Pay pendulum swings employees' way as firms get anxious about losing skilled staff

Salaries and bonuses for skilled IT staff increased significantly last year, ending a prolonged decline in IT pay rates, a study...

Salaries and bonuses for skilled IT staff increased significantly last year, ending a prolonged decline in IT pay rates, a study of 46,000 IT workers in North America and Europe has revealed.

Pay rates rose in 2004 by an average of 1% to 4% and are expected to show similar increases this year, the study by the US IT research consultancy Foote Partners has revealed.

"This time last year, the skills/ pay numbers were terrible. There were overall annual declines of 6% to 8% - and an even worse two-year drop of 11% to 23% respectively for certified and non-certified technical skills," said president and chief research officer David Foote. "One year later the pendulum has swung to the other side."

The research has shown that, as the jobs market picks up, employers are increasingly concerned about the risks of losing skilled IT staff, although the talent wars are on a smaller scale to those of the 1990s.

Hiring by IT services firms accelerated in 2004 and 2005, driving up pay rates for consultants with niche skills, the research concluded.

At the same time, outsourcing has proved riskier and more difficult than employers had expected, placing them under greater pressure to retain good staff.

"IT decision makers have lately become somewhat less inclined to play the offshoring or outsourcing card when under pressure. They are looking instead for ways to keep A-team players from jumping ship," said Foote.

Although offshore outsourcing will lead to short-term IT job losses, in the longer term it will create demand for multilingual, well-travelled IT workers with technical skills and skills in global project management, collaborative work and cultural integration.

"Offshore disappointments are mainly caused by poor communication, organisations and transition management, overestimating project management, human resources aptitude and capabilities, along with lousy cultural integration and supplier relationship building," said Foote.

The emergence of compliance regulations in Europe and the US will stimulate greater demand for IT staff with infrastructure skills, adding further pressure to salaries in 2005, the research predicted.

Further growth in the IT jobs market will be generated by a rise in the volume of company mergers and acquisitions as organisations work to integrate their IT systems.

"Mergers and acquisitions create job growth in the IT services industry and opportunities for versatile IT workers with various blends of technical, business and soft skills," said Foote.


Supplier certificates most in demand 

  • HP/Compaq accredited systems engineer 
  • HP/Compaq master accredited systems engineer 
  • IBM Lotus certified application developer 
  • Lotus certified systems administrator 
  • Sun certified systems administrator (Solaris) 
  • Sun certified network administrator (Solaris) 
  • Sun certified developer for Java 2 platform 
  • Citrix certified administrator 
  • Linux Professional Institute certification 
  • Microsoft certified systems engineer 
  • Cisco certified network associate 

Source: Foote Partners: Hot Technical Skills and Certifications Pay Index   


Hot skills   

Skills with biggest growth in 2004 

  • IBM Websphere 
  • Microsoft .net 
  • SQL Windows   

Highest paying skills in 2004 

  • Project-level security 
  • Rapid application development 
  • Voice over IP 
  • Storage/San 
  • Gigabit Ethernet 
  • Oracle database and applications 
  • IBM Websphere 
  • Microsoft .net 

Source: Foote Partners: Hot Technical Skills and Certifications Pay Index

Read more on IT jobs and recruitment