In-Depth

Careers: Hiring Is Up But Salaries Are Flat

IT hiring activity looks to be on the rise, but IT compensation levels are stagnating.

• By Stephen Swoyer
• 06/14/2005

As is so often the case these days, the latest IT job and salary news makes for a decidedly mixed bag.

On the plus side, a study from a prominent IT staffing firm once again predicts an uptick in CIO hiring for the coming quarter—encouraging news, to be sure. On the downside, of course, a new report released last week by a management consulting firm found that IT salaries are mostly flat, and that executives continue to fare much better than rank-and-file IT workers.

Every three months, information technology staffing firm Robert Half Technology surveys more than 1,400 enterprise CIOs to assess their hiring plans for the upcoming quarter. The Q3 results are now in, and Robert Half says that 17 percent of CIOs will make changes to their existing IT staff levels. Of these, the majority (82 percent) plan to add additional staff, while the remainder anticipate cutting staff levels. According to Robert Haff, this translates into the most encouraging hiring news in three years.

Most CIOs remain wary, however. “Businesses are showing increased optimism in their hiring plans, but they remain realistic,” said Katherine Spencer Lee, executive director of Robert Half Technology, in a statement. “CIOs are carefully evaluating their key requirements and adding full-time staff only when they identify a long-term need for a particular position or skill set. In the interim, they are bringing in project professionals to help core staff address short-term workload spikes and move ahead with select initiatives.”

Outsourcing Keeps Rank-and-File Salaries Steady

As you might expect, Robert Half’s promising news was, to some extent, mitigated by more sobering news from another source, this time a study conducted by management consultancy Janco Associates.

According to the company, overall compensation for IT professionals has remained more or less flat in spite of an improving job market. Overall, the management consultancy found, total compensation for IT pros has increased by just 0.2 percent since January, to $77,249.

What accounts for such lackluster performance? Janco CEO Victor Janulaitis fingered a familiar bogeyman: outsourcing. It’s not that organizations are outsourcing all or even most IT functions, of course. Instead, they’re typically outsourcing their most expensive IT tasks, leading to the elimination of some well-paying positions. This has the effect of depressing average compensation for all IT pros.

That's not the case for executives. According to Janco, compensation for executives at large enterprises with $500 million or more in revenue rose by 1.6 percent (to $140,760); for large enterprise IT pros, however, compensation fell by 0.3 percent, to $65,247. One consolation, of course, is that IT executives aren’t insulated from the effects of a lackluster job market: Total compensation for CIOs dropped from $169,601 in Janco’s January survey to $168,424 this month.

Both executives and rank-and-file IT workers seem to be doing just fine in medium-sized enterprise environments: Total executive compensation grew by 9.8 percent (to $124,472) in companies with revenues in the $100 million to $500 million range. Similarly, total compensation for rank-and-file IT pros increased by 4.5 percent (to $59,574) in the medium enterprise.

All’s not lost, of course. Most IT pros still command salary and compensation that’s at least commensurate with their experience—particularly for IT professionals with extensive productions and operations experience.

“Compensation for IT professionals has increased slightly in the past six months. Hiring has remained relatively flat, but we are seeing an increase in demand for IT professionals with extensive production and operations experience,” Janulaitis said in a statement. “Janco’s forecast for the next six months for compensation is that it will increase as will hiring demand.”

Robert Half’s most recent survey had other encouraging news, too. Among CIOs who expected to add IT staff in the coming quarter, for example, 38 percent cited business growth as the primary driver—up from 35 percent in Q2. Elsewhere, 21 percent of CIOs cited increased customer and end-user support needs as a major driver. Large enterprises plan to expand their job rolls at an encouraging rate: 21 percent of CIOs at large firms plan to add staff, while just four percent project declines in personnel.

CIOs are especially in the market for Microsoft-oriented skills: 77 percent of CIOs reported a need for Microsoft Windows administrators, while nearly half (47 percent) said SQL Server management was a hot specialty. Perhaps in testament to just how rapidly companies are expanding their overall employment rolls, CIOs cited help-desk/end-user support as the job responsibility experiencing the most growth. That’s a first in Robert Half’s quarterly survey.

“Newly initiated projects such as systems installations and the development of Web-based applications necessitate additional support staff to help users take advantage of new tools,” said Lee. “In addition, as firms become better able to offer promotions to retain and reward those who took on more responsibilities during the downturn, the entry-level help desk positions these individuals occupied must now be filled.”