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The New Economics of IT, Part I: IT Contractors Out in the Cold, but IT Staff Jobs Held Safe

The New Economics of IT, Part I: IT Contractors Out in the Cold, but IT Staff Jobs Held Safe

In the midst of the current economic gloom, there are some rays of light for those Australian IT professionals who currently are employed -- but the news is not so good for contractors and consultants. Find out more in Part I of “The New Economics of IT,” a special report conducted by the Australian CIO Executive Council.

In the midst of the current economic gloom, there are some rays of light for those Australian IT professionals who currently are employed. They are likely to keep their job, and very few of them will have their compensation cut.

The news is not so good for contractors and consultants. More than three out of four Australian CIOs report they are cutting back on IT contractors.


See related slideshow: The New Economics of IT, Part I | Budgets under scrutiny in The New Economics of IT, Part II

And for those seeking employment, the prospects are narrowing sharply, as more than three out of four organisations are putting a hiring freeze in place for their IT departments.

Those are some of the findings of The New Economics of IT, a survey conducted by the Australian CIO Executive Council in February and March. A total of 121 of Australia’s most senior IT executives were surveyed on a variety of topics related to the current economic crisis and its impact on their operations.

Despite some well-publicised reports of retrenchments at some top Australian organisations, the survey found that many IT departments in Australia have been held safe from layoffs. Of the CIOs surveyed, only 40% said they had already reduced IT headcount in the past six months, and a further 2% said they planned to do so in the next six months. However, 58% of the respondents said there are no plans in place to cut jobs at this time.

Somewhat surprisingly, 35% of the CIOs said their organisations would be increasing IT compensation costs (salaries, bonuses and benefits) in the coming 12 months, compared with the previous year. Nearly half (45 percent) said there would be no change, and 20% indicated they were decreasing compensation costs.

Most CIOs are committed to the continued investment in their staff, as well. Three out of five indicate they have no plans to reduce the amount they spend on staff training. That’s not to say that IT staff won’t be feeling the pinch as 68% of the CIOs have restricted travel for their staff or plan to do so.

For contractors and consultants, however, the forecast is much gloomier as 58% of the CIOs have already reduced spending and a further 20% intend to do so in the next six months.

This may last a while, also, as 78% report they have either already postponed discretionary projects or intend to do so.

“Australian CIOs are well aware of the importance of attracting and retaining talented employees,” said Linda Kennedy, general manager of the CIO Executive Council. “ ‘The New Economics of IT’ survey paints a very strong picture of their commitment to their staffs, even at a time when they are under intense pressure to reduce costs and reassess plans.”

The CIO Executive Council is an organisation which enables members to be more successful by facilitating the sharing of knowledge and creating content and programs around issues crucial to advancement of CIOs and the ICT sector. It is owned by IDG Communications, the publishers of this Web site.

Join the CIO Australia group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.

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Tags global financial crisisNew Economics of ITCIOCIO Executive Council

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