Tech jobs lose their sheen

The day of the technology employee being spoilt for choice is well and trulyover, writes Jamie Smyth

Three years ago the Dublin-based software firm Ebeon made headlines by offering a host of perks - including bonuses, BMWs and holiday vouchers - to staff who recommended suitable candidates for positions at the firm. So high was the demand for skilled technology staff at the height of the dotcom bubble, six-figure salaries for graduates just a few years out of university were common.

Fast forward to the current depressed economic climate and it is hardly surprising that Ebeon is no longer in business. Perks are now few and far between in the tech sector, and just holding onto a job at an established company is a challenge.

"Pay rises and bonuses were scrapped at our firm in early 2001 and nobody I know here has had a pay increase since then," says one Logica CMG employee based at the firm's Irish operation. "If inflation is rising at 5 per cent and you've been on the same pay for three years, then in net terms you are working out with less."

Like most other technology firms prior to the downturn, Logica staff enjoyed performance bonuses, share options that offered real value and regular pay increases. But the downturn has lowered wages in real terms. The financial squeeze has led to the removal of perks such as travel, gym allowances and the loss of company phones, according to the employee.

Despite these cuts in discretionary spending, Logica has shed hundreds of jobs at its Dublin and Cork offices over the past two years. "When staff were made redundant, you ended up doing two people's work. Even though there was less work at the firm, it wasn't proportionate to the number of staff working."

Anecdotal evidence gathered from workers at a range of firms across the Irish and international tech sectors tells a similar story. Many US multinationals with Irish operations have implemented wage freezes, including Intel and HP (formerly Hewlett Packard) - both firms with reputations for being caring employers.

The drive to cut costs in an uncertain economic climate is forcing companies to re-evaluate their human resources strategies.

One staff member at HP, who does not want to be named, says the firm is not giving full-time positions to some staff at its call centre, technical support and managed services divisions, even when employees have worked for two years or more. Rather, HP is using staff contracted to recruitment companies.

The practice of using more contractors or "insourcing" staff from recruitment firms enables firms to manage their head count more efficiently in a volatile economic climate. However, it can also result in fewer full-time staff with fewer employment rights.

But Mr Martin Murphy, managing director at HP Ireland, says HP has not changed its human resources policies and there is no strategy to use contractors more.

"Our preference is to have HP employees and there is no new strategy on this, although there may be specific \ cases," he says. "We recognise it has been a tough and difficult time but HP is one of the few companies that will be increasing wages in May. We are growing."

HP is continuing to evaluate discretionary spending, such as travel, but it has maintained a commitment to staff training. "We have staff attending universities and Irish Management Institute courses," says Mr Murphy.

Unfortunately, not many companies have done this, according to research published this week by PricewaterhouseCoopers. Its HR Benchmarking 2003 report found evidence to suggest that investment in training in terms of spend and number of days training per employee has fallen over the past 12 months.

"While this approach can create short-term financial benefits, longer term it can have a negative impact on organisational performance," it concludes.

Mr Brendan Butler, director of lobby group ICT Ireland, says cutbacks in discretionary spending at firms were made from a strong sense of protecting jobs at firms. "It is an incredibly reactive sector, which often has to take quick and demanding action. Firms have come up with innovative ways to cut costs."

But the cost cutting at many firms hasn't stemmed job cuts. Over the past three years, it is estimated that at least 20,000 staff have lost their jobs in the technology sector.

Figures compiled for The Irish Times by the State agencies IDA Ireland and Enterprise Ireland show net employment in the technology sector is down by 8,000 over the past three years.

A breakdown of these figures shows some sectors have done better than others. Employment at IDA firms in the software sector has held up relatively well compared with the manufacturing sector, where firms such as Gateway and General Semiconductor, have closed with the loss of more than a thousand jobs.

Enterprise Ireland has actually seen a net increase in the number of people employed in the software sector but this excludes indigenous manufacturers that will probably have experienced a sharp fall in employment.

Indeed, the experience of software engineers made redundant at Logica CMG has been relatively upbeat as many have already found jobs, although on significantly lower salaries.

For staff with lower skill levels, who work in technical support or call centres, finding a job can be difficult. And certainly the era of bonuses and perks is well and truly over.