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4/24/2008
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Info Tech Salaries Drop, Our Survey Finds. What's Holding U.S. Pay Down?

The dip in U.S. median pay is the first since the tech bubble popped. The culprits include the economy, outsourcing, and possibly even increased hiring.

THE SLOWING ECONOMY'S EFFECT
The InformationWeek survey was conducted in February and March, before much of the financial services turmoil hit, so pay trends could dip even more if this slowdown is severe. "The impact of the recession hasn't fully shown up yet," Hira says.

It hasn't shown up in the number of employed IT pros. It's surprising to see IT wages stall in part because IT employment appears to have grown so strongly the past year. For the 12 months ending in March, average U.S. IT employment is 12% higher than a year ago, hitting an all-time high of 3.8 million IT jobs, according to Bureau of Labor Statistics surveys. Yet a lot of that growth is in lower-paying roles. In the first quarter, 30% of new U.S. IT jobs were created in computer support, where the median pay is $51,000, according to our survey. That could explain some of the falling overall median.

The impact of an economic slowdown also varies by geography, which Hira thinks explains why the Washington-Baltimore area is doing much better than New York and New Jersey. Median pay for staff in Washington-Baltimore rose this year to $95,000 from $92,000, while median pay for IT staffers fell from $90,000 to $85,000 for those in New York, northern New Jersey, and Long Island, which depends more on banking.

But it's not just Wall Street tech pros feeling nervous about jobs. The state of the economy has everyone nervous in Maine, says Keith Gosselin, who runs IT for Biddeford Savings, a four-branch community bank in southern Maine. Gosselin has seen most of the bank's IT operations outsourced, so his job is a mix of managing vendors right down to fixing a fouled-up fax machine. Gosselin, who joined the bank about five years ago after working for it while running his own IT services company, is unusual in getting "a bump" of about 3% in salary for passing the Certified Information Security Management exam, on top of a 3% raise; just 7% of staffers say they got a bonus based on certification, our survey finds. A recruiter has his resumé, but "for now, I'll sit still unless something great comes up."

This is a global IT talent market, and U.S. pros must be aware of what work is vulnerable to being outsourced to lower-cost countries, from India to South America. IT pros believe that the trend's hurting the overall profession, but surprisingly few see it hurting their careers personally, our survey finds.

OUTSOURCING: HURTS US, NOT ME

Highest Paid
Staff Functions ...
Total annual cash compensation
(in $ thousands)
$95 Enterprise application integration
$92 Web infrastructure
$92 Enterprise resource planning
... And The Lowest Paid
$65 Training
$65 General IT staff
$51 Help desk/IT support

Note: Figure is the median for each function.
Data: InformationWeek Research U.S. IT Salary Survey of 9,653 IT professionals, spring 2008; 5,080 IT staff
Asked about the impact of outsourcing, 55% say it has led to fewer jobs being available, followed by lower morale (54%), new hires at lower pay (41%), and skills valued less (32%). Yet only 22% think it leads to reduced salaries for employees. When asked how outsourcing affects them personally, two-thirds say it's had no impact, 14% have gotten new responsibility, and 4% have been promoted. Six percent say they've lost a job.

Economic theory tells us that jobs vulnerable to offshoring will face the most wage pressure, but jobs that are difficult to do remotely and must stay in the United States could actually see wages rise. Among those "sticky" jobs are positions with customer-facing roles such as analysts, as well as those too sensitive to offshore, such as security, says professor Erran Carmel of American University's Kogod School of Business, who also chairs the IT department. However, our salary survey shows pay for a variety of "analyst" jobs either flat or down. Business analysts, for example, earn a median $75,000, down from $80,000 last year. Pay for security staffers continues to rise, up $3,000 to $83,000.

Robert "Woody" Weaver says he's found a sweet spot in the global IT competition. As an IBM IT security architect consultant, he's doing "customer-facing" work for the federal government, having recently finished an assignment for the Veterans Affairs Department; he now has an engagement related to a five-year contract IBM has with U.S. Customs. "I was doing systems integration work in the commercial sector, and that's more boom or bust, whether people are buying equipment," Weaver says. Having a security clearance--not difficult for a nonfelon to get, but it can take awhile--adds job stability.

It's been a good year for Weaver in terms of raises--7%, plus a small bonus, in part for doing work outside his IT-specific duties, such as helping prepare sales material for other contract bids, mentoring, and helping with documentation. Weaver, who's been working as a contractor since 1996, also spent many years as a college professor of computer science and math. "I've been in this for 30 years," he says.

Anna Gathright is in the private sector and doesn't feel much pressure from offshore competition. This year brought her a 9% raise, tied to her promotion to systems administrator from programmer at Murphy Oil, an oil and gas company in south central Arkansas. "Both jobs are very stable," she says, and not particularly vulnerable.

Another factor possibly dragging down pay trends is baby boomers retiring, says David Foote of IT salary research firm Foote Partners. Retiring senior IT workers usually are replaced by younger individuals who are often paid a lower salary for the same job, he says.

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