Caution: IT Investment May Be Hurting US Job Growth

The 2010 US economic recovery has largely been a jobless recovery. While many factors have been blamed — ranging from too much economic stimulus and regulation to too little — investment in information technology has so far escaped blame. But with recent reports of record corporate profits coinciding with strong growth in IT investment, the tech sector may no longer be so fortunate. With business IT investment up 11% in 2010, corporate profits 28% higher, and total non-farm employment unchanged, it certainly appears that businesses have been buying technology instead of hiring workers. Forrester's analysis of IT investment versus employment in 62 industries provides evidence that this is in fact happening: Many of the industries with the highest growth in IT investment have also seen the biggest declines in jobs. That may well be an economically rational decision by business executives. But, for tech vendors, it can spell political trouble. Instead of being seen as an engine of economic growth, IT may be demonized by political populists as a destroyer of jobs. Tech vendor strategists must ensure that their marketing messages work to counter that message, not feed it.