Volume 18, Number 2 -- January 12, 2009

IT Jobs 2009: The Dot-Com Bubble Burst Was 'A Cake Walk'

Published: January 12, 2009

by Timothy Prickett Morgan

Trying to get a handle on how the IT job market is doing is not an easy task. If you look at data from the U.S. Department of Labor and peel out the sections of its monthly jobs reports to look at IT manufacturers and services companies, then the layoffs have not been so bad. But, of course, the Bureau of Labor Statistics does not look at employment and unemployment by job type and title, but rather by industry, so you can't get a real sense of what is happening in the jobs market from Uncle Sam.

If I were President of the United States, or POTUS for short, this is one of the first things I would change. You can't manage what you don't measure, after all.

Thanks to the lack of government data, the job of sussing out the employment situations of programmers, system administrators, project managers, network managers, chief information officers, and other IT people--yes, these are all people, with lives, not just numbers in a table--falls to various compensation experts, online job search engines, and IT consultancies that make their best guesses about what is going on in the IT jobs market at large based on what turns out to be a relatively skinny sample of data. We work with the data they have.

Janco Associates, an IT compensation specialist based in Park City, Utah, has just released its 2009 IT compensation study, which you can get an executive overview of at this link, and the news is not good. Thanks to a confluence of factors, including company closures, outsourcing, layoffs, hiring freezes, and retirees coming back into the job market because they lost dough in the stock market, the mean salaries in the IT space have taken a big hit in recent months because of a glut of people looking for jobs in the market.

"The job market for IT professionals is one of the worst that I have seen since the late 1970s," says Victor Janulaitis, chief executive officer at Janco. "There is a surplus of IT talent and companies are in a cost-cutting mode. The dot-com bubble was a cake walk compared to this job market." He meant the dot-com bubble bursting in late 2000 or early 2001 (date it where you will) was a cake walk, but you see what Janulaitis was getting at. The report that Janco created is based on surveys of IT shops in the United States and Canada. The company says it has "over 50,000 data points" in that database; judge for yourself what that might possibly mean in terms of the thinness or thickness of the data presented below.

At large enterprises, Janco reckons that the average IT compensation in January 2009 across all job titles was $77,367 in the United States. That is down 2.1 percent from January 2008. At large enterprises, IT salaries are holding up better than at midrange shops, according to Janulaitis. Executives at large companies averaged a total compensation of $142,914, down 1.2 percent from a year ago. IT middle management compensation is down 1.7 percent over the same time frame, to an average of $78,530, while IT staff (mostly programmers and administrators) averaged $65,956, down 0.9 percent.

At midrange companies, the staff are not paid all that much less, and they also are not seeing compensation declines as large as the managers. The average compensation for IT staff at midrange shops in January 2009 was $60,279, down 0.75 percent. The average compensation among middle managers at midrange shops has, however, fallen by 3.9 percent to $71,830, and average compensation for IT executives at midrange companies dropped by 4.6 percent in the past year to $126,031. The chief information officers at companies are seeing their compensation drop as fringe benefits and bonuses are cut. At large enterprises, compensation (based on the mean) for CIOs is $168,839, down 6.1 percent, and at midrange companies it is $163,211, down 5 percent.

Janulaitis says that bonuses are being cut all across the IT spectrum, and so is the use of outside IT contractors to do projects as companies try to trim costs. He adds that demand for seasoned CIOs is up at large companies, while demand is slack for CIOs at midrange shops. For the second time in a decade, IT professionals are putting off retirement, or coming back into the workforce, leading to a surplus of IT job seekers at exactly the time that companies are freezing their hiring or letting people go. One side effect of the supply-demand curve for IT personnel is that companies are becoming less flexible about the work environment, which means having to work on site and with a dress code in some cases.

Yeah, man. It might mean no more khakis, no more flex-time. The upside is that IT is now integral to the business, and business managers get it. But the downside is that IT doesn't get to be treated differently, as if it were a bunch of Web 2.0 startups that need to be creative with their space and time. "No longer do they have the option of being different," says Janulaitis. "For example, IT professionals now must conform to typical dress codes. If everyone wears a business suit so must the IT pros." In a survey done by rival Robert Half Technology, more than a third of managers said that formal business attire was what people should be wearing to work. So not only is compensation down, but the dry cleaning bills are gonna go up now, too.


IT Doing Better Than Other Careers in 2009

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ChangeWave Plots a 'Historic Collapse' in IT Spending

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Editor: Timothy Prickett Morgan
Contributing Editors: Dan Burger, Joe Hertvik, Brian Kelly, Shannon O'Donnell,
Mary Lou Roberts, Victor Rozek, Kevin Vandever, Hesh Wiener, Alex Woodie
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