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Outsourcing hits bonus payments

Bonus payments for IT staff without formal IT qualifications are on a downward spiral as more companies turn towards offshore...

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Bonus payments for IT staff without formal IT qualifications are on a downward spiral as more companies turn towards offshore outsourcing.

For the forth quarter in a row, offshore outsourcing has had a negative impact on bonuses, an analysis of pay rates in the US and Europe by Foote Partners has revealed. Over the past two years bonus rates for staff with application programming and enterprise applications development skills have fallen by 20%.

"This is premium-skills pay that has traditionally been used to retain and motivate workers. As more programming work is transferred offshore, or at least directed away from IT full-timers, premium pay becomes unnecessary," said director David Foote.

Bonus payments began to slide in 2003. The skills affected closely matched the skills that were being outsourced, the research revealed. Pay bonuses offered for IT staff without recognised certificates fell by 2% during the year ending 2004, to an average of 6.6% of base pay - equivalent to a 16% decline since 2001.

Over the past 12 months IT professionals with networking, messaging, enterprise applications, and application development skills have seen the largest drop in bonus pay.

IT professionals with recognised qualifications and certificates have been less badly hit by the decline, however. Their bonus pay fell by an average of 5.6% in 2003, equivalent to 6.5% over the past two years, buoyed by strong demand for workers with project management, information security, enterprise systems and network skills.

The survey of 42,000 North American and European IT workers found that the most sought-after skills were information security, networking, project management, IP telephony, Linux and web skills.

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