decreased headcount to hiring trends to round out 2009. Eight percent of those surveyed who had experienced headcount cuts during the past six months – now report expecting their headcount to increase over the next six months. A stable 46 percent saw no change in the past, and still expect no change for the next six months.

*Data and analysis for specific geographies can be found in Addendums 1 through 4

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2009 ConsultNet Technology Staffing Outlook

ConsultNet Recommendations: There’s no denying that economic times are more challenging this year; however, technology professionals and employers need to focus on the many opportunities that still exist. These additional pressures should be the catalyst for improving technology, communication and interpersonal skills which will benefit individuals for the duration of their careers. Additionally, tighter purse strings can mean more creative planning and better resource management for IT execs— management techniques that will benefit organizations for years to come. “The news for the IT industry is good. ConsultNet is still experiencing a growing number of orders for technology professionals, which reflects how there is still a strong demand for experienced, talented IT pros,” said Spencer Shaffer, President of ConsultNet. “Hiring managers can also reap many rewards during this time because when more candidates enter the market, they can assemble a strategic team that can help grow their business.”

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What’s Hot for 2009: Aligning Skills with Upcoming IT Trends We are now a Web 2.0 world and companies are scrambling to meet the technological expectations the public demands. To stay valuable (and employable), IT professionals need to keep their knowledge and skills up-to-date with these latest technological trends. The following lists are from research firm Gartner Inc. and CIO Insight detailing what they believe are the 2009 technologies that will impact an organization’s long-term plans and revenue. Gartner’s Top 10 Strategic Technologies for 20095 1. Virtualization 2. Cloud Computing 3. Servers—Beyond Blades 4. Web-oriented architectures 5. Enterprise Mashups 6. Specialized Systems 7. Social Software and Social Networking 8. Unified Communications 9. Business Intelligence 10. Green IT

CIO Insight’s Top 10 Technologies that Drive Revenue6 1. Service-oriented architecture 2. Rich Internet Applications 3. Unified Communications 4. Smart Phones and Mobile Clients 5. AJAX 6. Application Virtualization 7. Storage Virtualization 8. Wikis 9. RFID/Wireless Sensors 10. Social Networking

Although they may be labeled differently, several technologies— virtualization, Internet apps, social networking and unified communications—appear on both lists, which is a strong indication that IT professionals with experience in these fields will be in high demand. To shed additional light on what skills and services will weigh heavily on the minds on IT execs in the coming year, Computer Economics also surveyed respondents about how their priorities were changing this year. The top five objectives are shown below7: 1. Improve IT service level performance 2. Improve disaster recovery capabilities 3. Increase IT security 4. Reduce the cost of ongoing IT maintenance & support 5. Improve the skills of IT staff ———————————————— 5

http://www.gartner.com/it/page.jsp?id=777212 http://www.cioinsight.com/c/a/Technology/Revenue-Driving-Technologies/ 7 IT Spending, Staffing & Technology Trends: 2008/2009 http://www.computereconomics.com/temp/ISS2008Ch1ExecSum072508.pdf 6

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2009 ConsultNet Technology Staffing Outlook

These priorities also ring true for the executives surveyed by CIO Insight. According to their study, the following are the Top CIO Priorities for 20098 1. Improve business processes 2. Deliver better customer service 3. Cutting costs 4. Generating more business from new and current customers 5. Innovative new products/services

ConsultNet Recommendations: Stay Sharp “There’s a common misperception that only the newest, hottest technology skill sets are in demand, but companies still need people who are knowledgeable about the technology that serves as a foundation for the latest and greatest developments,” Shaffer notes. “IT pros need to make sure their existing skills stay sharp, but keep abreast of the progress being made in their particular field.” Prove Your Value 2009 is a great year to break out from the pack and prove your value to your boss and your organization. One way to do this is to take on new, challenging projects. This will not only broaden your skill sets, but give you access to high-level meetings, customers, trainings and resources that you wouldn’t access in more mundane assignments. Although taking on tougher assignments is a risk, this strategy can give IT pros the recognition they need to secure a position during tough times.

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http://www.cioinsight.com/c/a/IT-Management/Top-CIO-Priorities-for-2009/

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A Supplemental Workforce Keeps Projects Moving During an Economic Slowdown IT executives may feel their departments are especially vulnerable in this time of shrinking corporate budgets. Rather than worry, IT execs can take advantage of some of the opportunities this recession presents. For example, with hiring at a standstill in many organizations, companies that do have open positions for IT professionals are in a better position now, than in years past, to find a qualified candidate. In previous years, organizations struggled to find IT talent as technology professionals were in short supply. However, with the possibility of an increasing talent pool due to budget constraints, 2009 may be the ideal time to find the technology talent that might otherwise be in short supply. The staffing challenges presented by today’s economic situation can also be a conduit to explore a “supplemental and flexible workforce” solution. Supplemental workforces consist of temporary and highly-skilled workers, particularly consultants specializing in a specific field, to help reduce the strain placed on full-time staff. As evidenced by the following graphic, although business executives are unwilling to add full-time IT staff, they are willing to outsource as a strategy to meet demands during fluctuating IT cycles9.

