Why big cuts in IT can be a dumb idea

The slash and trash mentality of company cutbacks could do the most harm when businesses have a go at their IT budgets, say the analysts at tech powerhouse Gartner.

The firm’s latest studies show that, in today’s economy, CIOs must understand what resources they have and may need in the short and long term. Upper management needs to avoid making deep staff cuts without first considering their effects on the organization’s ability to attract and retain talent.

Despite this imperative, Gartner’s research shows that nearly 66% of respondents do not currently have a formal IT workforce planning process that will help them take advantage of the opportunities presented by this economic downturn.

With layoffs and business failure a plenty, there’s excess IT talent around that’s available for a good price – something that savvy business leaders would do well to take advantage of while supply is high and prices are low.

The big danger: That companies will emerge from the downturn behind the technology curve and scrambling to catch up at the same time that wages start to rise and the number of available skilled workers drops.

“Considering that workforce-related spending is the largest part of the IT budget, one of the primary challenges for CIOs and HR leaders for the remainder of 2009 and into 2010 will be finding ways to control labor costs while engaging and retaining the workforce,” said Lily Mok, research vice president at Gartner. “Since it will still take time for the economy to establish a new normal, the impact of this recession will continue to be felt on an organization’s bottom line, as well as on the overall job market. This could cause companies to consider making further cuts in workforce-related spending.”

That, say the Gartner folks, would be a big mistake.

In IT, staffing isn’t just a matter of  quantity. It has a lot more to do with skills and training.

“The issue isn’t about the number of candidates available for hire, but rather their quality and skill profiles. IT professionals with skills such as Oracle, SAP, Java EE, Microsoft.NET, SOA, Java and PeopleSoft are still in high demand,” said Mok.

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