After several forgettable years, the IT job market in the United States is finally moving in a positive direction. Our research indicates that 2006 is destined to become a pivotal year for technology professionals, as both salary and hiring trends are finally on the upswing. The changing job market dynamics will mean that in 2006 IT professionals will recoup at least some of the leverage they enjoyed during the dot-com heydays.
For individuals in the right technical disciplines, this shift will translate into higher annual compensation packages. For companies, this shift will make it necessary to provide IT salary increases on a larger scale this year, or risk losing key IT technical talent that will be attracted by organizations offering higher base salaries, more lucrative benefit packages, and other perks, such as sign-on and annual bonuses.
This Research Byte is extracted from the first chapter of our 2006 IT Salary Report.
IT Staffing Trends
While the percentage of organizations posting staffing increases in 2005 outpaced those reporting staffing decreases for the first time since 2001, the number of organizations posting declines in 2005 was still quite high from an historical perspective. Based on our current research, we project that an even larger percentage of companies will increase their staffing levels in 2006, with a much lower percentage engaged in staffing reductions.
Details on IT staffing changes from 2001 through 2005 with, including our projections for 2006. Salary statistics for 81 job positions in 70 U.S. metropolitan areas are available from our
Our 2006 IT Salary Report provides details on IT staffing changes from 2001 through 2005, including our projections for 2006, along with salary statistics for 81 job positions in 70 U.S. metropolitan areas.
IT Salary Trends
As might be expected, IT salary trends have closely mirrored IT staffing trends over the past several years, resulting in some rough times for many IT professionals. During the period from 2002 through 2004, most organizations were only able to offer the majority of their IT staff members minimal wage increases. In 2005, the IT salary outlook improved significantly, with many companies providing significantly higher increases.
In order to gain a clearer picture on salary changes, Computer Economics recently conducted an informal poll of IT professionals. We asked these individuals how their total annual compensation in 2005 compared to 2004. The results of that poll are shown in Figure 2 from the full report.
Over half of the IT professionals in our survey stated that their total annual compensation increased in 2005, with one-third posting increases above 5%. Another 29% indicated that their annual compensation remained about the same as last year, while 16% indicated that they received a salary decrease, with the majority of that group indicating the decrease exceeded 5% in annual base salary. While this data illustrates a marked improvement in fortune for many IT professionals, the 2005 increases are still below those posted on annual basis from the late 1990s through 2001.
The Future Corporate IT Organization
The IT staffing mix in organizations is undergoing an evolution that over the next ten years will forever alter the look of the traditional IT organization from a personnel perspective. Outsourcing represents the single most critical factor in this changing landscape.
The IT jobs that remain within end-user organization will tend to be less technical, more managerial, and oriented toward customer and outsourcing relationship management. While the typical IT organization of 2015 may look substantially different than it does today, there will always be a need for both IT technical and managerial personnel. For those IT professionals that wish to remain within an end-user environment, moving into management or customer-facing roles would be an advisable course of action.
This advice should be heeded not only by individual IT professionals, but should also be given strong consideration by IT management personnel as they develop their three to five year strategic plans. Additionally, IT management must consider the implications that the current upswing in staffing and salary trends will have on their ability to retain key technical talent today.
February, 2006
This article is extracted from the executive summary of our 2006 IT Salary Report, which provides details on IT staffing changes from 2001 through 2005, including our projections for 2006, along with complete salary statistics for 81 job positions in 70 U.S. metropolitan areas.