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Although recent surveys of IT leaders predict that IT budgets, salaries and hiring will rise in 2009 we see that layoffs are happening at leading companies.



In fact, during the last months of 2008, firms such as Nortel, chip maker A.M.D., Sun Microsystems and hard-drive maker Western Digital announced they’d cut more than 10’000 jobs altogether as part of restructuring plans. Other measures such as salaries and hiring freeze (including executive pay in certain cases), the reduction of temporary workers’ use and overtime shifts as well as the splitting of businesses into different parts have become widespread practices.



These companies were already in a bad shape for some time but there is no doubt that the current economic crisis is worsening their situation with Western Digital stopping its manufacturing operations and Nortel seeking bankruptcy protection in the U.S.



And 2009 begins with other alarming rumors such as those circulating at IBM. The union “Alliance for IBM” declared on its website that the company could fire up to 16’500 workers by the end of the month with some claiming they have already lost their jobs, but the company denied confirming the fact. In addition, some speculations about Microsoft’s possible dismissals of 15’000 people became public last week.



Other firms active in the IT industry like Dell announced the closure of its Ireland plant and the layoffs of 1’900 workers while, Lenovo, another computer manufacturer said it will reduce its workforce by 11% or 2’500 posts. Last week, it was Logitech’s turn to announce it will cut 500 jobs or 15% of its workforce. The world’s largest computer mouse maker followed Sony, Philips and Motorola who previously announced layoffs. Today it was Google’s turn to declare it will sack 100 recruiters since the company slowed its hiring.



On the other hand, 44% of IT leaders interviewed by the Society for Information Management said their IT budgets in 2009 will be higher than in 2008, 37% expect IT spending to be flat while only 19% said they will be lower than last year. When it comes to headcount, optimism also dominates with 43% of respondents saying their staff will increase, 42% expect it to remain the same and only 19% think they will fire people in 2009. On top of that, the large majority (75%) of those surveyed expect IT wages to increase this year. The European Information Technology observatory (EITO) confirmed this trend saying the global IT market will grow by 2.7% to 983 billion Euros in 2009 with China, India and Russia leading the game.



These contrasts can be explained by two main factors. Firstly, IT is no longer viewed as a cost but as a way to improve productivity and is crucial to keep firms running properly. Secondly, the use of offshore and domestic outsourcing is expected to grow respectively by 75% and 20% compared to 2008. Another U.S. survey found that more than 60% of IT departments plan to use more intensively offshoring in order to cut costs in 2009.



This might well increase competition on the IT offshoring market by creating new destinations that will put pressure on Indian companies which are under attack after Satyam’s fraud and Wipro’s accusations of World Bank staff’s bribery. On top of that, another Indian-based company, Megasoft consultants, is being put on the World Bank’s blacklist as well.



But another straightforward reason could explain these differences: surveys may be wrong. In fact, certain analysts such as UBS and Friedman, Billings, Ramsey & CO. are far less positive. Computer Economics even forecasts that a quarter of companies will reduce their IT spending by at least 3% this year.



UNI certainly deplores this situation and is extremely disappointed that companies’ management, again, don’t inform employees and/or staff representatives timely and properly. In addition, UNI hopes that some Global Framework Agreement will be reached with multinationals to guarantee labour standards in offshore countries as well.



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