The Best of Times, The Worst of Times

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The U.S. is in a recession, massive layoffs are occurring at an alarming rate, and the trend will continue into 2009. So it's time to party like it was 1999. Right? No!

 

In early December, the U.S. Bureau of Labor Statistics (BLS) announced that 533,000 jobs were lost in November and the unemployment rate rose from 6.5 (in October) to 6.7 percent. The National Bureau of Economic Research also announced that the U.S. has been in a recession for about a year.

 

Fortunately, the BLS provides a reasonable definition of a recession. I found this enlightening (we do endeavor to educate where possible):

 

A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in production, employment, real income, and other indicators. A recession begins when the economy reaches a peak of activity and ends when the economy reaches its trough. Between trough and peak, the economy is in an expansion.

So Is It All Gloom and Doom?

To add insult to injury, the Portland Business Journal quotes Gad Levanon, senior economist at the New York-based Conference Board, as saying, "Thus far the U.S. economy has lost 1.9 million jobs and the declines in the (index) suggest job losses could very well surpass [three] million by mid 2009."

 

So what does this mean for IT jobs?

 

Linda Tucci, Senior News Writer at SearchCIO.com, writes in her article entitled "IT hiring report paints grim picture for 2009" that Dice Holdings, Inc., a provider of specialized career Web sites for select professional communities, reported in a recent Dice Report that there will be "fewer jobs in the next six months, the possibility of layoffs, a flattening of salaries and a rise in the number of qualified job applicants." Tucci also reports that a majority of the Dice survey respondents, including Dice, saw the number of job applicants rise during this fourth quarter. Their prediction, which is consistent with the rule of "supply and demand," is that it is likely IT salaries will be flat or even decline in 2009.

 

This may or may not be the case and likely has more to do with where the IT professional is in the organization and how the IT organization is viewed in the enterprise. As companies restructure, IT architects will be key players as will IT professionals engaged in mission-/business-critical initiatives, especially those that will reduce costs and save the company money, such as virtualization.

 

Moreover, Tucci reports that, "Whereas 63 [percent] of consultants and recruiters believe layoffs are likely in the next six months, only 27 [percent] of corporate hiring managers said the same." She quotes Forrester Research analyst Andrew Bartels, who says the companies with whom Forrester is talking "view IT staffs as core assets" who will be retained versus outside contractors.

And Now for Something a Little Bit Different

The old adage that "IT goes down with the ship" (it is an old adage, isn't it?) is both good news and bad. It is during times when enterprises declare bankruptcy, engage in massive layoffs and restructuring, and even fold, that the IT department suddenly experiences elevation in the enterprise. It is at this time that senior management has the epiphany that IT is the lifeblood of the company after all because someone has to ensure the systems keep processing payroll, receivables and payables, and other mission-/business-critical applications. And then, IT staff become sacrosanct.

 

I recently spoke with David Foote, CEO, and Chief Research Officer CEO of Foote Partners LLC, an independent  IT research consultancy that provides analysis and advice (in its many publications) about managing the IT professional workforce, who provided yet another view of the state of IT jobs.

 

Foote says first and foremost that IT staff in enterprises whose IT organizations are viewed as cost versus value creators and differentiators (read: on par with other lines of business) do face more of a chance of being laid off than IT staff in enterprises where the CIO has clout and can make, and back up, the argument that IT is even more valuable now as it has the capability to partner with senior and C-level executives to reduce and eliminate cost, redundancy, and waste enterprise-wide.

 

In addition, Foote indicates and I agree that there is big difference between working on discretionary versus mission/business projects. For example, in the financial services sectors, there is comparatively little discretionary spending, averaging about 20 percent of the IT budget. In spite of the collapse of giants such as Lehman Brothers and Bear Stearns, these sectors still consume more IT talent than any other industry--and a lot of these are AS/400 shops.

 

For your edification, Foote suggests that examples of discretionary projects include, but are not limited to:

•·         CRM (in industries where the ratio of IT spending to business operations spending is low)

•·         Data mining and analytics, except in retail and other consumer-centric industries, where executives are going to want to better understand customer loyalty and purchasing behavior

•·         Systems  and infrastructure  upgrades and improvement (e.g., PC and server enhancements)

•·         Other infrastructure improvements, such as the corporate portal and intranet, unless they are either customer- or business partner-facing.

