All the signs are that the recovery in the IT industry is putting on muscle, and this is translating into bigger pay packets for many IT professionals. Nicholas Enticknap reports on the highlights from the latest SSL/Computer Weekly salary survey
The recovery in the IT recruitment market is now accelerating. Permanent IT jobs advertised on the web have increased for the third consecutive quarter, and in the three months to June they were up by a third on the same period in 2003, according to the latest issue of the Survey of Appointments Data and Trends, produced by recruitment market specialist SSL for Computer Weekly.
Jobs advertised in magazines, which are thought to reflect demand from user firms more accurately, nearly doubled over the same period. The position is looking rosy for contractors as well, with vacancies up by a half.
The substantial increase in growth this quarter is generating renewed optimism in the recruitment business. "I am totally convinced we have turned the corner. Our IT recruitment business has substantially picked up," says Paul Smith, marketing director of recruitment group Harvey Nash.
While the recession may be over, it was a very long and deep trough, and the increase in job advertising taking place this year is relative to a very low base. The number of jobs advertised on the web is still less than two-thirds what it was two years ago, and less than a quarter of what it was three years ago.
SSL managing director George Molyneaux believes that the outsourcing of jobs to the Far East and Asia is slowing recovery in the UK. "A lot of software houses with large-scale development projects are going overseas. They are also using overseas companies' staff in the UK on a pure cost-saving basis. To what extent this is affecting the market I am not sure: it is certainly having an impact."
One sign that the recovery is now well established is that the salaries offered increased markedly in the second quarter. The median rise across all job positions was 4.0%, the first time for three years that it has been above the headline inflation rate. To put it into perspective, the median increase never topped 1.0% in any of the past five quarters, and the 4.0% rise is the highest in any quarter since the peak of the Y2K boom in the middle of 1999.
Rates in the contract market also illustrate the change from a buyers' to a sellers' market: they were up by a median 5.7% this time. A year ago, rates offered to contractors were on average 7% lower than the year before.
Premium for quality people
Smith says the low salaries and rates offered over the past couple of years have been because the surplus of people in the job market meant that potential employers were able to drive some hard bargains. But "that surplus is now beginning to reduce, so we are having to pay a premium for quality people," he says.
Another significant change in the figures is that the peak growth by job type was for system developers. This suggests that users are starting to undertake mainstream development again, a conclusion reinforced by the above-average growth in demand for business analysts. There is a perceptible switch away from business process re-engineering, underlined by a fall in demand for ERP generally and for SAP in particular, and for CRM.
The picture is broadly similar in the contract market. Here the hourly rates offered to developers and business analysts work out at more than double the salaries on offer to equivalent permanent staff.
Demand for software engineers continues to slacken, as it has been doing for over two years now. Full-time positions increased by only half the average amount, while contractor positions actually fell over the year. This is because the sectors that use software engineers most are not sharing in the general market recovery.
According to Molyneaux, "Software engineers are looked for by the electronics and comms companies - that is where the term is meaningful: also in aerospace and high-tech areas like Formula One, where they are looking for stress engineers."
The recovery in the market is certainly not uniform across all industry sectors. The IT industry and the financial services sector are leading the way, with the jobs on offer up by a third compared to a year ago, and these two groups of employers combined accounted for well over half of all IT advertising on the web in the second quarter.
Manufacturing industry, in contrast, remains in decline, with recruitment falling by a third relative to a year ago. The retail, media and public sectors are in the middle, with all three showing double-digit growth but well below the overall market average.
Areas of highest growth
The best region for job seekers to look in the second quarter was London, where jobs on offer were up by a half (and by as much as 80% in the contract market). This is where the financial services sector is concentrated, but other sectors must also be stepping up their recruitment to produce such large growth.
There was healthy growth also throughout the Midlands (where recruitment activity really took off after a quiet first quarter) and in the north-east. In contrast, there was hardly any growth at all in the north-west and in Wales, Scotland and Northern Ireland.
The uneven surge in demand across job type, sectors and regions has produced some major changes in the quarterly league table of skills most in demand. The most notable change is SQL's fall to fourth place after a run of eight consecutive quarters in first place.
The new number one is Unix, which was last on top in 2001. Among individual types of Unix, there was growth in demand for Solaris and AIX, but not for HP-UX. Most significant, though, is the growth in the number of Linux jobs on offer. Linux has entered the top 20 for the first time this quarter, and also for the first time has moved above Solaris.
Java is looking tasty
Java is the new number two, its highest position for three years. Demand for Java expertise increased by more than double the overall market average in the second quarter. It is the skill software houses value above all others: they specify it in their advertisements more than half as much again as any other language.
The league table makes pleasant reading for Microsoft. Office has moved up to number three, while SQL Server is seventh and Exchange 16th. All three are in their highest positions ever. Lower down, two skills which are quarter by quarter moving up the league table are Prince (up 11 places this time to 33rd) and Crystal Reports (up 15 to 39th).
Skills that are less in demand this time include SAP, which is down nine places to 28th. This has been up and down the table over the past four years, rising to as high as 12th two years ago. Its decline this time is doubtless temporary, and reflects the failure of the manufacturing sector to share in the recruitment recovery of the other sectors.
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 55 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 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 costs £350 and includes four issues and a free copy of a Windows-based CD which allows for selection by region, industry and software skills.