IT Salaries, Staff Counts Reflect Weak Economy

January 23, 2012 Dan Burger

The eagle flies on Friday is an old-time euphemism for Friday is payday. For a lot of folks these days, the eagle doesn’t fly as high as it once did. And others aren’t so sure that eagle isn’t really a vulture circling overhead.

Whether you are an IT pro with a paycheck or a resume in your hand, IT salary reports like the one just released by Computer Economics makes for interesting reading. The same is true if you’re expanding an IT staff or looking for a baseline to compare your IT salary budget with the numbers Computer Economics is putting up on the board.

For the average IT worker, 2012 looks like a good time to delay any new car purchases. In fact, you might even want to delay any new shoes purchases. IT salaries are not expected to keep pace with inflation. On average, IT organizations are budgeting for 2.8 percent raises. Meanwhile if you plan on eating like you are accustomed to and keeping as warm in winter and cool in summer as last year, you should know that food and energy took a 3.4 percent bite from your the wallet in 2011.

On either side of the median 2.8 percent salary increase, there’s little change to distinguish meaningful opportunities for a pay increase. Companies at the 25th percentile are raising IT salaries by 1.8 percent and those at the 75th percentile are increasing pay at only3 percent. A 3 percent bump amounts to $1,500 based on a $50,000 per year salary. According to Computer Economics’ report, these salary increases show little variation based on job function or level.

Things get a little more interesting when considering the trends in economic improvement, slight though they may be. Turnover rates based on the best and the brightest seeking better paying jobs are expected to hit 5 percent. Last year it was 4 percent and it was 2 percent and 3 percent in 2010 and 2009, respectively. A 5 percent turnover rate was typical prior to the 2008 recession.

To make that leap to a new job with greater financial rewards, you’ll find it easier if you have acquired skills in mobile computing and/or infrastructure virtualization. Those kinds of skills advance you to the in-demand category.

For the IBM i propellerheads, mobile application development skills should serve you well, as would SQL, advanced RPG, DB2, Web application development, along with project management.

Because I often hear that companies can’t find people with the right combination of skills and people who seem to have the in-demand skills can’t seem to find employers, I asked Computer Economics president Frank Scavo why this disconnect occurs.

As he rightly pointed out, mismatched candidate expectations and employer requirements have existed forever. He notes this is especially true for new technologies and for specific jobs in smaller communities. “In such cases,” Scavo says, “employers either have to pay more and be willing to relocate people into their area, or contract the work out. In some cases, people with highly demanded skills may not be willing to relocate to areas that they find undesirable.”

“On the employee side, there are many reasons a candidate may feel he or she has the right skills for the job but still may not be hired,” Scavo continued. “The candidate may believe he or she has the skills, but the employer may not. Or the employer may have unrealistic expectations–for example, asking for someone with five years of experience for a technology that has only been in existence for three years. That may sound funny, but these things happen. Or, the employer may not hire the candidate for reasons that go beyond technical qualifications, such as reference checking, personal chemistry or other reasons.”

Because of the high unemployment rate that badgers economic recovery, hiring forecasts create a great deal of interest. In this regard, the Computer Economics report notes 42 percent of U.S. organizations expect to be adding to their IT staff headcount in 2012.

Scavo offered some perspective on this for IT Jungle.

“In the spring of 2011–about 10 months ago–this figure was 34 percent. In the spring of 2010, the figure was 28 percent, and in the spring of 2009, the figure was 27 percent,” Scavo pointed out. “So, as you can see the hiring picture has been improving over the past three years. But hiring is still not robust. By way of comparison, in 2007, when the economy was relatively healthy compared to today, 52 percent of IT organizations were planning to add to IT staff headcount.”

To finish out the statistics on hiring predictions, 41 percent say they expect no staffing changes and 17 percent admit there are IT staff cuts in the forecast. “Long term, over the past several decades, information technology has been a growing function within most business organizations,” said Scavo. “Therefore, the natural state of affairs is to have increasing IT staff headcounts. The fact that fewer than half of organizations are planning to add to IT staff counts is a clear indication that the recovery is not robust.”

Computer Economics’ report is based on the survey responses of 130 IT organizations based in the United States. The survey was conducted in the fourth quarter of 2011. The entire report, the media just gets a peak, is available for $395 on the Computer Economics website.