One of the roles of an IT leader is the job of managing IT staffing (supply) with the needs of the organization (demand), to include infrastructure and support as well as IT investments that will drive innovation, new products and future growth. Although most leaders have an assumption that their IT organization will become more efficient over time, it is not unreasonable to expect that IT staffing numbers would increase in parallel with the growth and success of the business being supported. Yet, rather than a smooth trend line of IT staff numbers to match company or revenue growth, the staffing graph for many organizations resembles something like the following:
The graph itself may be troubling and raise several questions, yet almost without exception, any company that announces substantial layoffs, including layoffs within IT, is immediately rewarded with a share price bump on the news. It is difficult to find examples where this is not the case. It seems to me that the marketplace (specifically analysts) must be betting on one of the following scenarios in their positive reaction to layoffs within a company’s IT organization:
- There is little faith that the staff being eliminated were really needed, or were attached to specific projects/investments of value
- The projects/investments themselves were unlikely to result in growth or innovation, despite management assurances, and with the elimination of those IT investments the staff are no longer needed
- The company or IT department has become dramatically more efficient overnight, and can now deliver on all promised IT investments without the need of the staff in question, with no negative effect on future growth
Or are none of these the case, and the market is irrationally giving a bump based on short-term thinking only, without a concern about the long-term impact on growth and profits?