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The Information Technology Economy in Connecticut

The Information Technology Economy in Connecticut. Three points: Unprecedented downturn in IT embedded in stagnant US economy Impact varies by IT sector The future is murky at best. Perspective of a Data Center. Unprecedented Downturn. IT Recession Worldwide.

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The Information Technology Economy in Connecticut

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  1. The Information Technology Economy in Connecticut Three points: Unprecedented downturn in IT embedded in stagnant US economy Impact varies by IT sector The future is murky at best

  2. Perspective of a Data Center

  3. Unprecedented Downturn

  4. IT Recession Worldwide • IT market researchers at IDC say the worldwide IT industry will suffer a drop in revenue of 2.3% this year, the largest decline ever. This year's revenue drop combined with a decrease last year means the IT industry has shrunk by roughly 3% during the past two years, said John Gantz, chief research officer at IDC in Framingham, Mass. This figure compares with an average annual growth rate of 12% in the IT industry during the past 20 years. -IDC as reported in Computer World, November 25, 2002 • The researchers predict the total worldwide IT industry revenue this year will contract to $875 billion, a figure lower than forecasts issued as recently as August, when total IT revenue for the year was expected to remain above $900 billion.

  5. For Information Technology the Equivalent of Nuclear Winter • "The IT spending environment continues to be brutal," Tucci said. "The harsh reality of reduced budgets and the uncertainty of the economic and geopolitical climate are weighing heavily on business confidence, causing key projects and the corresponding IT [spending] to be delayed. We saw no significant change in the competitive environment during the quarter. We don't know when IT spending growth will resume." • "These are not the results you've come to expect from EDS; it's not the type of news we're used to delivering, at all," CEO Dick Brown said during a conference call. "We were more optimistic than we should have been relative to our ability to fight our way through a tough economy. We expected our clients' discretionary spending to tighten, not virtually stop."

  6. Business Investment in IT

  7. Job Growth Nationally Stagnant • “The current quarter is shaping up to be very weak - the 'soft spot' that we are in appears to be very soft indeed. Real GDP is expected to grow only about 3/4 percent at an annual rate in the fourth quarter. … employment and capital spending have been stagnant, and the manufacturing sector has been especially weak.” • “Labor markets have also been anemic. The differing signals from the establishment payroll survey and the household employment survey have been reconciled on the downside with both surveys now agreeing that there has been essentially no job growth this year.” -Federal Reserve Bank of San Francisco, December 2002

  8. Job Growth in IT Abysmal • The U.S. IT workforce has grown by a net 85,437 positions since January, from 9,895,916 jobs to 9,981,353, in first 3 quarters of 2001 according to Information Technology Association of America poll. This is a 1percent annual growth rate. • Hiring by non-IT companies outpace IT companies by twelve-to-one • If current hiring trends hold, the total U.S. IT workforce will reach just over 10 million workers by the end of the year, 10% below expectations earlier in 2002.

  9. Even Hotspots Like Security Cool Funding IT Security Projects • A mere 15% of respondents said their companies provided additional funds; most took money away from other IT work. • Among the 2,620 survey respondents, just under half said their companies have “undertaken any IT projects to improve disaster preparedness and recovery operations” since Sept. 11. • - Survey for year between September 11th 2001 and 2002

  10. This Recession: IT’s Perfect Storm • The burst after the bubble in the late 90’s • H1B hiring in the 1990’s displaced US workers • Off shore outsourcing, a growing trend • Overcapacity of resources particularly in telecommunications • Need to demonstrate ROI in IT • Lack of business investment • General effect of the sluggish economy in general

  11. Crystal Balls Cloudy Past Predictions: • The IT worker shortage is getting worse, hitting an all-time high this year as more companies desperately look to fill technical positions within their ranks. 400,000 IT jobs in the United States are presently unfilled, and the number is increasing by about 25 percent per year. The figure is expected to mushroom to 1.2 million vacant IT positions by 2005 if present trends continue, according to a new report issued by the Meta Group This Year’s Predictions: • Looking forward to 2003, however, IDC said IT spending is expected to pick up, driving a worldwide growth rate of 5.8% for the industry. • IT managers predict they will need to hire an additional 1,183,000 workers over the upcoming months, a prediction that is roughly on par with their plans at the beginning of the year. While this number is flat compared to January, it represents an improvement compared to July projections -indicating improved optimism on behalf of hiring managers. -ITTA Survey 2002

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