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The Right IT Skills Are Getting Raises, Report Concludes

Outsourcing isn't sinking pay for key skills the way it was a year ago, Foote Partners says.
Offshore outsourcing is no longer dragging down pay for key IT talent in the United States, and demand for certain skills and experience is rising, according to a new study released by research firm Foote Partners.

Twelve to 18 months ago, pay for U.S-based IT skills such as application development and database knowledge had been eroding annually 7% to 10%, but that has shifted, says David Foote, Foote Partners president and head of research. "Pay for those skills are gaining back those loses and growing," he says.

Foote Partners relies on data provided by human-resources, IT, and business execs, plus executive interviews. In the first six months of 2005, the biggest pay growth was for networking skills, which jumped 5.1%; database skills, which grew 4.3%; and application development, which rose 2.1%. Overall pay for 89 noncertified skills grew 3.8%, while pay for 87 certified technical skills rose 1.3% in the first half of 2005. Foote attributes the bigger rise in pay for noncertified skills in part to the demand for "talent beyond certification," such as industry expertise, as well as "hybrid experience," in customer-focus and operational IT, he says.

In fact, concerns about offshore-outsourcing failures could be contributing to that pay growth for key skills, as companies become increasingly cautious in choosing talent that not only has technical know-how but also specific industry experience that can help them avoid outsourcing mishaps, he says.

"Risk aversion is very popular right now," Foote says. Some companies "got burned" with outsourcing arrangements by not doing assessments to make sure they retained people with not only the critical technical skills, but also deep understanding of the business and industry. So companies are trying to do a better job of hiring and retaining talent--even as they outsource--with specific tech skills and business and industry experience, Foote says.

Also, as work related to Sarbanes-Oxley compliance tapers off at many IT companies, the need for complex combinations of industry knowledge and technical skills is rising. "The shift is on innovation and new products," Foote says.

The demand for "hybrid expertise" is particularly true for CIO candidates, he says. The coup by Hewlett-Packard in hiring former Dell CIO Randy Mott, Foote says, is a good example of the value companies are placing in getting talent that has deep industry know-how, business and tech expertise, and hybrid leadership experience.