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Technology Adds More Jobs

Software services leads with 5.3% growth

By Margo McCall

Software services added more jobs than any other US high-tech sector last year. And the technology industry in general continued to expand for the fourth year running, despite the slowing economy. According to TechAmerica’s annual Cyberstates report, the US technology industry added 77,000 net jobs last year, expanding to 5.9 million workers. That compares with job gains of 79,600 in 2007, 139,000 in 2006, and 87,400 in 2005.

Job Trends

The technology industry’s two largest sectors—software services and engineering and tech services—recorded 5.3 percent and 1.7 percent growth respectively. With the addition of 86,200 net jobs in 2008, software services now employs 1.7 million people. Engineering and tech services, which added 26,600 net jobs, now employs 1.6 million. Both sectors registered growth in 2008 for the fifth year in a row.

Global IT Spending(Gartner)
Sector 2008 Growth (%) 2009 Growth (%)
Hardware 2.8 (14.9)
Software 10.3 0.3
IT Services 7.6 (1.7)
Telecom 5.6 (2.9)
Overall 6.1 (3.8)

However, high-tech manufacturing lost 23,100 jobs and communications services shrank by 12,700 employees. The semiconductor sector, hit with falling demand and oversupply, accounted for more than 10,000 of the lost manufacturing jobs.

The report, previously produced by the   American Electronics Association, is based        on US Bureau of Labor Statistics data. TechAmerica was formed by the merger            of the AeA and the Information Technology Association of America.

Technology jobs by state

Thirty-nine US states recorded technology job growth in 2007, the latest year for which data is available. Texas led the pack with 14,700 jobs added; followed by Georgia with 13,100; Washington with 11,300; and North Carolina and Virginia, with more than 5,000 each.

With technology accounting for 92 of every 1,000 private-sector jobs, Virginia still boasts the highest concentration of tech workers. But with 942,700 working in its high-technology industry, California still leads in total numbers. Other high-tech juggernauts include Texas, which employs 474,100; New York, with 304,200 tech workers; Florida with 280,300; and Virginia with 276,100.

Technology wages were 88 percent higher than the private sector overall, according to the Cyberstates report. The wage differential was more than 50 percent higher in 48 states and more than double in five states.

Outlook for 2009?

However, the report’s authors cautioned that a fifth straight year of growth is unlikely, given the current economic downturn and the state of global financial markets. Indeed, market-research firm Gartner this week scaled back global growth estimates for IT and enterprise software spending—reductions that could eventually lead to employment declines.

Worldwide IT spending this year is forecast at $3.2 trillion, down 3.8 percent from last year’s $3.4 trillion, as companies cut budgets and consumers scale back spending in response to the economic crisis. Significantly, the spending decline is now expected to be more severe than during the dot-com bust.

“The speed and severity of the response by businesses and consumers alike to these economic circumstances will result in an IT market slowdown in 2009 that will be worse than the 2.1 per cent decline in IT spending in 2001 when the Internet investment bubble burst,” stated Richard Gordon, a Gartner research vice president and head of global forecasting.

Some growth areas remain

Software is the only bright spot. The markets for hardware, IT services, and telecommunications are all forecast to shrink this year. With 14.9 percent negative growth, hardware is expected to be the most severely impacted as customers put off new equipment purchases.

Worldwide enterprise software revenue of $222.6 billion this year is expected to be on par with 2008 levels, according to Gartner. Revenue is forecast to decline for operating systems, office suites, middleware, storage, and digital content creation. Some growth is expected for appliances, hierarchical storage management and archive software, Web conferencing, and security information and event management. Software as a service (SaaS), open source software, and outsourcing also have strong potential for continued growth, the analyst firm said.

Gartner’s fourth-quarter forecast called for 6.6 percent growth in the enterprise software market this year. Tom Eid, a research vice president at the firm, stated that enterprise software companies are now in for several difficult quarters, with a slow recovery kicking in no sooner than the first half of 2010. However, due to the enterprise software industry’s maturity and penetration, as well as confidence in IT, it is expected to weather the downturn better now than it did during 2001 and 2002.

TechAmerica and others point to the American Recovery and Reinvestment Act stimulus plan as cause for optimism. The plan includes technology spending to improve infrastructure, modernize the education and healthcare systems, and build an energy-efficient smart electrical grid.

Analysts from the market-research firm ABI Research say the $4.5 billion in federal matching funds allocated to electricity delivery and energy reliability for smart grids and smart metering will benefit module and smart meter vendors and meter data management software firms such as Oracle, SAP, and eMeter. Gartner analysts, however, believe the stimulus package will have little immediate effect, although it might be of some use over the long term. CW (2 April, 2009)

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