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Tech Industry

For CIOs, hiring outlook is cautious

But when broken down by U.S. region, the senior technology executives say they are more optimistic. In the South, nearly one in four say they will add IT staff.

    Senior technology executives throughout the United States are cautiously optimistic in their hiring predictions for the third quarter, though in some regional markets, they are downright bullish.

    According to a new study by Menlo Park, Calif.-based RHI Consulting, CIOs nationwide forecast a net 13 percent increase in the hiring of information technology professionals in the third quarter. The same group predicted a 10 percent increase in the previous quarterly survey.

    Only 3 percent of CIOs polled said they would cut their IT staffs in the third quarter, and 16 percent said they had plans to expand. Eighty percent of CIOs expected no change in hiring activity, according to the quarterly Information Technology Hiring Index, a survey of 1,400 CIOs from U.S. companies with 100 or more employees.

    "While the overall hiring climate remains conservative, some businesses are pursuing IT projects that were previously placed on hold and are hiring additional technology staff accordingly," said Katherine Spencer Lee, executive director of RHI Consulting. "Systems upgrades and Web initiatives have become higher priorities."

    CIOs in the Southeast were the most optimistic about third-quarter hiring initiatives. Nearly one in four CIOs in Atlanta and other Southern tech hubs said they would add staff, and only 1 percent said they would cut. Industries that were eager to resume hiring included healthcare, finance, insurance and real estate.

    CIOs in Western states, which include tech hubs such as California's Silicon Valley and Seattle, were also upbeat after more than two years of belt tightening. Nineteen percent of CIOs in the narrower Pacific states region--California, Oregon and Washington state--said they planned to expand their IT departments in the third quarter, and only 1 percent predicted staff reductions. Most of those CIOs said they would hire network administrators, technical support and quality assurance personnel.

    The results of the survey were consistent with other executive polls conducted in the past month, more than two years after the stock market downturn and collapse of the dot-com bubble. Despite massive unemployment, sluggish sales and bottom-feeding stock prices, executives at technology start-ups are surprisingly optimistic about the future of their industry.

    According to a survey last week of CEOs whose companies were listed on the 2001 Deloitte & Touche Technology Fast 500, roughly two out of three CEOs are "very" or "extremely" confident that the niche will return to the healthy status it had in the late 1990s. Most dismiss the downturn as a "healthy shakeout" that will lead to a more robust industry within 12 months to 18 months.

    Although most planned to slash administrative and travel expenses, many CEOs in that survey also said they would soon expand employee ranks. Eighty-nine percent of the CEOs planned to hire new employees, but most were conservative. Of those hiring, 49 percent anticipate adding less than 25 new employees; 20 percent plan to add 26-49 new employees; and 12 percent expect to hire 49-100 new employees. Only 6 percent say they plan to add 101-200 new employees, and a paltry 2 percent plan to hire more than 200 employees.

    Despite positive polls, it is unclear whether CEOs and CIOs are looking at the world through rose-colored lenses. Many rank-and-file computer programmers and engineers are waiting out the downturn in blue-collar jobs, and others are underemployed or are still collecting severance or unemployment insurance. Some economists forecast increases in unemployment throughout the summer, particularly in the hard-hit technology sector.

    The newest RHI study wasn't categorically positive. Of the regions that have large tech corridors, New England CIOs remained most bleak in their third-quarter outlooks, with only 12 percent predicting an uptick in employment. CIOs at retail and wholesale companies were also discouraging, reporting relatively minor increases.