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Economy Exerts Pressure on Pay

Annual survey shows declines for some positions

By Margo McCall

The slowing economy is taking its toll on information technology professionals’ pay, with compensation declining for the first time since the bursting of the dot-com bubble and hiring demand falling to its lowest level in 15 years, according to a new survey.

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Overall IT compensation fell by more than 2 percent in Utah-based consulting firm Janco’s annual compensation study, with executives and those at midsized enterprises taking the largest hits. According to data Janco gathered from surveys and other sources, North American CIOs’ 2009 salaries of $168,839 were down nearly 7 percent from 2008 levels, mostly due to the cutting of bonuses and fringe benefits. Internet systems and operating systems production managers, and network services supervisors’ salaries were both down by more than 10 percent.

The mean compensation for all IT executive positions is now $142,914 in large enterprises (down 1.2 percent), and $126,021 in medium-sized enterprises (down 4.6 percent), according to the consulting firm’s survey. Software engineers’ average salaries of $76,400 dipped by nearly 5 percent from the previous year, while network services administrators’ average pay of $76,300 declined by more than 8 percent.

Reduced demand for IT workers

What’s behind the compensation declines as always is an increase in supply over demand. In their summary of the current environment, Janco analysts said they’re seeing many companies instituting hiring and spending freezes, as well as extensive layoffs, outsourcing, bonus reductions, and elimination of IT contractors. All of which has reduced demand for IT professionals.

In addition, companies have cut benefits they used to provide. Although most companies still offer healthcare benefits, employees are paying a greater proportion of the cost. And even some non-cash perks such as flexible work schedules and hours are becoming less prevalent than they were before the economic conditions deteriorated.

Seasoned professionals close to the end of their working years are putting off retirement due to declines in the stock market that have wiped out 401(k) savings. Some experienced professionals who have already retired are looking to return to the workforce for that same reason.

Effect of outsourcing

Outsourcing is also playing a role, pressuring computer operations staffs, which are the easiest to outsource. Staff-level positions at medium and large enterprises are in highest demand, especially those focused on line operations and mandated security requirements.

Within large organizations, Janco listed a number of positions with high potential for being outsourced, including VPs of technical services, directors of IT planning, data-entry clerks, database specialists, senior network specialists, and managers of Internet systems, operating system production, and systems and programming.

Positions in large enterprises with higher demand and lower risk of being outsourced include CIOs, network control analysts, network services administrators, systems analysts, and systems programmers.

Within midsized enterprises, the Janco survey identified directors of IT planning, data-entry clerks, database specialists, senior network specialists, and managers of data communications, operating system production, and technical services, as well as software engineers, Web analysts, and network technicians.

CIOs, network control analysts, network service administrators, and systems analysts and programmers had lower outsourcing potential at large companies, as did database managers and specialists, librarians, and network control analysts at medium-sized companies.

Some still getting raises

The more than 1,800 technology workers that Network World surveyed for its annual salary survey were still receiving raises, but their 2.3 percent average increase was well below the 3.7 percent inflation rate. The average salary increase for top management—CTOs, CIOs, CSOs, and senior vice presidents—was 2.9 percent, according to the survey, compared with 2.3 percent for middle managers and 2.1 percent for staff.

The results of the survey, which was conducted in mid-September, weren’t surprising. Network World survey respondents said they expected that their salaries would remain flat or increase only negligibly in light of companies’ reductions in discretionary spending. Half of the respondents felt they were underpaid, while 33 percent felt fairly compensated.

One quarter of respondents told Network World that they would be job hunting this year due either to personal choice or changes within their organization. According to the magazine, the best chances of getting hired are at companies with more than 1,000 employees, more than 100 IT staff, at least $500 million in annual revenue, located in the South or Southwest, and in the healthcare or high-technology fields.

Meanwhile, Computerworld’s survey of more than 6,800 US IT workers found that salaries and bonuses rose by 3.5 percent overall, just slightly down from the previous year’s 3.7 percent increase. CW (8 January, 2009)

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