“Every company has aspects of their business that fluctuate with highs and lows. It’s during these highs when a supplemental workforce is the answer,” notes Shaffer. “For example, when a new product is developed, there are different stages of development, and each stage requires a different expertise. Once the product is completed, there is no longer a use for many of these people, so they get laid off. There is a high cost for this employment strategy as the employer pays for the recruitment, benefits and severance of the employee. They are still using a flexible workforce, just at a higher cost.” ———————————————— 9



IT Spending, Staffing & Technology Trends: 2008/2009 http://www.computereconomics.com/temp/ISS2008Ch1ExecSum072508.pdf

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2009 ConsultNet Technology Staffing Outlook

IDC Analysts have similarly concluded that the outlook for outsourcing in 2009 in extremely positive. “Although things look gloomy for the larger global economy, the outsourcing market represents a dichotomy: on the downside, organizations’ cost-cutting outsourcing strategies may negatively impact market growth, but at the same time, the upside is that outsourcing will be adopted by more organizations to help them work through financial and competitive challenges,” said Allie Young, vice president and distinguished analyst at Gartner. “The well-educated buyer and provider will have the advantage. The potential for outsourcing to address immediate cost pressures as well as long-term recovery goals will be unprecedented. However, only organizations that are diligent about understanding and avoiding the pitfalls of cost-focused outsourcing and that apply businessoutcome-focused outsourcing will be successful.”

ConsultNet Recommendations: Use a Supplemental Workforce Now is the time to secure a staffing strategy to stay ahead of the competition and ensure your organization is ready when economic conditions improve. The best way to do this is through using a supplemental and flexible workforce. “One of the toughest staffing challenges is finding the right person for a specific job. That’s when outsourcing IT staffing can solve a variety of problems,” Shaffer said. “First, staffing organizations have an expansive network of IT pros and can find a match to a specific need. Second, the time that would have been invested into finding the right person can now be spent on more critical matters.” Don’t Overlook the Retired Workforce One of today’s most sought-after technology talent pools is the aging workforce. The Bureau of Labor Statistics recently reported that over the last 30 years employment of workers 65 and older has increased by 101%. “The aging workforce are ideal candidates for consulting work because they have decades of experience and knowledge that many organizations are eager to tap into,” said Shaffer. “Additionally, consultants can choose their own hours and the projects they work on, giving these retirees the flexibility they desire.”

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http://www.gartner.com/it/page.jsp?id=856713&format=print http://www.bls.gov/spotlight/2008/older_workers/

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2009 ConsultNet Technology Staffing Outlook

Shaffer notes that certain areas of expertise are especially well-suited for consulting work, “Technology is an area where we are seeing a huge gap in the need for qualified IT talent versus available professionals. People with specialized IT skills are in demand and can do very well in consulting work. Retired technologists are being sought after because there simply aren’t enough qualified people to meet the demand.” The BLS has also reported that Baby Boomers are delaying retirement – or re-entering the workforce at an unprecedented rate of 80%. In addition, with benefits shifting from guaranteed pensions – to 401K’s, workers are anxiously trying to recover from the economic downturn. ConsultNet has seen a steady increase in the number of older consultants seeking work. “Smart companies are eager to offer positions to the 65 plus workforce because these are the people that have honed their management and people skills,” Shaffer said.

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Communication is Key

2009 is not a time for nail biting, but proving one’s value to an organization’s success. Although it may feel safer to stay out of the limelight in today’s shifty economic climate, it’s not a smart career move. Now is the time to communicate knowledge and demonstrate value to help ensure a successful career path.

ConsultNet’s Recommendations: Open Communication During this uncertain time, employees are obviously nervous about the future of their jobs. Now is the time to be as open as possible with regards to the health of the company, expectations for layoffs – and perhaps most importantly, how each department and employee can help. Many people today feel helpless with their ability to influence their own future. By clearly communicating the company’s challenges, opportunities & how they can help the company stay healthy is not only empowering, but provides a peace-of-mind knowing where they stand. “When employees don’t know what’s going on, they assume the worst. Executives need to maintain constant communication with employees and engage with the different teams within the company. This will help quell rumors and keep staff calm and productive,” notes Shaffer. Go to Bat (for yourself & your department) Many organizations today are evaluating what departments and individuals are adding value to the company. Now, more than ever, is the time to clearly report on the value you personally & your department bring to the company. Focus on highlighting quantitative ways in which you are saving the company money, and are improving productivity. The goal is to prove that you are an invaluable contributor to the company’s short- and longterm success.

