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Report: IT Salaries Show Upward Trend, Outsourcing Overblown

The lid on IT salaries is beginning to lift, and IT specialists should see gains of as much as 10 to 15 percent over the next three years, according to a new IT staff salaries study by the META Group.
The lid on IT salaries is beginning to lift, and IT specialists should see gains of as much as 10 to 15 percent over the next three years, according to a new IT staff salaries study by the META Group.

While that's the good news for IT personnel, the bad news is that the salary inflation will push labor costs upwards of 55 percent of IT enterprise budgets through 2007, the research firm stated in its annual Staffing and Compensation Guide.

"Some turnover is starting," said Maria Schafer, senior program director with the META Group's Executive Directions unit, in an interview Thursday. "Companies need to recognize that their employees don't have strong loyalty to the company [any longer].

The report is based on the belief that the U.S. economy is improving and, as it does, IT budgets will increase, causing key IT employees to seek out "greener pastures" at other organizations. Because of this, Schafer said CIOs must improve a wide range of programs to keep their IT people happy.

"Morale generally isn't a problem," she said. "But we see the 'IT employee as service provider' model starting to move forward." She cites performance metrics for IT personnel that have been "all over the map" in the past increasingly becoming focused and valuable to both IT enterprises and IT specialists.

Schafer said CIOs and their employees look at performance metrics as a positive, because both parties want to know what the employees can bring to the enterprise. IT specialists with targeted expertise--particularly in security, application development, and networking--are in great demand, she said.

META Group analysts said IT organizations will be challenged to devise new strategies to keep turnover from exceeding a 4 to 6 percent rate. Schafer cited the obvious strategy of utilizing telecommuting as one increasingly popular retention tactic, and she indicated that job-sharing is another perk that is gaining traction in IT organizations.

"Companies are becoming more flexible about job-sharing," she said. "With so many IT people resident on-site, we'll be seeing more of these alternate-work arrangements in the future."

Schafer was asked what impact the outsourcing phenomenon will have on IT specialists and their salaries.

While outsourcing has an impact, she believes talk of its impact has been overblown. Schafer cited a recent META Group outsourcing study, which found that 81 percent of some 600 polled IT enterprises don't engage in outsourcing at all.

She pointed to the value of IT specialists with "balanced capabilities"--having a strong technical expertise combined with managerial skills. She said: "These skills aren't going to be outsourced--ever."