IT Shops Struggle to Control Personnel Costs

Published: August 10, 2009

by Timothy Prickett Morgan

According to a new report out of Gartner, IT managers and chief information officers are having a tough time getting their arms wrapped around personnel costs in their shops.

Gartner has just put its 2009 IT Market Compensation Study out, which is based on surveys it performed back in March at 325 IT organization in the United States, and some 66 percent of the respondents to the survey said that they did not have a formal IT workforce planning process that would "enable them to leverage opportunities presented by this downturn."

I don't find that shocking. I am a bit perplexed what the other 34 percent were thinking, in fact.

Anyway, there are some more concrete bits of data in the Gartner compensation report, including the fact that 64.1 percent of those taking part in the survey said they would put hiring on hold for 12 months (at the time, between March 2009 and February 2010), with the remaining 35.9 percent saying they were going to be adding staff.

"Considering that workforce-related spending is the largest part of the IT budget, one of the primary challenges for CIOs and HR leaders for the remainder of 2009 and into 2010 will be finding ways to control labor costs while engaging and retaining the workforce," explains Lily Mok, the research vice president at Gartner who does compensation tracking. "Since it will still take time for the economy to establish a new normal, the impact of this recession will continue to be felt on an organization’s bottom line, as well as on the overall job market. This could cause companies to consider making further cuts in workforce-related spending."

Gartner's research indicates that companies are having trouble finding IT system architects, database administrators, ERP system programmers and analysts, project managers, Web and Internet architects, and Web application programmers. And not because there are not plenty of candidates, but rather because the people that are knocking on their doors and email boxes don't have the skills and experience that companies want. And to make it more difficult, median salary increases are on the decline in IT shops. Averaged across all of Gartner's survey respondents, salary increases for IT staff are projected to be 3 percent, down from the 3.5 percent level in 2008. And 2010 is shaping up to have an average increase of only 3 percent, too. By the way, payrolls outside of IT are averaging only a 2.8 percent increase in 2009 and a 3 percent increase in 2010, based on budget expectations when Gartner did its survey back in March, so don't feel slighted. IT personnel are in the same boat as all other employees.

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