IT Salaries Take A Hit
by Paula Santonocito.

Two new reports point to what may be some surprising news regarding IT salaries.

Despite an ongoing demand for information technology workers, technology staffing firms  indicates that IT starting salaries will grow by an average of only 0.1 percent this year, which is significantly lower than last year's 8.4 growth forecast. A salary survey by management consulting firm Janco Associates, on the other hand, shows that, for the first time since 1985, there has been an overall decrease in the benchmark salary for senior IT executives.

What does this mean to HR? Are all IT workers now available at bargain rates?

Different Approaches

The  Janco's 2002 Salary Guide  is an analytical undertaking that focuses strictly on data. The firm looked at earnings of more 47,000 individuals in 71 well-defined position categories. Respondents included 246 large companies and 336 mid-size firms throughout the United States and Canada. The pharmaceutical, insurance, health care, and telecommunications industries are represented, along with other fields.

Janco presents its findings in detail. Salaries are organized by position, as well as geographical location.

What the Numbers Say

According to the survey, the area most significantly affected by the economy is networking/telecommunications.

Janco reports a benchmark salary decrease of more than 20 percent in the categories of both manager and supervisor of network services at mid-size firms. This, however, is offset somewhat by an increase in excess of 20 percent in the position category called network services administrator at companies of the same size.

Why such a discrepancy? Janco attributes it, in part, to the elimination of management layers at many firms.

The  firm also reports that, in the U.S. and Canada alike, vice presidents of information services and vice presidents of technology are losing ground when it comes to salaries.

Regardless, Certain Fields Key

Yet, while the new benchmark may be lower for many position categories, some jobs are commanding higher salaries.

The salaries for disaster recovery specialists in the U.S. are up.  The survey shows that new emphasis has been placed on IT positions related to security. All of these position categories reflect higher average salaries.

What the Experts Recommend

While the firm acknowledges that salary is important, it notes that other factors come into play. These include:

• staff recognition and bonus programs;
• training opportunities;
• company reputation;
• advancement potential; and
• corporate culture.

It advises hiring managers to focus on those factors that are important to individual candidates, and to "sell" the company.

Yet, M. Victor Janulaitis, CEO of Janco Associates, cautions that salaries cannot be ignored.

"The salaries are what you need to pay to get the top performers," he tells HRWire.

The Analysis

Janco surveys IT salaries every six months, and company data goes back more than 10 years.

According to Janulaitis, recent decreases in certain IT position categories are attributable in part to the economy. Widespread layoffs and dotcom failures have created a surplus of IT professionals, particularly at the senior level.

But, then, as the economy rebounds, won't IT salaries again escalate?

Although salaries may increase at some point, Janulaitis says it isn't expected to happen anytime soon.

"IT salaries are a trailing indicator and will probably stay flat for the next few quarters," he explains.

Furthermore, although the current salary survey factors in the economy, Janulaitis notes that it doesn't fully take into account the delayed effect of Sept. 11 and the move away from metropolitan areas for some IT and back office operations, which are also likely to have an impact.

The Outlook

Still, various reports from the U.S. Bureau of Labor Statistics appear to indicate that, long term, the demand for IT professionals will be greater than the availability of workers.

If this is the case, shouldn't companies count on paying hefty increases down the road?

According to Janulaitis, the government figures don't tell the whole story.

"I think the B of L (Ed. note: Bureau of Labor) statistics do not take into effect the new productivity improvements with new software tools. Yes, there will be high demand, but the start-up times will be much quicker, and supply will meet demand rapidly without the traditional rapid inflation in salaries," he says.