Salary survey: Green shoots grow stronger

Prospects for IT jobseekers continued to brighten as 2004 drew to a close. There were 20% more jobs on offer in the last quarter than in the preceding three months, and more than double the number there had been in the final quarter of 2003. These findings are from the latest issue of the SSL/Computer Weekly Survey of Appointments Data and Trends.

There is now no doubt that the recovery from the low point of 2003 is well under way, and the relatively modest growth rate is convincing market observers that matters will improve for a long time to come.

"The market is increasing by a few per cent every month," says Richard Knott, sales director at jobs website Totaljobs. "There are 26,000-27,000 jobs on our site at present; at this time last year there were about 20,000.

"I am happy the market is increasing slowly. Solid gradual growth is more sustainable than short-term highs and lows," he says.

Knott sees recovery proceeding for several years, if no unforeseeable factor intervenes. "I think we are 20% of the way through the upwards turn of the business cycle," he says. In the IT job market, that cycle started a year ago, so things look promising through to 2008. For 2005, Knott foresees "double digit growth" in terms of jobs advertised.

Paul Smith, operations director at recruitment specialist Harvey Nash, agrees. "Over the next four to five years there will be steady, but not explosive growth," he says.

Life remains tough for everyone other than the high-flyers. Although jobs over the whole of 2004 were two-thirds up on 2003, they remain two thirds down on 2001. The IT jobs market now is very different from its last peak period in 1998-99. The biggest difference lies in the way you apply for a job. In those days you scanned the newspapers looking for opportunities; today you surf the net. IT jobs advertised on the web accounted for 97% of all positions advertised in the last quarter.

Another major difference is that many jobs have disappeared overseas. Organisations are subcontracting development work out of the UK in large numbers, particularly to the Indian subcontinent, but increasingly to places further east, such as Vietnam.

Harvey Nash is a company active in this area, and recently teamed up with market analysts Mori to measure the scale of the offshore development market. Smith says more than half of UK firms have turned to overseas developers at some point in the past four years. "The driving force is the need to get cost reductions, to improve efficiency and so deliver competitive edge," he says.

Harvey Nash found that the effect of this trend is to increase the average skill level of the IT jobs that remain in the UK. More than half the IT jobs lost overseas in the past four years are classified for the purposes of this survey as unskilled (such as helpdesk functions) or semi-skilled (unskilled developers and infrastructure support staff). In contrast, more than two-thirds of the new jobs created in the UK over the same period were for graduates and other well-qualified professionals.

The message is, says Smith, that "people have to make sure they are in the top tier of skills, quality and capability to progress their careers. Quality people will find jobs, but people who are not developing their skills will find it more difficult to move."

He adds, "Think commercially, rather than just technically. That goes for developers as well as project managers and chief information officers."

Detailed findings of the SSL survey support Smith's view. The salaries offered to developers, analysts, programmers and PC support staff all fell relative to a year go, but the average wage advertised for senior versions of all these posts rose.

From the corporate point of view, the cost reductions gained from offshore IT development have to be set against two disadvantages: the effect on staff morale and the difficulty of maintaining control.

The negative impact on the morale of existing staff has to be taken into account when deciding whether to move a development project offshore. Paul Smith says this is not usually a problem once a development project is under way, provided the necessary staff consultation took place beforehand.

The management control issue is a thornier problem. Knott says, "Some firms have put work offshore and regretted it. The result is technically good, but it does not necessarily fit with the business. IT development work is at the core of the business, so if it goes wrong, it can cost millions of pounds."

In times of growth, companies look rather to build and to bring in key people as permanent members of staff. That is what is happening in the UK IT recruitment market now. The market for contractors is still flourishing, with well over double the number of positions on offer compared to a year ago. Demand is particularly strong for mainstream development and analysis professionals. The hourly rates offered are more than double those implicit in the salaries offered to permanent staff.

The biggest growth in demand was for contractors with networking expertise. The number of posts on offer more than trebled compared to last year, and the rates on offer rose correspondingly, standing at 15% up on a year ago.

Salaries on offer to permanent staff stabilised during the quarter after exceptional growth during the middle of 2004. Typically, salaries were 1.3% up on a year ago.

Curiously, employers were at their most parsimonious when it came to attracting senior staff. IT manager salaries were 7% down on a year ago and stand at their lowest level since early 2002. The remuneration offered to consultants fell by nearly as much and salaries there are now on average below £60,000 for the first time since the Y2K boom started gathering momentum in the mid-1990s.

The skills league table shows no great changes this time. We are in a period of consolidation after the internet revolution changed the nature of the game. The new-wave skills developed to meet the requirements of web-based development continue to grow in popularity, with .net (10th) and C# (14th) rising to their highest ever positions. Demand for expertise in these products grew more than for any other of the top 25 skills.

In consequence, some older products have slipped to their lowest ever positions. It is no surprise to find that this category includes Cobol (98th), VMS (105th), and Cics (130th). Also now to be included among legacy products are Lotus Notes (53rd), Novell (58th), Informix (87th) and Ada (125th).

Meanwhile, Microsoft has continued to maintain its dominance of corporate desktops, despite the arrival of open source. Office stands proudly in second position in the table having displaced Java, which still remains the most popular programming tool.

How is the survey conducted?   

This article is based on information contained in the SSL/Computer Weekly Quarterly Survey of Appointments Data and Trends.  

The survey analyses advertisements for IT professionals on the web and in the trade press and the quality national dailies and Sundays. It is primarily intended for recruitment agencies and CIOs with a substantial recruitment requirement. 

The posts advertised are broken down in the survey into 55 job categories. Within each job category, the survey provides details of the number of posts advertised and the average and median national salaries offered for the last quarter and for each of the previous four. 

The survey provides further analyses within each job category by platform type, industry sector and regional location. It also provides a breakdown for the major job categories of the technical skills most in demand. In each analysis, it again details the average salary on offer for each of the past five quarters. 

The price of a single issue of the survey is £250, and for an annual subscription is £350. This covers four issues, and includes a free copy of a Windows-based software product on CD which allows selection of combinations of region, industry and software skills for a specified job type. Readers can order it at  www.salaryservices.co.uk