In-Depth

Careers: IT Salaries Fell, IT Budgets Rebounded in 2004

The mean of IT compensation declined by almost 1 percent in 2004 while inflation grew by more than 3 percent

• By Stephen Swoyer
• 01/18/2005

There’s both good and bad news in the offing for IT professionals at the start of 2005. IT budgets, for starters, appear to have recovered. IT bonuses, for senior- and C-level IT executives, at least, have also rebounded.

IT salaries, however, are still waiting on a recovery. That’s the upshot of a recent survey from information technology consultancy Janco and Associates, which offers a twice-yearly snapshot of compensation for executive and rank-and-file IT workers alike. According to Janco’s most recent survey, which included feedback from respondents in 465 organizations, mean compensation for all participants dropped by three-quarters of a percentage point during the last six months of 2004.

It may not seem like a lot, but it certainly bucks a prevailing trend. IT budgets, for example, have rebounded sharply: Consultancy Forrester Research projects that IT spending will grow by seven percent this year, based on a survey of more than 1,300 IT decision-makers in the U.S. and Canada. In addition, organizations spent more on IT in 2004: Sales of software, for example, fell just shy of $190 billion—a year-over-year increase of just over six percent. More to the point, inflation grew by 3.5 percent from November 2003 through November 2004. So IT workers aren’t only making less, their paychecks aren’t going as far, either.

In the last quarter of 2004, mean total compensation in mid-sized enterprises dropped to $75,406 from $76,259. IT professionals in large enterprises typically fared better: Median compensation declined only slightly, from $80,605 in June 2004 to $80,276 in January 2005—a drop of less than half of a percentage point.

Not everyone was affected equally, of course. Thanks to year-end bonuses, mean total compensation for CIOs in large organizations increased by 4.16 percent, from $162,827 to nearly $170,000. CIOs in mid-sized enterprises didn't do quite so well; they received a 1.35 percent increase in compensation, from $169,498 to $171,791. For what it’s worth, CIOs still earn far less than they did during the height of dot.com exuberance: In 2000, the typical CIO brought home about $425,000; in 2001, nearly $450,000.

Even though rank-and-file IT workers are still waiting on a recovery, Janco CEO Victor Janulaitis lauded the rebound in C-level bonuses as an encouraging sign. “The return of year end bonuses is a positive sign. It has been several years since we have seen a significant number of our participating enterprises providing as many bonuses as they have this year,” he said, in a statement. “The increase in bonuses for CIOs is a leading indicator of an improved situation for long term demand and pay for all IT professionals.”

Janco Associates highlights other bright spots in its survey data, as well. For example, the pronounced downward trend in compensation for all IT workers appears to have reached an equilibrium of sorts. “At the start of 2003 there was a continued decrease in both salaries and demand for top level position[s] in large companies,” the report says. “In 2004, we see that the downward trend has stopped and compensation will increase at least for the top positions.”

In addition to IT executives, professionals in several IT specialty areas fared better than their peers. Janco Associates cited high demand for IT professionals with experience in disaster recovery, security, and Internet development.

Elsewhere, many organizations that eliminated training, planning, and infrastructure positions have started to restaff in those areas.