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Compensation Takes a Dip

Wages, benefits, and bonuses all hit

Working and unemployed IT professionals still have much to worry about, as companies cut wages and fewer high-tech positions open up due to attrition. Janco Associates’ Mid Year IT Salary Survey indicates that rather than improving, compensation for IT workers is actually on the downslide as companies continue to hunker down for a long economic recovery.

Job Trends

The third-quarter data shows that since November 2008, the IT sector has lost nearly 250,000 jobs and is 6 percent smaller than its peak of 4.1 million jobs. Layoffs continue, even though some high-tech companies report that sales are rising. The Park City, Utah-based advisory firm estimates that compensation for IT professionals in 2009 has declined by the largest amount in nearly two decades.

And the worst doesn’t seem to be over. Market-research firms weighing in on what we can expect in the new year aren’t optimistic. Janco predicts that IT budgets will decline another 1.5 percent in 2010. On the bright side, that’s only half as much as 2009. And in 2010, budgets are expected to be back in the green, with Janco estimating a slight 1 percent increase.

Recovery in 2011?

Even though there are signs pointing to the end of the recession, hiring has yet to bounce back. Janco pointed out that the 53,400 jobs posted on Dice are down from the 75,600 posted on the technology jobs board in November 2008. IT jobs continue to move overseas. Janco predicts that recovery will not happen in IT until eary in 2011.

“The current economic climate with its cost-cutting mind-sets, business closures and extensive outsourcing has put such a great pressure on the IT job market that overall pay has been impacted,” said Victor Janulaitis, CEO of Janco, in a statement. "Added to that, many baby-boomers who had planned on retiring in the next few years are not leaving the job market and you have more potential employees than positions available."

Pay and benefits down

Computerworld magazine’s recent poll of 5,861 IT professionals showed that salaries were flat in 2009, with smaller bonuses and the reduction or elimination of benefits. This year’s respondents reported more canceled projects (35 percent, compared with 25 percent last year), training cuts (37 percent vs. 25 percent), budget cuts (65 percent vs. 53 percent), salary freezes (51 percent vs. 22 percent), and hiring freezes (48 percent vs. 33 percent), according to Computerworld.

Some 44 percent of respondents reported permanent layoffs at their companies in this year’s study, up from 28 percent in 2008. And 47 percent said they were passively or actively looking for a job, either within or outside their companies, Computerworld said. Nearly half of those who weren’t looking blamed the poor job market.

Many companies have instituted hiring and spending freezes in addition to laying off staff, according to Janco. This has been augmented by extensive outsourcing, bonus reductions, and elimination of IT contractors -- which has decreased the demand for IT professionals and in some cases lowered wages, with higher-priced positions being eliminated.

The layoffs have focused on middle management and IT support staff, and many midsized enterprises have stopped hiring altogether. Though benefits such as healthcare are available, IT professionals are now paying a greater portion of that cost. Furthermore, flexible hours and work schedules are now less available. CW (18 November, 2009)

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