IT staff cuts top list of budget reduction plans

Companies trying to cut IT budgets are laying off staff and reducing compensation and benefits for remaining employees, new survey results show.

What not to cut from IT budgets: Staff

2009 IT budgets and spending: a snapshot

A majority of more than 1,000 enterprise IT decision makers in North America and Europe resorted to hiring freezes, staff reductions or pay and benefits decreases in an effort to lessen IT budgets and spend, Forrester Research reports.

Enterprise IT executives reported that nearly 70% of their IP operating budget allocation goes toward ongoing operations and maintenance, and for North American IT leaders more than one-quarter (26%) of that budget is spent on salary and benefits for full-time IT staffers. In Europe, 22% of similar operating budgets is dedicated to maintaining staff.

"IT staff salaries and benefits continue to be the largest part of the IT operating budget," the Forrester report reads.

"Hiring freezes and layoffs top the list of actions that firms expect to take this year as a result of current economic conditions."

Survey data reveals that 61% of enterprise IT firms said they expect to reduce staff headcount in 2009 compared with 2008, with 23% of those planning to reduce staff by 5% or more.

"Compensation for IT staff also takes a hit, as 54% of firms plan for decreases," the report adds.

On the SMB front, Forrester found that staff cuts weren't the first place the smaller companies looked to make cuts. The research firm polled more than 1,250 SMB IT decision-makers between February and May 2009.

More than half of SMB IT departments will maintain the same headcount they had compared with 2008, but about 30% plan to decrease staff, and 13% report they will reduce staff by 5% or more.

SMB IT decision makers also report similar results for pay and benefits, with 50% intending to maintain 2008 levels and 31% expecting decreases in 2009.

"Hiring freezes top the list of actions that firms expect to take as a result of current economic conditions, followed by reducing the use of contractors and consultants, and deferring of capital investment," the report states.

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