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Operating under tight budgets, most organizations remain cautious about hiring. But firms also recognize that a cost-effective information technology (IT) function is a business necessity. IT teams must be able to strategically implement new technologies and adapt to changing economic conditions.

Some firms are upgrading talent but are doing so very deliberately, with a close eye on the bottom-line impact of each hire. Other companies, having made deep staffing cuts, are beginning to restore essential roles and position themselves for growth.

Following are key trends affecting the IT employment environment:

Selective hiring: Recruiting has become more targeted as employers seek only those candidates who meet or exceed their requirements. Firms are willing to invest more time in the interview process to avoid costly hiring mistakes.

Tough competition: Many experienced IT professionals are delaying retirement, further intensifying competition among job seekers. To improve their prospects, some job candidates have become more flexible about compensation or even geographic location.

Salary slowdown: Budget limitations have forced managers to moderate job offers. Base compensation for many IT positions is slightly declining, with starting salaries forecast to decrease by an average of 1.3 percent next year, according to our 2010 Salary Guide.

Project work: Some departments are engaging IT project professionals to augment their existing staff and gain the flexibility they need to respond to changing business conditions. This way, teams can be quickly expanded or contracted without the need for layoffs as workloads and shifting priorities dictate. In addition, these professionals may be strong candidates for full-time positions when hiring constraints are lifted.

Restarting initiatives: Out of necessity, some companies have cut their IT teams to levels below what is required to effectively support customers or end users over the long term. When a recovery takes shape, the demand for infrastructure and support professionals may ramp up sharply. Some organizations that have postponed important initiatives, such as web development, are preparing for this shift by recommitting resources in those areas.