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2009 ConsultNet Technology Staffing Outlook

“IT managers fearing budget or staff cuts need to make a case for IT being the company’s backbone during tough times,” said Shaffer. “Executives also need to stress that IT has to maintain ahead of the curve so when the recession is over, the company is innovative and ahead of the game.” Listen Listening to employees and colleagues will help you determine where to invest your efforts to deliver the highest value. Asking questions and allowing colleagues time to talk is also a sign of flexibility and willingness to learn. “Overall, remember it is vital to be open. Tell employees where you stand with profitability, staffing and what needs to happen to ensure the company is healthy,” said Shaffer. “Spell out specific milestones in terms of product releases, fixes, customer service, sales, etc. to empower employees with the means to control their own future & provide some peace of mind knowing exactly what to expect.”

www.consultnet.com California Office Phone: 949.242.3522

Colorado Office Phone: 303.759.4440

Texas Office Phone: 214.461.1720

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Utah Office Phone: 801.208.3700

National Office Phone: 888.215.9675

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Creating Business Success

ADDENDUM 1: ORANGE COUNTY, CALIFORNIA IT & ENGINEERING FORECAST

58%

37%

5%

53%

41%

6%

52%

40%

8%

38%

9%

53%

In ConsultNet’s analysis of the surveys collected from Orange County, Calif. IT and Engineering Hiring Managers, a moderate improvement in budget expectations, and a slow, but positive improvement in headcount expectations was found. Under Budget, hiring managers experienced a 58 percent budget decrease during the past six months, but only 53 percent expect a budget decrease over the next six months – a five percent improvement. We also see a four percent improvement of budget expectations of no change. Finally one percent more of those surveyed expect their budget to increase over the next six months, compared to the previous period. Under Headcount, expectations nearly matched the performance of the past six months, with only a two percent point movement in any direction. Overall, nine percent of IT and Engineering Hiring Managers expect to increase headcount, 38 percent expect no change in headcount, and finally 53 percent expect a headcount decrease over the next six months.

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ADDENDUM 2: DENVER, COLORADO IT & ENGINEERING FORECAST

64%

32% 20% 29% 16%

67% 61% 59%

4% 13% 10% 25%

For the Denver-area survey, ConsultNet sees significant improvements in both budget and headcount (+9% and +15% respectively) expectations among IT and Engineering Hiring Managers. Additionally, the percent of those surveyed who expect more budget and headcount decreases dropped 12 percent and 13 percent respectively. Under Budget, the expectations shifted dramatically to a more positive outlook. Increased budget expectations grew nine percent, from an actual four percent from the previous six months to 13 percent looking ahead. Additionally, the expectations for continued decreased budget dropped 12 percent, from 32 percent to 20 percent, again indicating stabilization or budget growth for the remainder of 2009. Under Headcount, 25 percent of survey respondents expect their headcount to increase over the next six months – growing from 15 percent over actual headcount during the past six months. Additionally only 16 percent believe headcount will be cut during the next six months, as compared to 29 percent of actual headcount decreases over the past six months – an improvement of 13 percent in expectations.

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ADDENDUM 3: DALLAS-AREA, TEXAS JOB MARKET OUTLOOK

27% 28%

41% 45%

30%

41%

30%

45%

32% 27% 29% 25%

For the Dallas-area, Texas survey, ConsultNet did not see significant shifts in either budget or headcount confidence for the remainder of 2009. While both decreases in budget and headcount remained the same when comparing the past six months to the next six months, a slight shift towards greater stabilization with no change in either was found. Under Budget, ConsultNet found a slight improvement in no budget change expected of three percent. The change for expected budget increase actually dropped slightly at five percent for the remainder of 2009. The budget decrease held steady at 28 percent when comparing the past six months to the next. Under Headcount, there was a four percent increase in expectations of no headcount change moving into the final six months of the year. Keeping with the same trend as the budget expectations for the Dallas-area, survey respondents indicated a slight drop of expected headcount increase of four percent. It is worth noting that survey participants for this market included a higher number of government-related technical hiring managers when compared to the other ConsultNet market surveys, which may have skewed the results slightly.

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ADDENDUM 4: UTAH IT & ENGINEERING FORECAST

53% 15%

37% 55%

44% 10%

10% 30%

48% 56%

8% 34%

For the Salt Lake City, Utah survey, ConsultNet sees significant and marked confidence in both budget and headcount areas for surveyed hiring managers going into the final six months of 2009. The most dramatic improvements include a 26 percent movement up in expected headcount increases, as well as a 20 percent increase in expected budget increases over the next six months. Under Budget, ConsultNet is seeing a significant improvement across the board in terms of expectations. For example, those surveyed who expected a budget decrease dropped 38 percent, while there was a 20 percent improvement in terms of expected budget increase for the next six months. Under Headcount, 34 percent of survey respondents expect headcount to increase over the next six months, as compared to only eight percent for the past six months – a difference of 26 percent. Additionally, only ten percent expect budget decreases, a drop of 34 percent when compared to actual cuts during the past six months. Finally, there was an eight percent jump in expectations of no change in headcount, landing at 56 percent of respondents who expect stability over the next six months.

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