US Government Shutdown's Early Effects on IT Jobs Remain HazyBy Corinne Bernstein | Print
NEWS ANALYSIS: Although IT employment remains healthy, federal cutbacks make the outlook for tech jobs less certain.
The biggest software and hardware companies derive 20 percent of their revenue from the federal government, Steve O'Keeffe, founder of Meritalk, a public-private partnership focused on government IT, told eWEEK. Uncertainty is never good for the economy or jobs, and some tech companies already face a credit crunch that could worsen if the shutdown continues or political wrangling surrounding the debt ceiling continues, O'Keeffe said.
Some technology companies will face late payments and furloughed contractors, CompTIA's Hyman wrote in an Oct. 1 blog posting. "CompTIA has conducted research that indicates approximately one in five IT channel firms have a government practice, meaning they are engaged in ongoing government-related work. … In addition, outside of government procurement, many tech SMBs also rely on federal financing through the Small Business Administration. The processing of these loans will come to a standstill," Hyman wrote.
Yet being forced to cut spending can have some positive effects, industry watchers said.
"Pressure in D.C. will drive new models," O'Keeffe said. "More efficient models will be called for. As the budgets tighten, everything is scrutinized. More of the same won't do it. … It presents the federal government with a great opportunity to rationalize and innovate. It's a most exciting and terrible time."