IT Budget & Staffing Survey Shows Bleak Year Ahead for CIOs, IT Staffs

A recent CIO magazine survey sees dwindling IT budgets and hiring freezes in 2009

CIO's latest survey on IT budgets and staffing paints a bleak picture for the year ahead.

The number of CIOs planning budget decreases continues to rise dramatically, according to 208 IT executives surveyed in January, 2009. More than half of IT heads (53 percent) now plan to slash budgets in response to unfavorable economic conditions, up from 40 percent in a similar survey conducted in October and 17 percent in the first quarter of 2008.

Fifty-nine percent of CIOs are implementing IT hiring freezes, up from 46 percent in October and more than one third (34 percent) have begun reducing IT headcount, up from 23 percent 3 months ago.

More CIOs plan cuts to IT compensation costs; 35 percent of CIOs plan a decrease in the coming year, up sharply from the 18 percent reported in October.

Nearly a third of CIOs (31 percent) say they plan to reduce their full-time, in-house staff; an increase from 21 percent in October and 14 percent in the first quarter of 2008 while close to half (48 percent) plan to reduce spending for contractors and temporary workers, up from 26 percent 3 months ago

IT Projects on Hold; Cost Cutting Measures Continue

More than two-thirds of CIOs (68 percent) say current economic conditions are causing purchasing decisions to undergo closer scrutiny by other business executives in their company.

With IT increasingly under the microscope, cost cutting is a priority for many CIOs. Almost half report that the percentage of their total IT budget allocated to new projects will decrease and 49 percent have already begun freezing or canceling IT capital spending.

CIOs most frequently cite travel restrictions, hiring freezes and holding off on discretionary IT projects as cost cutting measures they have already begun implementing.

The percentage of CIOs slashing their training budgets increased sharply to 46 percent, from 25 percent 3 months ago. With cost cutting top of mind, some CIOs are looking for alternative IT models; 38 percent of CIOs say they are more likely to consider on-demand services and SaaS as a result of the unfavorable economic condition

Which of the following measures are you considering taking as a result of current economic condition?

Started in the last 6 months Plan to start in the next 6 months No plans at this time
Postpone discretionary IT projects 58% 19% 23%
Renegotiate IT vendor contract 52% 22% 26%
Freeze IT hiring 59% 10% 31%
Freeze or cancel IT capital spending 49% 11% 41%
Reduce IT headcount 34% 6% 60%
Reduce spending on IT contractors and consultants 52% 17% 30%
Reduce spending on training for IT staff 46% 11% 43%
Restrict IT travel 61% 12% 27%

How will your budget within the following categories change in the next 12 months?

Increase Decrease Remain the Same
Hardware 20% 47% 33%
Applications 23% 41% 36%
Network Infrastructure 26% 35% 40%
Web/mobile 22% 32% 46%
Outsourced IT Service 20% 48% 32%
IT compensation costs (include salaries, bonuses & benefits but not stock incentives) 26% 35% 39%

Methodology

The CIO IT Budget & Staffing survey was conducted online between January 12 and January 26, 2009 with the objective of gauging how current economic conditions are impacting IT spending plans. An email invitation containing a link to the survey was sent to a sample from the CIO customer database. Results are based on 208 respondents who indicated they are the top IT executive at their company or business unit. A broad range of industries are represented including government and nonprofits (21 percent), financial services (15 percent), manufacturing (15 percent), services (14 percent), high tech, telecom and utilities (12 percent), retail, wholesale and distribution (11 percent) and healthcare (7 percent). Company size distribution by annual revenue is as follows: <$100 million: 35 percent, $100 million - $999.9 million: 37 percent, $1 billion or more: 18 percent, non-profit: 9 percent (2 percent of respondents were unsure). The margin of error on a sample size of 208 is +/- 6.8 percent. Percents on questions where respondents could select only one answer may not sum to 100 due to rounding. Not every respondent answered every question.

Field dates and response counts are listed below for reference when making comparisons to previous CIO surveys.

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Copyright © 2009 IDG Communications, Inc.

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