After the pain of the past two years, the IT industry is showing some signs of recovery. Nicholas Entiknap sums up the findings of the latest quarterly survey of IT jobs and salaries which have left industry experts feeling cautiously optimistic.
The latest issue of the Computer Weekly/SSL salary survey provides clear evidence that the long slump in the IT recruitment market is at last nearing an end. Contract jobs advertised are on the increase, as are the jobs advertised in magazines, and the rate of fall in the jobs on offer on the web is now declining.
These signs of new life in the recruitment market are consistent with findings elsewhere. The latest Computer Weekly UK IT Expenditure Report shows that computer departments' spending is rising. Last month, analyst firm Gartner forecast that European IT expenditure would rise by between 3% and 4% in 2004.
Although recruitment agencies stress the danger of counting unhatched chickens, they also feel the outlook is more promising than it has been for a long time. "We are seeing a lot more confidence, a lot more activity in the market and are getting a more buoyant feel. I would say we are cautiously optimistic," says Paul Smith, group marketing director of recruitment consultancy Harvey Nash.
Cathy Walsh, managing partner of recruitment specialist the Triangle Partnership, agrees. "People are cautiously optimistic," she says, adding a note of caution of her own. "We call it the Bisto smell. We can smell the gravy, but we do not yet know when we are going to eat."
The first positive finding for the survey, conducted by Salary Services (SSL), a provider of IT salary, appointments and trend data, for the third quarter of 2003, is that jobs offered to contractors increased, relative to the same period last year, by nearly 20%. This was the second consecutive quarterly year-on-year rise and the fourth in a row where the number of jobs has risen relative to the previous three-month period. The total number of contract jobs on offer was the highest since the first quarter of 2002.
Average salaries offered in Q3 2003
This is significant because the market for contractors usually anticipates trends in the market for full-time positions by a few months. The last time the market for contract jobs was rising while the full-time market was still in decline was in 1992, which heralded an upturn in the permanent market which lasted for six years. "Over the past 30 to 40 years the contract market has always showed the way to the permanent market," says SSL managing director George Molyneaux. It seems likely that the number of full-time jobs will start to increase during the first half of next year.
The growth in contract jobs was greatest in inner London where there was a better than average growth in software houses, financial institutions and especially the public sector.
The increase was not uniform across job types. Advertisers were offering contracts - particularly to systems staff, who saw the number of opportunities rise by more than 30% from a year ago - and to database specialists, who had 40% more jobs to choose from. In contrast, network staff saw 15% fewer contracts on offer and systems engineer contracts fell by more than 20%.
This discrepancy highlights a change in the nature of the recruitment market, compared with the pre-recession IT job market in the late 1990s. One major change is the growth in overseas development. "There seems to be more offshore outsourcing of development," says Molyneaux. Smith agrees. "A huge amount of development and business processes are going offshore, which will serve to slow recruitment down," he says.
Full-time jobs advertised on the web in the last quarter were still in decline, with the number on offer being just under 50% of the total for the third quarter of 2002. However, this rate of decline is falling.
The fall was fairly even across all types of job categories, although jobs for web specialists fell more than other categories, by 80%. Jobs for developers, programmers and software engineers were also down by more than the average, again pointing to the impact of offshore development. "Developers are coming under pressure in this country," says Smith. In contrast, the requirement for managers, PC support and technical support staff fell by little more than 30%.
Regionally, the decline was also uniformly distributed. The smallest decline was in the north-east (for the second quarter in succession), and the largest in neighbouring Scotland (for the third quarter in succession).
Jobs advertised in magazines increased relative to both the previous quarter and the same quarter in 2002. This was the first year-on-year quarterly increase in this area for nearly five years. It is another positive sign, as magazine advertising is used predominantly by IT sites, but jobs on the web are almost invariably placed by recruitment agencies. So an increase in magazine advertising tells us that IT managers are beginning to have money to spend on recruitment again, and the decline in web advertising is evidence that agencies are keeping their hatches firmly battened down for the time being.
