Workforce Development: The IT Market

1. Workforce Development:The IT Market Julie Kaminkow Education Market Analyst WWE

2. The New Economy • Changes in the earnings of American workers • Variation in earnings among workers with the same level of education has increased • Employers are willing to pay a premium for the skills Source: Can the Internet Help Solve America’s Education Problems? Lessons from the Cisco Networking Academies, Richard J. Murnane, Nancy S. Sharkey, Harvard Graduate School of Education; Frank Levy, Department of Urban Studies and Planning, MIT

3. IT Market 2001-2002 were worst years in IT industry. Worldwide recession – stock market down 30% and oil prices up 30%. IT industry had been used to gaining 10% in the 1990’s and that declined to –4.1%. IT outlook: Expecting a 6 to 7% growth worldwide in 2004. Tech spending in the U.S. will grow 1.5% from 2002 to $372 billion in 2003, and then keep growing at a compound annual rate of 4.9%to $467 billion by 2007. Analysts expect the tech industry will grow at a higher clip after the U.S. economy recovers in 2004. Source: IDC, 2003

4. IT Trends • The best paying jobs, in the highest demand, require technology fluency. • Pervasiveness of networks, computers, and communications technology. • Changes in education and teaching. • Community need for a IT skilled workforce.

5. IT Trends The Internet by 2006: over 1 billion users, $6 trillion in Internet commerce, emerging technologies take-off (voice-over IP, steaming video, wireless/mobility, etc.) Increase of converged devices, smart handhelds, wireless games, embedded devices in auto’s, chips, etc. will require greater bandwidth (growing 20 fold). Bandwidth includes switches, storage, security, etc. Source: IDC

6. ITAA Workforce Study 2003

7. IT Workforce Shortage in the U.S. • IT workforce in the United States: 10.3 million • New IT positions being created in 2002:493,000 jobs Source: ITAA, May 2003

8. IT Workforce • U.S. IT workforce at start of 2003: 10.3 million. (Private sector only.) • 4.2 percent growth during an economic period when the overall unemployment rate reached over 5%.

9. IT Workforce -- The Positives • 74% of companies say they have not changed compensation • for IT workers in the past 12 months. • Only 8% of companies lowered pay. • 91% of companies were able to • meet or exceed their hiring plans in • 2002. • Reductions by IT companies were • down almost 50% in the last 12 • months, while hiring was static.

10. IT Worker Demand • IT worker demand over next 12 months: 493,000 • 67% believe hiring demand will stay the same or decline over the next 12 months. • To give this some perspective: • IT worker demand at the start of 2000: 1.6 million • IT worker demand at the start of 2002: 1.1 million • 91% of companies were able to meet or exceed their IT hiring plans. • Demand in Specific Job Categories: • Demand for digital media experts fell the farthest - down 67% • Followed by network designers where demand fell 59%. • Only database developers gained.

11. Where the Jobs Are Programmers and Software engineers - 2,144,377 Technical support - 1,904,842 Enterprise systems specialists - 1,113,883 Database developers/administrators - 1,011,331 Web developers/administrators - 885,070 Network designers/administrators - 729,417 Digital media - 694,251 Technical writers - 538,759 Other - 1,290,719 Hiring by non-IT companies has generally outpaced those by IT companies by 10-to-1 (Banks, Hospitals, Governments, Military, etc.)

12. Outsourcing • 12% of IT companies and 3% of non-IT companies are saying • they have already opened up overseas operations. • Jobs most likely to be moved offshore are: • programming • software engineering • network design • web development • IT companies in the Midwest and West are most likely to • send jobs overseas.

13. Skills Attainment 46% indicated that a 4 year college degree was the most desired education or training background of qualified applicants rather then specific experience; a close 2nd. (This is a change from past surveys – in 2002, 46% cited specific job experience as the Primary entry-level criteria.) This is followed by certification, general IT experience, 2 year or community college and private technical schools. As the job market has softened, employers are more apt to seek education and specific experience.

14. Other IT Workforce Findings

15. Tech Skills Demand Index • Other findings: • Growing need for diversification of knowledge and broader skill bases. • Fast-growing demand for contract workers. • Temporary help firms added another 66,000 positions in April (the 3rd • consecutive month of significant job gains). • The broader networking & telecommunications skills rose in demand for • LAN (16) and WAN (21) skills. • Experience and certification continue to grow in importance. • MCSE is the most requested certification followed by CCNA. Source: Techies.com, May 2002

16. IT Salaries Source: InformationWeek’s National IT Salary Survey, April 2003

17. 2002 Salary Survey “Cisco-related wages aren't unlivable by any means. You might consider them generous when you compare them to the average household income of Americans in 2001: $49,252 (as reported by Market Statistics, 2001, Demographics, U.S.A.) The average salary earned by Cisco certified professionals in our survey is $64,000.” TCPMag.com, June 2002

18. Potential Salaries According to the U.S. Dept. of Labor the computer industry is the top industry with the fastest wage and salary employment growth, 1998-2008. Base Salary Cisco CertifiedNetworking Associates (CCNA) $67,000 Cisco Certified Networking Professional (CCNP) $77,000 $80,000 Cisco's Security Specialist $78,000 IP Telephony Specialists NOTE: These numbers don't include signing or performance bonuses or other forms of non-salaried compensation Source: TCPmag.com Salary Survey, June 2002

