Survey: Tech Hiring Up Slightly

November 29, 2004 ( - The tech sector should see overall net employment increase slightly for the next three to 12 months as of Q3 - with lower growth than predicted last quarter.

A news release said that Clark Consulting Technology Employment Confidence Index for Q3 remains at 58 over the next 12 months. However, both the three-month and 12-month outlooks are down by 2 points when compared to second quarter results. At 50, the Index indicates expectations of no increase in employment; below 50 indicates an anticipated job cut; and above 50 indicates an expectation of employment increase.)

Meanwhile, actual employment levels continued to decline modestly in the third quarter, with exempt employment down nearly 1%, according to the study. The Index also found that differences exist by tech sector, particularly for the next three months, with Software showing the highest level of confidence at 57 and Semiconductor Equipment the lowest at 48 – suggesting a modest contraction in hiring.

Despite the slight dip in confidence, the survey revealed a quarter-over- quarter increase in the annualized hiring rate with a move from 7.3% in Q1, to 9.4% in Q2, up to 10% in Q3.

“One very interesting trend is that for the third straight quarter, job change activity – new hires and turnovers – has increased,” said Joe Rich, Clark Consulting executive vice president, in the news release. “Though new hires and turnovers continue to virtually offset each other, this increase does suggest that employees may be more confident in making a move to a new company and that companies are confident enough to replace employees who leave. This may suggest that we are in a period characterized by job rotation-matching turnovers and hires – rather than job creation, which would result in employment expansion.”

According to the survey, the number of firms reporting an increase in the use of hiring bonuses has grown over the year, with more than double the number of firms reporting an increase in use of hiring bonuses from Q1 to Q3. In the third quarter, 11.3% of firms indicated they would increase the use of hiring bonuses, compared to only 5.6% in the first quarter.

The survey found that merit-spending remains of limited use, although more firms are increasing their budgets than are decreasing them. Each subsequent quarter in 2004 has seen an increase in “merit spending above amount approved” with responding companies implementing those merit increases at higher rates than they have contemplated them.

According to the survey a large majority of employees – 86.4% – were targeted to receive a merit increase in Q3. As an indicator of a more competitive job market and increased net employment in 2005, employers project that 89.68% of employees will receive merit increases next year.

The third quarter saw companies contemplate base-pay spending freezes at more than twice the rate those freezes were actually implemented – 8.4% reported contemplating freezes in Q3, yet only 3.2% actually implemented those pay freezes. For this quarter, no firms reported implementing a permanent base pay reduction, and only 1.1% said they were thinking about such reductions.

The Clark Consulting Technology Employment Confidence Index is a quarterly snapshot of how the technology industry perceives the employment outlook. One hundred-seven technology companies representing more than 1.2 million employees participated in the Q3 online poll.

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