The growth in magazine advertising came only in London and Scotland - all other regions continued to cut back. The public sector increased its magazine advertising by more than 16%, and software houses placed more advertisements during that quarter.
The salaries on offer still reflect the reality of a bear market. Rates offered to contractors are, on average, the same as a year ago. However, this is an improvement on the two previous quarters, where rates fell. Molyneaux says this is a good indicator. "There does seem to be a lot more activity," he says.
In the permanent jobs market, the average salary rise across all job positions was 1% - the same as this time in 2002, and slightly better than during the first half of 2003. For IT directors it was a depressing quarter. Advertised salaries suddenly fell by an enormous amount, from an average of nearly £90,000 to just over £70,000.
Managers in particular found advertisers in a less than generous mood, with salaries across all types of position falling by 3%. But there is good news for developers and programmers, who did better than most with typical salaries up by between 2% and 3%.
The skills in demand have remained much the same throughout the year. SQL and Unix are in first and second places in the quarterly skills league table, as they have been for the whole of 2003. Measured among user organisations only, SQL is again in first place, but Unix drops to third behind Microsoft Office.
The clearest trend in 2003 is for an increase in demand for new wave Microsoft skills. Demand for expertise in .net and C# has been steadily increasing and both are occupying their highest ever positions in the quarterly league table, at the 13th and 25th places respectively. They are the only two skills in the top 25 to appear in more web advertisements than one year ago. Software houses are stimulating the most demand for .net - it is now 12th in that sector's league table.
Windows 2000 is also in its highest ever position, one place above .net. ASP is just three places lower, the same position as this time last year. Microsoft is doing well with its Exchange groupware product, which is up seven places on one year ago, at 17th. Rival product Lotus Notes is moving in the opposite direction and falling nine places to 47th.
Further down, Crystal Reports has been consistently rising up the table and it entered the top 50 for the first time this quarter at number 50 - 18 places higher than one year ago. Just below it in 53rd place is Apache, which is also rising steadily and is nine places up on 2002. Other open source software does not feature prominently in the table apart from Linux. It has been regularly in the lower reaches of the top 25 during 2003 and is now 24th. That is well below Solaris (but above AIX and HP-UX), and Linux still features in less than a quarter of the number of advertisements specifying Unix.
Downward movers include, most surprisingly, TCP/IP, which has fallen 10 places (and four places since one year ago) to 21st. This has ended a run of 45 consecutive quarters in the top 20, dating back to the beginning of 1992. It will be interesting to see whether this dramatic fall is a statistical glitch or the start of a significant trend.
The enthusiasm for expertise in embedded applications, which was such a feature of the past year, has abated during 2003 and this skill is down 10 places to 23rd. In the software house sector, it has fallen from 15th to 22nd.
Demand for Assembler language experience fell sharply during the quarter and is down 25 places to 65th, its lowest ever position. But perhaps it is remarkable there is still a demand. The two languages introduced in the 1950s to replace Assembler, Cobol and Fortran, are lower still at 77th and 139th respectively, while the most recent contender, Ada, languishes in 113th.
Some more modern skills have also endured a bad quarter. RPG400 has fallen out of the top 100 for the first time, while Ethernet is in 100th place. Novell has fallen outside the top 50 to 52nd. Perhaps more surprisingly, GSM is down to 58th, although it seems only yesterday that mobile phones were a novelty.
About the survey
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, in the trade press and the quality national daily and Sunday newspapers. The posts advertised are broken down into 57 job categories; within each it 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 region. It also provides a breakdown for the major job categories of the technical skills most in demand. In each analysis, it details the average salary on offer for each of the past five quarters. The price of a single issue of the survey is £250. An annual subscription is £350 (four issues and a free copy of a Windows-based CD which allows you to select by region, industry and software skills for a specified job type). 'www.salaryservices.co.uk