The furor over the offshore outsourcing phenomenon is exaggerated, and key IT jobs are staying in the United States, according to a new report on IT staffing and compensation.

"Outsourcing is a little bit of a myth," Maria Schafer of the Meta Group said in an interview. "In point of fact, outsourcing had been happening for sometime." She said that, while the best and most valuable IT positions are generally staying put, a slowly improving economy hasn't yet been strong enough to overcome relatively stagnant hiring. "It's going to be another six months before we see any real [hiring] vigor."

Schafer, a senior program director of Meta's Executive Directions Advisory Service and the author of the report on IT staffing and compensation released Tuesday, said IT employees are still being paid as much as 20% more than non-technical personnel at their organizations. More than 75% of the companies surveyed for the report said they pay IT employees higher salaries, and 45% said they pay premium salaries for critical skills, particularly in wireless, security, and data-management fields.

"Experience," she said, "that's what continues to sell." She added that Internet-related specialists are in short supply, particularly for those with expertise in application development, Java-application management, and networking. However, demand for E-commerce skills dropped slightly in this year's survey--15% versus 22% last year, and 25% in 2002.

Skills in high demand in IT enterprises that normally aren't outsourced are for specialists in building out IT infrastructure, including for database-management systems and Web infrastructure. Other categories in demand include customer-relationship management and enterprise resource planning.

"Application-development skills also continue to be highly sought after, as are Oracle and Java application-management and networking experience," Schafer said. "The consistency with which these skill sets are mentioned is a strong indicator that not enough is being done to develop these capabilities."

Not surprisingly, pay has increased for the most in-demand positions. Schafer cited some examples--average base salary for a programmer analyst moved from $131,000 last year to $172,500 this year while a business-application delivery manager saw his salary increase from $91,000 to $116,500.

The most sought-after IT specialists remain in senior levels, where pay premiums remain the highest. Senior-level staff in highly technical positions remained the highest paid. Conversely, Schafer found entry-level hiring remained stubbornly static.

As for outsourcing, Schafer found that it, too, has generally been suffering with the slowly recovering economy. Asking survey respondents for the first time for information on offshore outsourcing, the Meta survey revealed that only 20% are currently sending work offshore.

Noting that the offshore outsourcing phenomenon has recently generated much political debate, Schafer indicated she thinks the issue is somewhat overblown. She noted that much of the work earmarked for offshore outsourcing would likely have been carried out in the recent past by foreign IT employees in the United States working under H-1B visas.