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  • Post-Recession IT Jobs and Spending Lackluster, Surveys Say

    July 18, 2011 Alex Woodie

    Total IT spending in North America increased about 2 percent the first half of the year, according to the latest study from Computer Economics. However, the increase was less than IT spending jumped following previous recessions, as organizations spent less per user and make due with a leaner permanent IT workforce. And according to Janco Associate‘s latest IT salary survey, middle managers and non-line IT executives continue to feel the salary crunch, as compensation creeps forward slowly.

    There were a number of mixed messages coming out of Computer Economics’ latest report, which has been conducted annually for the last 21 years. 2011/2012 IT Spending and Staffing Benchmarks, which is based on a survey of about 200 North American IT executives during the first quarter of 2011, summarizes the condition succinctly:

    “Even though the general U.S. economy is technically out of recession, IT spending has not yet strongly recovered,” the report states. “Nevertheless, there are indications that the worst is behind us. IT operational and capital spending is rising.”

    The good news is that more than 60 percent of organizations were increasing their IT spending, while 22 percent were decreasing it and 18 percent were keeping it the same, according to Computer Economics. This was positive compared to 2010, when 42 percent of survey respondents reported a decrease in IT spending.

    The median rise in IT spending in Computer Economics’ study was 2 percent, compared to no change in both 2010 and 2009. Companies in the insurance, distribution, and discrete manufacturing industries reported the highest increases in IT spending, while the banking, finance, and retail sectors recorded the lowest gains. The government category was the only one to record a net decrease in IT spending, in this case by a whopping (relatively speaking) 3 percent.

    But the increase in IT spending is lackluster compared to recoveries following recessions of the past, the group says. That could change, if IT executives get their way. It might change soon, as a full 50 percent of the survey respondents say they feel that their IT budgets are “inadequate” (i.e. too low) to meet their organizations’ computer needs.

    North American businesses continue to strip the fat out of their operations in pursuit of leanness and meanness, and IT is no exception. The decrease in IT spending by the government, obviously, is driven by forces other than the pursuit of profit. With so many state and local agencies in de-facto bankruptcy, it’s not surprising that IT spending here would see a dip.

    As corporate profits sit near all-time highs (the third quarter of 2010 was the best of all time, according to the U.S. Commerce Department), total spending on IT–both as a percentage of revenue and on a per-user basis–continues to drop. In the case of IT spending per user, the median amount spent per user has dropped from $8,105 in 2006 to $6,667 in 2011, an 18 percent decrease. As a percentage of corporate revenue, median IT spending has dropped from 1.8 percent to 1.6 percent over that same term.

    IT Staffing and Salaries

    With efficiency being one of the main goals of business, it’s no surprise to learn that there are big pressures on IT staffing levels and salaries in North America. Computer Economics reports that while 60 percent of organizations are increasing IT spending, only 34 percent are increasing their IT headcount. It appears that organizations are reluctant to hire full-time employees when they can save money by outsourcing tasks as needed, Computer Economics hypothesizes.

    Meanwhile, Janco and its survey division, eJobDescription.com, have released the latest installment of their semi-annual IT salary survey. The figures tell a similar story as told by Computer Economics: that things are getting better, but very slowly and not equally across the board.

    According to the Janco and eJobDescription.com data, regular IT staff at midsize and large enterprises saw annual salary increases of .1 percent (to about $62,000) and .37 percent (to about $66,000), respectively. Mid-level managers at midsize companies barely did better, increasing about .12 percent (to about $73,000), while mid-level managers at large enterprises increased .48 percent (to about $80,000).

    While overall salaries are on the rise by fractions of a percent, chief information officers (CIOs) are increasing their salaries faster than the group as a whole. Janco reports that CIO salaries at large enterprises increased by almost 1.75 percent, to about $185,000, while CIO salaries at midsize companies increased about .5 percent, to about $163,000.

    As a whole, the total mean compensation for all IT professionals crept up by 0.35 percent since June 2010, to $77,873. This puts the numbers back at the levels of January 2008, before the recession hit. That’s a good thing for IT workers.

    Here’s another good thing: the total number of people employed in IT-related fields (including telecommunications) increased by 55,000 over the past 12 months. This is driven by strong hiring in the healthcare industry, where deployment of electronic health record (EHR) systems is having a big impact right now. However, overall IT employment in the U.S. is flat; about 2.7 million work in IT, down from more than 3.2 million in 2000.

    While layoffs seem to have tapered off, cost reduction is still the rule of the day, Janco says in its report. Instead of hiring full-time employees, Janco reports an increase in the number of part-timers and contractors hired for specific projects. They are also reducing the overall benefits they pay to IT workers, such as by making them pay a greater portion of their healthcare costs. Instead of paying higher salaries, companies are using non-monetary ways to attract talent, such as offering flexible schedules.

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Volume 20, Number 25 -- July 18, 2011
THIS ISSUE SPONSORED BY:

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Table of Contents

  • Still Wanted: A Power-i System of Systems
  • Post-Recession IT Jobs and Spending Lackluster, Surveys Say
  • Hosted Services And Great Expectations
  • Mad Dog 21/21: Smart Fellers
  • Hands-On, Virtual Training for i Coders and Admins
  • Reader Feedback On Mad Dog 21/21: In Hack Signo Vinces
  • Sundry Summer Power Systems Announcements
  • CEOs and CFOs Pull Rank On CIOs In IT Purchasing Decisions
  • Microsoft Spends Big Big Bucks On Partner Channel
  • SAP Wants Oracle’s TomorrowNow Award Cut Way Down

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