Better Days Ahead For IT Workers, But Tougher On IT Management?
 
According to META Group, in recent years the IT industry 'has had one of its longest periods of job and salary stagnation.' But today, with the economy heating up and increasing investments in IT, META Group expects IT staff salaries to go up 10 percent to 15 percent through 2007. It claims that by 2007 this salary 'inflation' will cause labor costs to represent 'upwards of 55 percent of an organization's IT budget.'

It also believes that over the next 12 months, 'key IT employees will seek 'greener pastures' with competitive firms. To prevent a mass exodus of highly valued employees, CIOs will need to pay closer attention to their human capital management programs, including management development, employee welfare/morale programs, recruiting/retention programs, and perhaps most important, compensatory strategies such as performance-based incentives.' If CIOs fail to tackle this problem, META foresees 'a real workforce crisis in the months to come.'

META is not alone in predicting a workforce crisis in the months and years ahead. Datamonitor reported on statistics from dice.com, one of the leading tech recruitment sites. According to Dice's CEO, 'The US tech sector as a whole could face a skills shortage within two years.' He notes the following reasons for this potential shortage:

  1. US universities are producing fewer technology and engineering graduates
  2. Immigration restrictions mean fewer foreign students are taking up places on technology courses - in past years, academic IT departments recruited large numbers of overseas students, who would eventually find their way into the US technology workforce.
  3. Trimming of the H1B and other visa programs in the wake of the US recession, meant that companies could not look overseas for suitable candidates.

Dice also sees a tremendous opportunity for IT workers in the US defense industry - especially if those workers have security clearance. It reports that the length of time it takes to get security clearance has increased from six months to two years. According to Dice,'if you're a tech professional with security clearance, you can write your own check.'

META Group also reports there is a growing gap between IT and non-IT salaries. According to its recent survey 'More than 76 percent of companies indicated they continue to pay IT employees higher salaries, and 45 percent of companies claim to be paying premiums for critical skills because IT organizations are finding them so difficult to locate and retain.'

META also found 'Despite the substantial publicity concerning the outsourcing of highly skilled IT jobs, demand for certain IT skill sets remains strong. This year's respondents indicate a continuing need for Internet-related capabilities, including application development (15 percent of respondents), Java application management (15 percent of respondents), and networking (11 percent of respondents). Demand for e-commerce skills lessened this year, with only 15 percent of respondents indicating a strong need, as opposed to 22 percent last year and 25 in 2002.'

One other interesting statistic on IT salaries came from Datamonitor. It reported that salaries are also on the rise in India and that 'new client demand has driven increased staff salary inflation, which ... is now faster than in the last few years, which have seen a growing number of offshore players compete for experienced senior engineers and project managers.' This increase in Indian salaries has eroded some of the price-competitiveness of Indian offshoring to the stage where some Indian firms are reportedly beginning to offshore some of their work to regions such as China.