19. 2002 Salary Survey • Certification on Job Promotion: • 11% of respondents report advancing on the job through certification • 30% reported it was partially responsible • 22% expect a new credential to have an impact on their position in the next • 12 months. • Certification on Salary: • On average, participants said they believe attaining a Cisco certification • will increase their salary by 8%. • CCNAs had 5% increases. • CCNPs had 6% raises. • CCIEs had 10% increases. • Security Specialist expect an increase of 12%. TCPMag.com, June 2002

20. 2002 Salary Survey • Future Prospects • 40% expect their companies to be hiring additional Cisco-certified people • in the next 12 months. • Only about 13% reported being laid off in the last 12 months. • Two-thirds have found another position. Of those who were out of work, it • took an average of four months to find a new job. • Most people remain upbeat about their job prospects for the next 12 months. • Certifications people plan to attain • CCNP leads the pack, as it did last year, followed by CCDA, the Security • Specialist title, and CCDP. • Only 11% anticipate achieving their CCIE in the coming 12 months. TCPMag.com, June 2002

21. The Value of Certifications: “When one considers all economic measurements of certification benefits, Cisco certifications set the gold standard.” • Certification and Salary Levels—Certification Magazine Study found that there is no doubt that certification does serve to increase the annual salary of IT professionals • The average certificant had a salary of $55,577 Certification Magazine, 2000 Source: Certification Magazine’s Salary Survey, Dec. 2001

22. Certification Value (Cont.) • The number of certifications impact salary—more is better • Technical certifications • 79% said they plan to pursue additional certifications in the coming year • Certifications and Job Promotion • Certification and Raises $64,560 $59,868 $53,559 $49,852 2–3 4–5 6–7 1 Number of Certifications Source: Certification Magazine’s Salary Survey, Dec. 2001

23. Cisco Certification • Cisco shows its professionals the money more than any program • Cisco certificants received a 17.8% salary increase, equivalent to $10,606; the same group had salary increases that were 84% higher than average • Cisco and Oracle certifications provide the best overall economic impact and return on investment Source: “Certification and IT Professionals,” 2000, research study conducted by Fairfield Research, Inc., and Certification Magazine

24. 2002 State New Economy The state of the economy: “It looks like the worst is behind us and we are poised for a period of robust New Economy growth, perhaps less spectacular than the dizzying days of 2000, but strong all the same.” Broadband Internet connections continue to grow by more than 50% a year. Business investments in information technology fell relative to 2000 levels, but were 15% higher than 1999 levels. And a host of new technologies are “poised to be commercialized”. Most industries and firms are organizing work around technology and to be successful all firms must be using advanced technology. Source: The 2002 State New Economy Index: Benchmarking Economic Transformation in the States, PPI, June 2002

25. 2002 State New Economy In the old economy workers often followed companies, so attracting companies made more sense. In the New Economy, as knowledge workers become a more important factor in production, companies often locate where knowledge workers already live. Regionally, the New Economy is strongest in the Northeast, the mid-Atlantic, the Mountain West, and the Pacific regions. 15 of the top 20 states are in these four regions. (The five exceptions are Florida, Illinois, Minnesota, Texas, and Virginia.) In contrast, 16 of the 20 lowest ranking states are in the Midwest, Great Plains, and the South. The two states that are farthest along the path to the New Economy are MA and Washington. California is third, with Silicon Valley remaining the world's most dominant technology region.

26. 2002 State New EconomyInformation Technology Jobs States with a larger share of workers trained and skilled in the use of IT will do better than states with a smaller share. All sectors employ IT workers. For example, more than 90% of IT workers in the Chicago area are employed by firms that use IT (such as insurance, banking, and health-care administration) rather than those that produce IT or provide IT services. Even "traditional" industries use IT, such as the automobile industry. Technology companies remain key engines of the New Economy. High-tech states include Colorado, Washington, and Massachusetts. Low-scoring states tend to have natural resources or traditional manufacturing-based economies such as Mississippi, Arkansas, and North Dakota.

27. 2002 State New EconomyWorkforce Education An educated workforce is critical to increasing productivity and fostering innovation. Americans have been getting more education. In 2000, 51% of workers had at least some college, up from 40% in 1991 and 33% in 1982. States with a more educated workforce are better positioned to capitalize on his trend. Studies have shown that highly educated individuals are more geographically mobile than less educated individuals. As a result, states like Colorado, Hawaii, and Washington that have attracted large numbers of people from other states that generally have a more-educated workforce. Many states with a less-educated workforce have high net out-migration (for example, South Dakota, West Virginia, and Wyoming), or have historically invested less in education (Alabama, Louisiana, Mississippi, and Nevada).

28. Is the Demand for Techies Tapering? • The labor market is still a sponge and techies are faring better than most workers • Techies haven't been suffering as much as those in marketing or business development—largely because of the pent up demand throughout those industries for experienced technical professionals • According to David Hume, VP of Bradford & Galt (an IT consulting firm), even in NY where dotcom workers have been hit hard, the programmers, database analysts, and website administrators have bounced back after layoffs Source: Monster.com

29. “Don’t Give Up On An IT Career Just Yet,” Jeff Taylor, founder of Monster.com Taylor believes there is a high tech workforce shortage just around the corner and that knowledge workers are going to be in high demand. "The human capital shortage is just around the corner and it is the knowledge worker who is going to be at the center of company desperation," said Taylor at a Chicago High School. Source: http://biz.yahoo.com/prnews/030319/cgw046_1.html, March 2003