November 20th, 2009
Research paints ugly IT employment picture: Almost 2 million jobs gone in 14 years
The Hackett Group reports that 300,000 IT jobs have disappeared in 2009, a spike that will translate into nearly 2 million eliminated technology positions between 2000 and 2014.
In a report, Hackett notes that IT is taking the brunt as companies cut back-office jobs. In 2009, 630,000 back office jobs will be lost at the world’s largest companies. Overall, there’s an “extended jobless recovery” in “IT, finance, procurement, HR, and other general and administrative (G&A) areas.
Hackett reports:
Longer-term, Hackett’s research estimates that nearly 3.6 million G&A jobs in North America and Europe will have been eliminated between 2000 and 2014. More than half of these losses, or nearly 2 million of these jobs, are in IT, making it the largest back office area to be hit by a wide margin.
Hackett researched 4,000 global companies with $1 billion in revenue.
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The underlying trends behind these job losses are well known. In a nutshell, companies need to keep improving profit losses, jobs are going offshore, outsourcing and process improvements. In a report, Hackett writes:
Hackett’s analysis of close to 4,000 large (over $1 billion in revenue), publicly held companies reveals that as a result of efficiency gains made through automation, process improvement, outsourcing and offshoring, G&A functions cost approximately $333 billion less to run in 2007 than in 2000 for this group of companies. However, these improvements have come at the cost of 1.4 million net back-office G&A jobs at these companies. This job loss occurred despite average annual economic growth of 2.2% during this period, which offset a portion of the jobs eliminated through efficiency gains. On balance, the pre-crisis years showed a healthy trend for an increasingly knowledge-based, industrialized economy, modest net declines in lower-value-added jobs, and net creation of higher-value-added jobs elsewhere in the economy. However, the current economic downturn has disrupted this trend. In order to protect margins in the face of declining revenue, companies have been forced to accelerate G&A cost take-outs.
Here’s a chart of the IT job losses in context of other positions:
Larry Dignan is Editor in Chief of ZDNet and Smart Planet as well as Editorial Director of ZDNet sister site TechRepublic. See his full profile and disclosure of his industry affiliations.
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