CAMBRIDGE, Mass. – Across North American businesses, information technology staffing will grow just slightly in 2004, tracking IT budget forecasts of meager growth, according to a new study by Forrester Research. Credit unions and other financial service organizations are part of that trend, and IT directors in CU land who find they are considering outsourcing over training in-house staff to meet changing technology needs will not be alone. Based on survey results from 528 executives and directors across 10 industries, 15% of all North American companies will reduce IT staff in 2004, while 22% will increase staff. The average IT staffing increase is forecast at 0.3% although IT budgets are forecast to increase an average of 1.7% over 2003 levels. The Forrester report also shows that while 25% of financial services firms predict they will increase full-time IT staffing, 20% predict they will reduce it, the study shows. "Even among companies that plan to increase overall IT spending in 2004, more than half plan to make no changes to staffing levels," Forrester analyst Tom Pohlman says. Pohlman estimated that actual IT spending would catch up with the economy and grow by 4% in the coming year if the economic recovery that began shaping up late in 2003 continues into 2004. And while smaller companies usually drive creation of jobs, that's not the case in this scenario, he says. "Conventional wisdom suggests that smaller companies drive job creation," Pohlman says. "These jobs won't be in IT next year." Midsize companies (500 to 1,000 employees) plan to reduce IT staffing by an average of 0.3% in 2004, contrasting with a 1% average increase planned by companies with 1,000 to 5,000 employees, Pohlman says. The survey shows that most executives believe their organizations lack important internal IT skills, across a wide range of skill sets, enough to lessen their chances of success in 2004. How will they respond in 2004? Just one-third of firms feel that they have time to let internal training programs meet IT skill gaps. Outsourcing is expected to narrow many gaps in IT skills. Companies planning to downsize internally are 56% more likely to outsource IT functions for the first time. "These companies are also three times more likely to consider moving IT development or maintenance activities offshore a critical priority for 2004," Pohlman says. -

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