Is N.E. a victim of its own tech success?

Computer hardware, software, storage, and networking have created such efficiences that businesses no longer have to hire as many workers, while the Internet has made it easier for companies to capitalize on cheaper labor abroad, high-tech leaders told the Future Forward 2003 technology summit here yesterday. The result, they said, is an economic recovery in which employment is growing more slowly than in the past, especially in New England.

"We have a productivity crisis," said John Landry, chairman and chief technology officer of Adesso Systems in Waltham. "It's not that we don't have enough -- we have too much. All the hardware and software we've developed to optimize productivity are having their effect. And it's expanding from the tech sector into the whole economy."

Landry cited last week's report that the US economy grew at an annual rate of 7.2 percent in the third quarter even as it lost more than 40,000 jobs. Yesterday, the Labor Department said business productivity rose at an 8.1 percent annual pace in the third quarter.

Bill Warner, founder of Avid Technology in Tewksbury, said the trend of rising productivity and declining employment has been going on for the past three years. "We're still underestimating the impact of the information technology tools we've created," Warner said. "And we're just at the beginning. It's like we don't have to do the laundry anymore because we have a washing machine."

New England's comeback is lagging partly because of its productivity gains, said University of New Hampshire professor Ross Gittell, vice president of the New England Economic Project. "Massachusetts was hit hard, and is slow to recover because of the tech sector," he said.

And as the technology industry has shed jobs, growing companies have hired experienced workers at lower salaries, said Maria Cirino, chief executive of Guardent Inc. in Waltham.

Concern about the jobless recovery also was discussed Wednesday by Deputy Commerce Secretary Samuel W. Bodman at a round table with a dozen regional technology executives, organized by TechNet New England and hosted by Akamai Technologies in Cambridge. Noting signs of a pickup in business spending, Bodman said the US economy would have to create more than 100,000 jobs a month to begin eating into unemployment.

Bodman conceded the acceleration of outsourcing to India, Russia, and other countries was a drag on the employment recovery. "We've got to figure out a way to make our economy more innovative and inventive, and create more opportunity," he said.

Technology investor John J. Cullinane, president of Cullinane Group Inc. in Boston, questioned whether the current recovery will translate into significant numbers of US jobs, as have past recoveries. "Businesses are seeing an uptick," he said, "but their performance is better partly because they're outsourcing work." He said venture capitalists were encouraging even small companies to send work overseas.

At the Future Forward summit, some speakers attributed the slow recovery to businesses' cautious spending. Many companies, they said, bought too much technology gear in the late 1990s to fend off the Y2K bug and prepare for a new era of Internet commerce.

"We're not digesting all that technology," said Phyllis Michaelides, chief technology officer of Textron Inc. in Providence. "It's not being used. And it leaves a bad taste in your mouth."

Robert Weisman can be reached at weisman@globe.com.