•·         LAN, although there may continue to be WAN enhancements

•·         A range of technology-enabled business innovation activities that cannot show near-term payback

 

Moreover, examples of non-discretionary projects include, but are not limited to:

•·         Daily operation of core/strategic systems, such as trading, order management, and evaluation applications in financial institutions

•·         Development and maintenance of enterprise-level business applications, such as Oracle and Sap

•·         Assurance of core network connectivity and latency

•·         Management of high-volume transaction data processing (financial sectors)

•·         Managing compliance systems and disaster recovery/business continuity

•·         A wide range of IT security functions and activities

•·         Supporting key risk management systems

•·         System consolidation and virtualization

 

And note, even with massive layoffs occurring in many institutions, the economic crisis has created new tasks for IT, such as:

•·         Processing of those people who were laid off and removing their access to all systems

•·         Continuance of day-to-day IT responsibilities

•·         Preparation of staffing handoffs

•·         Documentation of...well...everything

 

Foote believes IT staffing cuts in 2009 will be situational in nature and may occur as follows:

•·         Acquired or merged companies (10 percent IT staffing cuts)

•·         Bankrupt companies (as high as 20 to 30 percent IT staffing cuts)

•·         Likely some selective outsourcing

•·         Continued hiring for special skills

 

The safest jobs, according to Foote, are likely to include the following:

•·         Architects

•·         Analysts (strategic)

•·         Project managers

•·         Functional and industry specialists

•·         Those involved in customer-facing activities

 

While ultimately there may be layoffs in IT, it is more than likely they will be later rather than sooner, which means more time for IT staff to get their personal/professional ducks in a row.

A Cautionary Tale

Yours truly has both survived and been a casualty of job cuts at a number of organizations during the last 20+ years. Whether you believe your job is ironclad, you are starting to get queasy, or you know that pink slips are on the way, here are some "guerrilla warfare" survival tips:

•·         Have your résumé, with references, up to date. Duh! We all say we'll get around to it, but most of us never do. This weekend, sit down with hot cocoa or the libation of your choice (skip alcoholic beverages), pop in a holiday CD or other inspirational music, and get to it. "Holiday shopping to do," you say. Do it online and think budget-slashing. Send e-cards. Also, it is a good time to do some social networking--before you find yourself in the precarious position of pending unemployment. Don't bare all, but try to get a sense of whom you would ask for references should you need them. And, if these people are discreet, ask them a priori. All you need to do is say, "Hey, just in case..." There may also be a quid pro quo involved in this, but, hey, 'tis the season!

•·         Organize and make electronic and hard copies of performance reviews, awards, certificates, certifications, and any email kudos you have received. These can be valuable in a job search, especially if it comes down to you and another equally qualified candidate as documents such as these vet your résumé. I once consulted for a company that required I bring in my undergraduate diploma--yes, in its frame--for the HR department to photocopy it. Imagine having to drag a 17.5" by 13" diploma, glass, frame, and all through the subway system in New York City. Oh, the things I am willing to do.

•·         OK, here comes the "guerrilla" part: without committing a copyright, privacy, or intellectual property infringement, you should also have samples of your work. You are walking a fine line here, and I am not advocating you do something criminal. And I'm not kidding. If the work samples you select contain company or client-sensitive information, sanitize them! Less is more. You only need a few excellent samples or even some thoughtfully documented examples of projects upon which you worked to provide you with yet another enhancement to your résumé.

•·         Check out Career Entitlements of the Unemployed on the Today Show Web site, in which Eve Tahmincioglu, an msnbc.com contributor, provides some sage advice on what you need to know if you are expecting a pink slip--or not--such as if you will be paid for unused vacation, bonuses, expenses, etc.

•·         Don't steal from Peter to pay Paul. Today Show (you do see I quote only from the best) financial editor Jean Chatzky constantly and consistently warns viewers not to raid their 401Ks in order to pay off debt, especially if the employer makes matching contributions. It's free money!

•·         Have money in the bank. It used to be that the rule for consultants, because of the tenuous nature of assignments, was to have at least three to six months expenses in the bank. Now this is the rule for everyone. Don't sweat it if you don't, but start now. And find creative ways to raise cash, such as selling stuff you don't use and don't need.

•·         Get a part-time job. While many retail establishments are not hiring, there are some who are. And we are talking part-time, not full-time, which is easier for employers to digest. It never hurts to have a plan B.

Bottom Line

The worst of times for employees in other lines of business sometimes means it is the best for times for IT professionals. The mainstream media does not differentiate; it makes its bucks on broad-brush statements and hype, especially doom and gloom. While I'm not downplaying the economic crisis and its uncertain aftermath, IT professionals are likely in a safe place--for the time being. So it's time to reign in spending, start saving, think creatively and outside the box, and be prepared. Happy and healthy holidays.

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