Most Large Companies Not Increasing IT Headcounts in 2018

January, 2018

Despite a strong global economy and moderate growth in IT budgets, most large companies are not adding to their IT staff headcounts this year. In fact, on average, they are slightly decreasing them this year. It is too early to tell, but this may be the first sign that the cloud is actually reducing staff rather than just hindering growth in staff levels.
This year, for the first time, our outlook for IT spending and staffing for the new year goes beyond the U.S. and Canada to also report the outlook for the rest of the world. Figure 22 from the full study, Worldwide IT Spending and Staffing Outlook for 2018, shows the expected average IT headcount changes for our worldwide sample by company size. Small companies expect to increase IT staffing levels by 4.5% on average, and midsize companies expect an increase of 2.2%. However, large companies are actually expecting to decrease headcounts by 0.9%. This is a remarkable finding in light of favorable economic conditions.

Outlook2018 fig 22 RB - Most Large Companies Not Increasing IT Headcounts in 2018

If you look at the U.S. and Canada samples only, the trend is even greater, with 1.2% of large companies decreasing IT headcounts. This is likely, in part, because the U.S. and Canada are farther along in the cloud transition.

“Typically, during a strong economy, you don’t see companies reducing headcounts,” said David Wagner, vice president of research for the Irvine, Calif.-based research firm, Computer Economics. “There are really only two major reasons this could be happening—a major increase in outsourcing or that the cloud is allowing them to move jobs to cloud and SaaS providers who enjoy economies of scale.”

Outsourcing is increasing, but it is unlikely to be the only reason for the decrease. It has long been predicted by cloud critics that this could happen. However, one year does not make a trend. It is worth watching if this is the first signal of a larger employment trend or just a blip on the radar.

In our annual outlook study, we provide guidance for IT executives as they firm up their plans for the new year. This year, our report assesses IT operational and capital spending plans for 2018, priorities for IT spending and investment, and plans for hiring, outsourcing, and pay raises for IT organizations throughout the world.

This Research Byte is a brief overview of our study, Worldwide IT Spending and Staffing Outlook 2018. The full report is available at no charge for Computer Economics client or may be purchased directly from our website (click for pricing).