Salaries for IT consultants have leapt 17% over the past 12 months, following a boom in public sector outsourcing and private sector mergers and acquisitions, new research claimed.
The average pay for IT consultants rose from £41,500 in 2005, to £48,383 in 2006, as management consultancy firms compete for skills, research by SkillsMarket and the Association of Technology Staffing Companies shows.
“Consultancies have embarked on aggressive recruitment drives in recent months to cope with the volume of M&A business, but skills are now in very short supply. Rival consultancies are locked in a bidding war for skills, which is creating a wage spiral,” said Ann Swain, Atsco chief executive.
Shortages are becoming so serious that consultancies like Logica CMG, have told the market that if they cannot get the staff they will have to turn work away, Atsco claims.
A record growth in merger and acquisition activity, which reached its highest level in 2006 for six years, has fuelled demand for external consultants to integrate IT systems.
At the same time, management consultants are in demand in the public sector as more organisations cut back-in house staff and outsource more IT development to the private sector, pushing public sector spending on IT consultants up by 33% to £2.8bn during 2006.
“Demand for consultancy skills has surged on the back of the recent M&A boom. Post-merger integration of IT systems can be a hugely complex task, and companies rarely have the resources to manage the process internally,” said Swain.
“The public sector outsourcing market continues to grow despite recent concerns about how much is being spent on consultants. The primary driver of this growth is the scale and complexity of public sector IT programmes, which cannot be managed in-house and often involve multiple consultancies working on the same project,” she said.
The Gershon Review, which identified £21bn of public sector efficiency savings, partly by reducing internal staffing levels, is making the public sector more reliant on consultants, said Atsco.
Projects such as the NHS IT programme, forcast to cost £12.4bn, and the MoD Defence Information Infrastructure (Future) project, estimated at £2.3bn are also pushing up demand for consultants.
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