U.S. tech firms add jobs despite automation

U.S. technology companies are investing more in machines than in people, but tech hiring is nonetheless rising, according to a new report by Forrester and a just-released National Science Foundation study.

There are several trends behind what is a pronounced shift in tech employment. Tech manufacturing is shrinking, thanks in part to automation and overseas production. Telecommunications is shedding jobs as the industry moves to wireless. But software and IT services are on the rise as more of the economy moves online .

High-tech manufacturing employment has declined by 28% since 2000, or about 687,000 jobs, according to the National Science Foundation (NSF) in its Science and Engineering Indicators 2012. The NSF's high-tech definition is broad and includes communications equipment, semiconductors, pharmaceuticals, aerospace and computer industries.

The value of the output generated by manufacturing employees in the last decade, however, doubled, according to the NSF, meaning it takes far fewer people today than it did just 10 years ago to produce a product.

As manufacturing jobs decline, the value of the work performed has doubled in the last decade, thanks, in part, to improved automation.

Manufacturing in the U.S. is increasingly becoming the assembly of components that are brought in from overseas; it is also increasingly automated, said Andrew Bartels, who prepared Forrester's study.

The NSF report looks at a broad range of the tech industry. Forrester is looking at a much smaller segment: the high-tech industry, which includes IT and telecommunications.

The U.S. tech industry, by Forrester's count, employed 3.2 million people by the end of last year. That represented a net gain of 42,000 workers compared to 2010 despite job losses in the telecommunications sector.

Nonetheless, the U.S. tech sector added 131,000 jobs last year in services and software development, according to Forrester. Although the tech sector provides only 2% of U.S. jobs, these IT jobs represent 6% of the total new private sector jobs created since the first quarter of 2010.

Holding back job growth are businesses that are investing in machines instead of people, said Bartels.

There was a 7% increase in business IT investment last year, but only a 1% increase in jobs compared with 2010, said Forrester. "Rather than add capacity, in the form of more workers, they are choosing to put their cash flow into technology to reduce cost," said Bartels.

The telecommunications sector is losing jobs because of the shift from wired to wireless, which needs fewer workers. There is also increasing automation in that industry, said Bartels.

Telecommunications, which makes up about a third of tech employment, lost about 89,000 jobs last year.

The U.S. high-tech manufacturing employment chart defines tech broadly to include not only IT and telecom related industries, but aerospace, pharmaceuticals.

IT outsourcing also declined last year by 5,000 jobs, and is down 31,000 jobs from the recession, according to Forrester. Hiring by offshore outsourcers appears brisk; Tata Consultancy Services, for instance, reported this week that it added nearly 12,000 net new employees to its payroll in its most recent quarter.

Forrester's overall count of 3.2 million jobs in tech is lower than the estimates used by some groups because it excludes semiconductor manufacturing and value-added resellers from its tech employment estimates. Bartels said it is trying to line up the data between tech companies that sell directly to businesses.

Forrester expects a continuing rise in software and services employment through this year, and sees tech purchases growing 6%.

Foote Partners, which researches employment data, said that U.S. data showed that 127,000 jobs were added last year in the government categories of management technical consulting services and computer systems design and related services.

Foote also believes the government is having trouble tracking IT growth because of the creation of hybrid IT-business professionals, people who have a combination of business and technology knowledge and don't match government labor categories.

Patrick Thibodeau covers cloud computing and enterprise applications, outsourcing, government IT policies, data centers and IT workforce issues for Computerworld. Follow Patrick on Twitter at @DCgov or subscribe to Patrick's RSS feed . His e-mail address is pthibodeau@computerworld.com .

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