Job Jitters Just Won't Stop

With cautious hiring and selective raises the rule, it'll be another tight year in the IT labor market.

Marianne Kolbasuk McGee, Senior Writer, InformationWeek

December 30, 2005

5 Min Read

I.T. workers have gotten used to a "Yes, but ... " job market. Yes, companies are hiring--but only for the right skills and very cautiously. Yes, raises are coming--but hardly juicy ones and, again, mostly for certain skills. 2006 will keep the qualifiers coming.

Just 23% of 300 business-technology professionals surveyed in the InformationWeek Research Outlook/Priorities 1Q 2006 study say their companies plan to hire IT managers in 2006. Just 47% say IT staff hires are planned, with companies seeking expertise in business applications, user and PC support, networking and convergence, project and process management, and software development. Still, only 12% say their companies will cut staff, mainly because of economic pressure (61%), system consolidation (48%), and outsourcing (39%).

chart: Mixed Hiring MessageAnecdotally, IT execs see hiring looking better than it has of late, leading to competition for the best talent.

E.&J. Gallo Winery, which ranked No. 1 in the 2004 InformationWeek 500, has made IT talent retention a priority as the California job market picks up. "There's been a resurgence of activity in hiring and poaching," CIO Kent Kushar says. "You have to recruit on an ongoing basis. Nonetheless, you need to be selective."

The Modesto, Calif., winery is seeking people who aren't pure IT or business staffers but rather have a mix of skills, for positions such as business analysts. "Those people can define the gap between business and technology," Kushar says. The company also is looking for database administrators and what he describes as "integration jocks." Says Kushar, "These people know how to plug very complex things together."

There's more activity in Boulder, Colo., too, says Joe Thielen, IT manager at the Hain Celestial Group Inc., a maker of organic food and drinks. The company just added three IT staffers, including a systems administrator, an EDI associate, and a Web pro. They'll work on new initiatives, including EDI apps for raw-materials suppliers, such as those that provide ingredients for the company's Celestial Seasonings teas. Hain already moved to EDI and the UCCnet data-synchronization system to satisfy retail customers such as Wal-Mart Stores Inc. and Kroger Co.

Employment figures suggest a decent job market. IT unemployment in the third quarter hit 3.2%, 1.5 percentage points lower than a year earlier, according to analysis of data from the U.S. Bureau of Labor Statistics. It shows 3.44 million IT pros employed, up from 3.32 million in the third quarter of 2004. However, two-thirds of survey respondents believe there are plenty of U.S. IT professionals, even for skills in high demand.

Tough Market
The hunt for tech talent in some industries, such as health care, remains tough because salaries aren't as high as in sectors such as financial services, says Paul Contino, VP of IT at New York's Mount Sinai Medical Center, which competes for IT pros from the same regional talent pool as more-generous Wall Street firms.

An improved economy will make things tougher for health-care providers when it comes to finding Java developers and other talent. "It's already taking us longer to recruit people, especially when they have other options, like working for a higher-paying bank," Contino says.

However, he's confident about staffing key projects, such as the rollout of electronic medical records. "Often, we'll attract people who have worked awhile in other industries, and now they want to work in health care for altruistic reasons," he says.

chart: In DemandOne obvious way to keep people: Offer competitive salaries. Last year, Huhtamaki Americas Inc. adjusted its IT salaries to make them more competitive, says Mark Pettigrew, IT project manager at the company, which makes packaging and paper products such as Chinet dishware. Another 2% to 3% boost in pay is planned for 2006. "We want to keep turnover low," he says.

At Ricoh Americas, IT pros can expect raises from 3% to 4%, and slightly more for high performers, says Sean Magee, VP of IT at Ricoh Americas, which is Ricoh Corp.'s operations in North and Latin America. About 50% of Ricoh's IT budget is earmarked for labor, while the other half is for infrastructure, including software maintenance.

Ricoh employs most of its IT staffers but uses contractors for activities such as work that will extend the company's Oracle ERP implementation, which started a couple of years ago. A big goal of that rollout is to take the company's supply chain to the next level of efficiency, Magee says. Much of that will improve customer service, such as online ordering and order-status checking.

Pay for the contract talent needed to continue the ERP work is increasing, up about 10% to 15% from a year ago, Magee says. The demand for "good knowledge of Oracle applications, especially in workflow and financial areas, is heating up," he says.

Hardly anyone says IT pay will go down in 2006--only 1% of survey respondents expect that to happen. Sixty-seven percent expect their companies' IT salaries to go up 1% to 4% in 2006, 17% say it will rise more than 4%, and 15% expect salaries to remain flat.

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About the Author(s)

Marianne Kolbasuk McGee

Senior Writer, InformationWeek

Marianne Kolbasuk McGee is a former editor for InformationWeek.

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