Dot-com and start-up companies feel the pinch

The dot-com sector may be on the verge of collapse, but the IT sector is cruising along – although it might need a tune up, according to a recent study commissioned by RHI Consulting in Toronto.

It appears the age-old argument about size really mattering applies aptly here. What has been revealed to date is that the geographical location plays the most crucial criteria in determining how adversely affected the IT community has been hit.

Marilyn Harris said the recent lay-offs in Victoria by SDL, a subsidiary of JDS Uniphase, resulted in 170 people being let go. And while all of those individuals were not in IT, a sizeable number were, she said. “It has had a very big impact on a small high-tech sector like Victoria to have 170 people without jobs.” Harris, a consultant for KLR in Vancouver, blames the stock market as the genesis of the cuts in the industry.

Larger IT sectors such as Ottawa and Toronto have more elasticity in their respective markets, and have positioned themselves to pick up the slack – even during down times, Harris said.

Charles Bennett, however, believes the recent lay-offs have not affected the market. Bennett, the director of information systems for Toronto-based TORYS , a international law firm representing large and medium size industrial and service companies along with financial institutions, emphatically stated that it’s been business as usual, and said he does not see a glut or shortage of people on the market. “I don’t see a downsizing in the IT sector (and) I don’t think they’re trimming IT people.”

Since IT is so crucial to business, companies that are cutting in that sector “may as well cut off their left hand, because [technology is] that important to your business,” he said.

Michael Byrne also thinks IT workers have been spared the recent round of lay-offs. Few skilled and experienced people are being let go in Alberta, said the director of computing and network services at the University of Alberta in Edmonton. Those who jumped on the dot-com bandwagon are not the type of staff that CIOs are looking for, he said.

“People who can construct Web pages may have been persuaded that they are fully-fledged IT professionals, (but) they’re not,” he said. While hiring may be slowing down, there continues to be more vacancies than qualified people to fill IT positions, he added.

Downsizing at start-up companies with weak value propositions would indeed continue, he said. Start-up companies will see a recovery around 2003 at a much slower rate than the growth rates they experienced during the ’90s.

And in Eastern Canada, the recent cuts have not dramatically affected Newfoundland and Labrador, and may have a positive effect because it will alter the way a company recruits people into its organization.

Craig Slaney, the national marketing co-chair for the Canadian Information Processing Society said the recent boom/bust cycle has affected new graduates entering the industry because of their lack of experience.

One of the problems causing the demise of the dot-com industry is the lack of experience within organizations, Slaney said. “(Dot-com) companies didn’t have the grey hair, and maybe if some of these organizations did, it would have injected a little more realism.”

When addressing the job losses at Nortel, Slaney said the cuts didn’t affect the IT staff or the computer engineers but rather the manufacturing side. He characterized it as basic supply and demand; with demand falling for products, those are the people let go, and not the intellectual properties of that company.

According to the study, 78 per cent of CIOs said the recent job cuts have had no effect in recruiting; only seven per cent said it was more difficult. The dot-com and start-up sector made millionaires out of many, and lead to an incredible boom in the industry. Now, with the boom of the ’90s a distant memory – a transition is under way. But it’s a pinch that qualified IT professionals likely won’t feel, as demand remains high for them throughout Canada.