Analysts Talk Up IT Recovery

By Michael Feldman

January 14, 2010

As the economy shows signs of recovery, at least one analyst firm is forecasting the IT sector to make a dramatic turnaround in 2010. Forester Research is predicting that global IT spending will grow 8.1 percent this year. Given that the sector declined 8.9 percent in 2009, we’ll almost be back to where we were in 2008. Woo-hoo!

In a recent CNET article on the topic, Forrester Research vice president and principal analyst Andrew Bartels was quoted as saying: “All the pieces are in place for a 2010 tech spending rebound. In the U.S., the tech recovery will be much stronger than the overall economic recovery, with technology spending growing at more than twice the rate of gross domestic product this year.”

He goes on to say that Western and Central Europe will do even better, with an 11.2 percent jump predicted. And with emerging technologies like service-oriented architecture, server and storage virtualization, cloud computing, and unified communications on the horizon, Bartels thinks the next six or seven years look even brighter.

That optimism is reflected in a report released by the US Bureau of Labor Statistics (BLS) that forecasts job opportunities in computer-related occupations over the next ten years (actually 2008-2018). According to the report, computer and math jobs are projected to grow by 22 percent over this period:

Computer and mathematical occupations are expected to add 785,700 new jobs from 2008 to 2018, and, as a group, they will grow more than twice as fast as the average for all occupations in the economy, according to projections. It is anticipated that computer specialists will account for the vast majority of this growth, increasing by 762,700 jobs. Demand for computer specialists will be driven by the continuing need for businesses, government agencies, and other organizations to adopt the latest technologies. It is projected that computer software applications engineers will increase by 175,100 jobs — more than the projected increase for any other type of computer specialists. Network systems and data communications analysts are projected to see an increase of 155,800 jobs. New computer specialist jobs will arise in almost every industry, but roughly half will be located in the computer systems design industry, which is expected to employ more than one in four computer specialists in 2018.

While those figures may not console the thousands of unemployed IT workers today, it does offer some hope that long-term trends favor tech-loving job seekers. Or does it? The funny thing about IT is that it acts as a powerful driving force to reduce labor needs, even within the computer industry itself.

For example, the BLS recognizes that computer operator jobs are declining because that type of work is being automated away by things like automated document storage, more sophisticated software, and better telecommunications. But what about the disruptive technologies emerging today, like cloud computing, social networking, virtualization and SSDs? Somehow I doubt if the BLS has done much analysis of how those technologies will impact the workforce.

In the HPC realm, GPU computing could reshape the landscape over the next several years. If NVIDIA’s vision of replacing CPU-based clusters with GPU workstations and traditional supercomputers with GPU clusters is realized, that portends a big shakeup in the HPC industry.

Economists like to explain away technology’s propensity to eliminate jobs by pointing to “elastic demand,” that is, as products or services get cheaper, they become more attractive to more people. Thus, a $10,000 GPU workstation may indeed replace a $100,000 CPU cluster in some situations, but because the price of the workstation is much lower and the demand for personal HPC is unmet, there is probably a good deal of elasticity in this area. So overall, the market would grow.

In other situations, the market is much less elastic. For example, the replacement of human labor with robotic systems in auto manufacturing has not led to any great leap in car sales — at least in Europe and the US. Other factors like the rising price of gas and the attraction of telecommuting are working against the auto market. Plus, once every individual has their own car, there is little motivation to buy an additional one.

Ironically, the speed of technological change is outpacing our ability to predict its impact. The interactions between technology, social forces, and the macro-economy are so complex that long-term forecasting of the job market is nearly impossible. As Harvard University economist Lawrence Katz noted in a recent Wall Street Journal article: “One thing we’ve learned is that when we attempt to forecast jobs 10 or 15 years out, we don’t even get the categories right.”

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