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‘Signs of Life’ Expected in 2004 IT Salaries

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CIOs and IT managers just may be seeing an increase in the money they’re taking home this

year — the first increase they’ve had since 2001.

Upper-level IT managers should see some much-missed bonuses this year, along with a 3

percent to 4 percent increase in salary, according to industry analysts. Two different

studies were released this week reporting that IT compensation, which has been stagnant at

best the past few years, is on the move again, despite the pressure that offshoring is

putting on the information technology industry.

Lower-level IT workers, however, may not be so fortunate. With more of their jobs being

moved to other countries, like India and China, the demand for them is lower. And that is

keeping pay down for programmers, help desk workers and business processors.

”Since 2001, salaries have been dropping for all levels in the organization, especially the

CIO, and a big reason for that is that there haven’t been bonuses,” says Victor Janulaitis,
CEO of Janco Associates Inc., a Park City, Utah-based international consulting company that

has been doing salary surveys since the early 1970s. ”We found that this year, a fair

number of CIOs are going to be getting partial bonuses… Things are still pretty tight, but

people are seeing a little bit of breathing room.

”I’m seeing signs of life,” says Janulaitis. ”From everything I’ve seen, if we don’t have

another 9-11, we’ll see high demand.”

Janco’s 2004 IT Salary Survey shows that mean total compensation, which includes bonuses,

for CIOs in large enterprises increased by 1.32 percent from $165,329 to $167,508, and in

mid-sized enterprises it increased by 2.66 percent from $171,795 to $176,357.

The survey also shows that the mean total compensation for all positions surveyed in

mid-sized enterprises has moved up to $76.003 in early 2004 from $75,759 in the last quarter

of 2002. At the same time in large enterprises the median compensation is at $79,338.

Another bright spot is rehiring. Some of the organizations that had eliminated training,

planning and infrastructure positions, such as change control, are beginning the process of

limited re-staffing in those areas.

”Now that people are seeing a little bit of breathing room, IT organizations are going to

have to start hiring people,” says Janulaitis. ”I foresee some recruiting in the area of

wireless, project management and people who understand Visual Basic and Java. And I’m

already starting to see some pick up in recruiting for CIOs.

These improvements, however, are being somewhat tempered by the number of IT jobs that are

moving offshore.

David Foote, president & chief research officer of Foote Partners, LLC, an IT research firm

based in New Canaan, Conn., just released a report noting that for the third quarter in a

row offshored IT labor is making onshore skill supplies less critical. And that means lower

pay for many IT workers.

”Outsourcing and offshoring hits hard in implementation jobs, but leaves an awful lot of

other IT jobs safe,” says Foote, who adds that he first saw offshoring impacting stateside

salaries early last year. ”There are some jobs that they want to keep onshore. Any job that

requires in-depth knowledge of the company, like prototyping, data modeling, enterprise

project managers, security experts and network administration, will be safe.”

And those ‘safer’ jobs that will see the increase in pay.

”When things have thawed a bit, you’ll see a number of these salaries — that aren’t being

offshored — continue to grow,” says Foote. ”But companies will spend their money with the

top 10 percent to 20 percent — the people who matter. They’ll be paid well, bonused well

and retained. The other 80 percent who have been treated indifferently, will see a

continuation of that.”

But Janulaitis says which jobs fit into that 80 percent chunk of IT have changed.

Security positions and voice/wireless communication positions are being upgraded in many

enterprises, the Janco survey notes. These jobs were lower- to mid-level positions prior to

2000. Today, however, they are now mid-level to senior positions. Janco analysts also found

that demand is high for object programming, data warehousing and e-commerce.

John Challenger, CEO of Challenger, Gray & Christmas, an international outplacement firm

based in Chicago, says this kind of slow growth, though it may be frustrating, is healthier

than the boom and bust cycle that the industry experienced a few years ago.

”We’re seeing 3 percent to 4 percent gains in salaries this year,” says Challenger.

”That’s up from last year’s 2.5 percent to 3 percent gain. Companies are investing in their

technology again. They’re continuing to build business systems, e-systems, develop new

applications, and equip their people with new technology.

”This is good in comparison to the last few years,” he adds. ”It doesn’t mean that

outsized bonuses are back… It’s important not to get back to that boom and bust cycle.

It’s like always going on a crash diet. We’d like to see steady growth and job security. We

don’t want to start believing in those lottery-style gains again.”

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