In June, the Texas Department of Transportation shifted its IT operations to an outsourcing services firm, affecting some 300 employees. IT workers were promised six months of job security with the outsourcing firm, which has recently ended.
Layoffs were announced this week, a figure put at less than a dozen by NTT Data, the services company that took over the Texas DOT's IT operations.
The decision by the Texas DOT to outsource information technology operations fits squarely into an IT job pattern that dominated last year.
Hiring by IT services and consulting firms outstripped all other IT hiring last year as companies increasingly shifted to using contingent workers, IT services and consulting firms, according to an analysis by David Foote, who heads the labor research group Foote Partners.
IT jobs, overall, increased by about 128,500 last year, based on Foote's analysis of certain U.S. Labor Department IT categories. Most of that hiring, however, about 111,000 of those jobs, were in IT services segments. These segments refer to dozens of labor categories that are most associated with IT services hiring and include titles such as management consultant.
Companies are reluctant to bring on full-time workers until they feel confident that economic growth will prevail, Foote said. "Nobody is really putting an emphasis on hiring full-time people," he said.
The shift to contingent workers has been noted by others. IT research firm Computer Economics recently reported that the use of contract labor in large IT organizations, companies with IT budgets of $20 million or more, has grown to 15%, the largest percentage since 1998.
Another reason for the change, Foote said, has to do with the heightened interest of IT leaders in playing a bigger role in driving innovation and profitability. Having a larger role in the business is leading IT management in the direction of a more flexible workforce that can adapt quickly to business changes, he said.
Another trend that Foote cited, and one that has been noted by other IT labor analysts, is a slowdown in IT hiring. In the last five months of this year, the average number of IT hires was 60% below the number of hires for the first seven months, he said.
Last June, Texas announced that it was moving application maintenance and development, customer support, network and telecommunications systems support, professional support services, and IT security to NTT Data, a Japanese services company.
After the deal, about 300 of the 350 workers in the Texas DOT's IT department were offered jobs at NTT, according to statesman.com the website of the Austin American-Statesman. The website said about 200 of those workers remain with NTT.
In a statement on the layoffs, NTT Data said: "Within the IT services industry, staffing fluctuations are a normal course of business to support client business needs."
Patrick Thibodeau covers cloud computing and enterprise applications, outsourcing, government IT policies, data centers and IT workforce issues for Computerworld. Follow Patrick on Twitter at @DCgov or subscribe to Patrick's RSS feed. His e-mail address is [email protected].
Read more about it outsourcing in Computerworld's IT Outsourcing Topic Center.