Financial Crisis May Lead to Hiring Freezes, Layoffs in IT, says Gartner

Computerworld — The image of Franklin Roosevelt was among those flashed on the screen during the opening session at Gartner Inc.'s Symposium/ITxpo 2008 conference in Orlando yesterday, as part of a parade of grim messages and recommendations from Gartner analysts about the Wall Street meltdown. The only piece of advice about the economic situation that drew a hearty laugh from the IT managers in the crowd was this: "Don't buy junk."

The No. 1 item on Gartner's list of what IT execs have to prepare for was the worst of all, from a manager's standpoint: hiring freezes and possibly even layoffs. It was a somber message for the 6,000 attendees at the conference.

"The next big thing in IT is not a technology—it is cost reduction, risk management and compliance," said Peter Sondergaard, Gartner's global head of research.

Gartner, which said in a report late last month that it didn't expect a recession in tech spending, now is forecasting that overall spending will grow three percent year over year during the current quarter and then increase 2.3 percent next year—a reduction from its previous projections. And the consulting firm isn't ruling out IT budget cuts as deep as 20 percent at some businesses. "This is no downturn; this is a crisis," Gartner analyst Whit Andrews said.

But what does all this bad economic news mean, exactly? Other than Gartner's somber outlook on possible staffing actions, much of the advice dispensed here was familiar, and some of it has long been on the radar of many IT managers who were in attendance. And it has always been true that companies want to cut costs as well as expand their technical capabilities.

For some users, what this downturn may do is create a Welcome Wagon of sorts for technologies that, up until this point, have been considered too risky to adopt.

Blair Mandryk, global IT manager at Haworth Inc., a Holland, Mich.-based maker of office furniture, had been looking to cut his technology costs long before the recent events began unfolding. One of Gartner's key recommendations is to virtualize systems—hardly a new piece of advice, but one that the consulting firm underscored today. Mandryk has already done that, having used VMware Inc.'s virtualization technology to reduce 450 physical servers down to 100 boxes.

But another IT problem is finding a way to expand services without increasing the budget. "The business is still expecting IT to deliver, so without having the money to do it, you have to find creative ways," Mandryk said. For instance, he predicted that software as a service "is going to be a huge trend," partly as a result of the economic downturn. A year ago, Mandryk himself wouldn't have considered SaaS. Six months ago, "probably yes," he said—and now, "absolutely."

Marvin Reem, CIO at Bob Jones University in Greenville, S.C., has been deploying new processes based on the IT Infrastructure Library specifications as a means of improving the efficiency of the school's IT operations. The ITIL implementation has delivered cost savings, Reem said. But he added that he already has started looking at additional ways to cut expenses.

One cutback involved dropping a plan to buy a new service management tool as part of the ITIL implementation, according to Reem. He said he is considering other steps as well, as part of an effort to keep the focus on IT services that "really aid the organization."