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No Deep Cuts for IT Spending Seen in 2009

Despite a troublesome economy, IT staff and executive positions are safe for now, according to a market study released on Wednesday. That's one of the conclusions of a Computer Economics study, which surveyed 159 North American IT organizations in October.

The Irvine, Calif.-based research firm found that "IT executives are not anticipating deep cuts in IT operational spending or staffing levels" in 2009.

Organizations currently are focused on retaining their employees, according to the report, "Outlook for 2009 IT Spending and Staffing Levels." However, some respondents (35 percent) are reducing spending in areas such as travel, training, filling open positions and initiating major planned projects.

It could be worse, according to the report's executive summary.

"More IT organizations are cutting IT spending this quarter than was the case earlier this year, but the cost-cutting is not nearly as draconian as one might assume by reading the business news headlines."

In a released statement, Computer Economics noted that IT organizations responding "at the median and 25th percentiles forecast no change in headcount in 2009, while companies at the 75th percentile are actually forecasting a 5% growth in staffing levels."

In essence, one in four IT firms actually plans to increase the head count.

"This means that at least 25 percent of companies responding to our survey are forecasting at least a five percent increase in IT staffing levels," said John Longwell, research director for Computer Economics in a telephone interview. "Surprisingly, a significant number of companies (from the median to the 25th percentile) are forecasting no change in staff levels."

Still, IT budgeting is under the microscope. According to the report, 35 percent of surveyed organizations will be cutting back on equipment upgrades, 33 percent will reduce contractors and temps, 26 percent will cut back IT training, 25 percent will reduce costs of meals/entertainment, and 17 percent will defer planned pay increases.

Of those surveyed, only 17 percent will be cutting IT staff and only 15 percent are looking at outsource and offshore options. Others will be renegotiating vendor contracts (26 percent) and stretching out vendor payments (11 percent).

More than a third of companies surveyed said they had increased IT staff in 2008.

"Our study forecasts that IT operational budget growth will be flat for 2009. If this forecast proves to be true, it may be because IT organizations have already been proactive about tightening the belt in 2008," stated Frank Scavo president of Computer Economics in a released statement. "For many organizations, significant layoffs of IT professionals are not possible without jeopardizing the business."

The full report from Computer Economics is available here.

About the Author

Herb Torrens is an award-winning freelance writer based in Southern California. He managed the MCSP program for a leading computer telephony integrator for more than five years and has worked with numerous solution providers including HP/Compaq, Nortel, and Microsoft in all forms of media.

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