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Payroll Gains At IT Services Firms Outpace U.S. Economy


Companies providing computer-design and related services added 41,400 jobs in the past year, including 5,200 in June.



Payrolls grew in several IT sectors in the United States last month, led by 5,200 new jobs in IT services. Computer and peripheral equipment manufacturers added 2,300 jobs in June, but a category that lumps together Internet service providers, search portals, and data-processing companies--including software makers--saw payrolls slip by 300 positions, the U.S. government reported Friday.

Still, in its monthly employment report, the Labor Department said all three IT sectors expanded payrolls in June compared with a year earlier. IT services providers added 41,400 jobs, a 3.6% year-over-year increase. That's more than double the rate of the two other major IT sectors. ISPs, search portals, and data processing increased payrolls by 6,000 jobs in the last year, or 1.5%, and computer and peripheral manufacturers added 3,300 jobs, or 1.6%. As a comparison, overall nonfarm payrolls in the United States grew by 1.5% year over year. Figures for June are preliminary; all numbers are seasonally adjusted.

Why do IT services lead other segments of the technology industry and the overall economy? Productivity is the culprit. Simply put, manufacturers can produce more wares with fewer employees than in the past, says Creighton University economics professor Ernest Goss. But, Goss says, the best way to improve output within the service sector is by adding workers.

Offshore outsourcing also is a factor. Manufacturers experience greater savings by sending jobs abroad than do service providers, which Goss says explains one reason job growth is slower on the factory floor than the office building.

Also, employers stung by cutbacks caused by the tech bust of the early 2000s remain jittery about growing payrolls despite an improving economy. So they'll retain consultants rather than hire employees. "Everybody got burned in IT before," Goss says. "Some employers are much more comfortable outsourcing, though those costs are higher than if they hired internally. But by outsourcing, employers aren't locked into long-term situations than if they hired the workers themselves."

Dion DeLoof, president of the IT staffing and consulting firm Anteo Group, says payroll gains in IT services should continue over the next few months, though not at a rapid pace. "Our clients predict a continuation of this paced growth through the next few months, which is as far as can be reasonably predicted with their project budgets," he said in a statement. "Overall, the outlook in the technology hiring space is still positive, with no large increases in hiring predicted but a continuation of hiring increases."


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