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IT Unemployment Keeps Growing; Automation is One Likely Culprit

Ara Trembly
Insurance Experts' Forum, October 13, 2009

In a recessionary era such as this, unemployment figures gain tremendous importance to most as an indicator of how badly or well the economy is doing.  

Stocks will be bought and sold, business plans will be advanced or trashed, fortunes will be won or lost, and workers (that’s us) will be elated or depressed based on the numbers cranked out by the U.S. Bureau of Labor Statistics. On that basis, you would think that these numbers should clearly reflect the state of the working world. But do they?  

By its own admission, the Bureau does its numbers voodoo based on computer models that are fed by disparate employment and population databases. Computer models, while they sound very reliable, are, in fact, educated guesses that are operationalized in a technology environment. And while we want our guesses to be educated, one wonders why we are guessing at all instead of looking at the hard numbers and figuring out for ourselves what they will mean.  

Take the latest unemployment data as reported by IEEE on computer professionals (based on the Bureau’s statistics). According to IEEE, the unemployment rate for computer professionals went from 5.4% in the second quarter of 2009 to 6% in the third. Software engineers showed a slight decline (4.7% vs. 5%) in joblessness, but computer scientists and systems analysts experienced a significant increase (7.3% vs. 6.4%).

Why is this happening? Certainly, the overall economy remains mired, but insurance enterprises on balance have, for the most part, either maintained or increased their spending for this year. The simple answer is that despite the static budget numbers, IT departments are still looking to cut costs. As a result, an insurer who has had some big-ticket projects in line for launch will back burner them, and will thus need fewer human resources for some period of time.  

Another potential answer is that insurance IT leaders have followed their own advice and begun automating parts of their own operations. For example, despite the gloomy economic picture, many insurers are still upgrading or completely replacing policy administration systems—a big-ticket item. The new systems, however, put much more responsibility in the hands of business users, and actually place much less demand on the IT operation.  

Ironically, this “automation” of some IT functions to make them accessible to business users means that fewer IT personnel are needed to support the policy administration system (especially since the system vendors aggressively promote their own support services).  

Given this trend, computer scientists and systems analysts might be well advised to seek employment with the tech vendors, rather than their customers. Meanwhile, IT workers can comfort themselves somewhat by realizing that joblessness in the tech sector is below the levels found in the general population (nearing 10%) … assuming, of course, that you believe the Bureau’s models.

Ara C. Trembly (www.aratremblytechnology.com) is the founder of Ara Trembly, The Tech Consultant and a longtime observer of technology in insurance and financial services. He can be reached at ara@aratremblytechnology.com.

The opinions posted in this blog do not necessarily reflect those of Insurance Networking News or SourceMedia.

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