There are a number of killer threats to those working in the IT industry.
It is not so many years ago since we were in a ferocious IT jobs market downturn. Contract rates are lower after the dotcom and Y2K booms.
The recent downturn from he credit crunch hasn‘t been nearly as bad.
Added to that was the belief that we had now entered the Information Age, where quick access to quality business information would give some companies competitive advantage over others. It would become one of the main differentiators between businesses.
Those in the engine room of the Information Age were those who worked in Information Technology. They were the ones who would benefit from the dawn of the internet and the fight for technological advantages between major companies.
Now the upturn has started things have been looking a lot rosier. However, there are still a number of killer threats to the livelihood of those who work in Information Technology. We point out a few:-
Killer Threats – Increasingly Cyclical Business
It used to be that the IT profession was a fairly safe one. Economic downturns didn’t affect it much in its early days.
The reason for this was that in earlier days, companies thought of IT (when it used to be called DP or Data Processing) as a good way of cutting costs.
It replaced manual workers who were expensive. Therefore, whenever there was an economic downturn, Finance Directors pushed for computer systems which could replace their manual operations, e.g. transaction processing, and run their business more efficiently
The first real downturn which affected IT jobs badly was the downturn of 1990/92.
By this time, most companies had replaced all the manual work that they could by computer systems. They were now looking to use IT as a means of getting competitive advantage when selling their products.
The trouble is that when customers aren‘t buying, e.g. in a downturn, there is not so much need for major changes to computer systems.
In fact, when cuts need to be made to keep the bottom line in the black, those that work in IT have become very expendable. The IT jobs market has become highly cyclical. The IT budget has become like the Marketing budget. It is one of the areas where they can make cuts easily.
As contractors make up, normally, around 20% to 25% of those who work in the industry, they are very easy targets when cost cuts have to be made.
Killer Threats – Offshore Outsourcing
When a company has cut all the contractors it can to save money and keep the bottom line in the black, they then make some of their permanent staff redundant.
When we are in a long-term downturn, companies look to see how they can make even further cuts. That’s without harming the long-term prospects of the company too much.
Many of them look for even more savings by offshore outsourcing. They send a large part of their work offshore to places like India, where the average annual salary for a developer is below £5,000 a year.
The Indian economy is now booming, mainly due to its vibrant IT sector. A great deal of this work has come from offshore outsourcing contracts. In fact, the top Indian companies are hiring like there‘s no tomorrow.
Killer Threats – Work Permits
For those who haven‘t been put out of work by the downturn, or whose job hasn‘t been shifted offshore, there is the danger of cheaper offshore workers coming to the UK, and taking a fair chunk of the IT jobs available here.
They issue 30,000 IT work permits to non-EU migrant IT workers a year.
Killer Threats – Fragmented and Changing Market
Gone are the days when IT contractors had Cobol experience, with, perhaps, CICS and DB2, and could simply wait out the downturn, and come back again into jobs using the same skills.
Now, the market is so fragmented, and the skills in demand are changing so fast that anyone who is out of work for more than a year risks not being able to get back on the jobs roundabout.
Those who have the most recent skills should be OK. However, anyone whose skills were starting to fall behind even during the boom may find that the wagon train has moved on. They may find that no one now wants the skills that they have.
Their best hope is to find some systems conversion work, where companies are migrating to a new skillset from an old one, and there are not enough people on the market with the new skillset.
Killer Threats – IR35
Those contractors who have managed to remain in work despite the above threats, still have to worry about the IR35 tax that the UK government created. This is because they believe that many IT contractors are in fact ‘disguised employees‘.
Killer Threats – Insecure Career
Gone are the days when those who worked in IT had a secure career, whether as an employee or a contractor.
A few years ago, IT related courses became the most popular of all courses for those going to university. However, during the downturn, very few companies were taking on IT graduates and they had to find careers elsewhere.
So now fewer graduates are taking IT related courses. However, that will all change again at the hint of any new boom.
There is still a lot of hope for the IT profession. This is the Information Age after all, and the internet is still in its infancy.
The recovery is well under way. Perhaps in a few years time we will look back and think that we were worrying over nothing.
However, the carefree years of a career in IT now appear to be over.
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