IT Investment To Rise, But Employees Look To Flee

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Enterprises are to increase IT spending this year, but it may not be enough to keep employees on board

IT executives, along with finance and operations management, are more confident about investing and spending for the remainder of 2010, yet many business leaders believe growth and overall economic health is tenuous, according to a quarterly Corporate Executive Board (CEB) survey of 440 executives in more than 50 countries.

IT discretionary spending will rise in the third quarter, especially in software: 54 percent are expecting to have higher spending overall with 57 percent expecting more spending in software.

“Even though the overall outlook has moderated, there is still resilience in key investment areas such as anticipated R&D and IT CapEx,” said Oleg Polishchuk, senior director at CEB in an 18 August statement. “Furthermore, executives expect higher order volumes and plan to increase production levels.”

Employees less engaged

Human resource executives are not as bullish on employee engagement, though they do expect labour costs to rise between 1 and 4 percent. More than one-third of HR managers believe employees will be less engaged on the job. Higher employee turnover is a concern with more than 54 percent of human resource professionals expecting workers to seek new jobs.

“While fundamentals at large companies have recovered steadily across the past year in terms of both top-line growth as well as margins, executive concerns about the economic environment – especially the strength of consumer demand – have returned,” said Michael Griffin, managing director, Global Research at CEB, in the same statement. “Many companies are taking a wait-and-see approach, but history suggests that those who undercut growth investments during economic trough periods risk longer-term revenue stalls while those who make investments ahead of peers are more likely to seize outsized returns.”

A June study by CEB on employee satisfaction found 25 percent of employees identified as high-potential by their companies were looking to leave the company. By way of comparison, that number was only 10 percent in 2006. Similarly, 21 percent of employees said they felt highly disengaged on the job – a number that has tripled since 2007.