According to the Computer Economics 2009 IT Salary Report, IT workers could come out ahead as certain factors indicate that median base pay for IT managers and staff will actually increase slightly in 2009, driven mostly by annual cost-of-living raises that IT organizations will award to existing employees. Median salary growth for all IT employees will be about 2% in 2009. Base pay levels for IT executives, directors, managers, and developers will rise from 2% to 3% this year, while median base wages for other IT workers will rise from by 1.5% to 2.5%.
As the recession unfolded over the past year, IT managers pulled back on capital spending, delayed projects, froze hiring, and reduced use of outside contractors. But when it came to reductions in IT staffing, organizations have so far resisted major cutbacks. As late as the fourth quarter 2008, surveying found most organizations continued to anticipate that IT staffing levels would remain much the same in 2009 as in 2008. While few organizations were planning to add staff, fewer still were planning layoffs.
IT Departments Continue to Run Strong, Yet Lean
According to analysts, IT organizations have been cautious about adding staff since the last recession, when the technology sector led the downturn. Through greater use of outsourcing, data center automation, and other strategies, IT has been running lean– learning to do more with fewer workers– for several years now. “We also believe that as companies cut head count generally, they become even more dependent on technology to get work done. As such, IT organizations are doing their best to hold on to experienced technical staff,”? said Frank Scavo, president of Computer Economics, an IT industry research firm.
Wage Level Increases Depend on Position
While the median planned pay raise is roughly the same for eight functional groups in the survey, average pay raises tell another story. As shown in Figure 3, executives and directors, managers, and developers are getting higher increases than other groups. In some organizations, they are getting substantially higher increases, which are pushing the average above the median. Average pay raises for network support, server support, desktop support, help desk, and administration staff are all closer to the median planned pay raises for all IT workers. The higher-than-average pay increases for developers indicates application programmers, architects, database programmers, and certain other skill sets remain in short supply. Despite a slowdown in new system implementation, organizations are continuing to renew legacy applications and improve e-commerce and other customer-facing systems that provide competitive advantage and lower cost of sales.
Incentive Pay Flattens Across All Regions
The higher-than-average increases for executives, directors, and managers may be compensating for reductions in incentive pay tied to corporate profits. Incentive pay is more likely to adjust to economic conditions than base wages. A separate Computer Economics survey on incentive pay in 2008 found that incentive pay comprised at least 20% of IT executive salaries at 53% of organizations. As incentive pay for IT executives and managers declines, organizations may be increasing base pay for these positions.
The rate of median wage growth can fluctuate significantly from region to region due to variations in cost of living, economic growth, and labor supply. According to its projections, however, Computer Economics also sees a flattening of growth rates among the various regions, compared to prior years. While salary growth in New England, Mid-Atlantic, and East North Central states lagged behind other regions in 2008, IT salaries should rise closer to the 2% median range in 2009. Similarly, salaries in the Mountain, Pacific, and West North Central regions, which outpaced salaries in other regions last year, will also fall close to the median in 2009. The South, including the South Atlantic, South Central, and West South Central regions, will lag behind other regions by about a percentage point, according to the Computer Economics forecast.
“While median wage growth for IT employees will slow considerably in 2009 compared to the last three years, we still anticipate modest growth for most job functions,”? said Scavo. “IT wages experienced no growth and, in some cases, declines following the last recession and only began to recover in 2004. But that recession was led by the technology sector. The subsequent tightening in the labor supply and drive to improve data center productivity has put IT organizations in a better position to respond to this recession.”?
This article is based upon the Computer Economics 2009 IT Salary Report, which provides 2009 base salaries for 70 specific IT job titles in 73 U.S. metropolitan areas. Salaries are reported at the 25th percentile, median, and 75th percentile for small and midsize-large organizations. Data and analysis in this article are provided with permission from Computer Economics (computereconomics.com).