Offshore Outsourcing Driving Down IT Salaries

January, 2004

A new study by Foote Partners LLC, a salary research group, confirms what has been painfully obvious to many technology professionals: IT salaries are dropping. The study indicates that although the general economic downturn is partly to blame, offshore outsourcing is another contributing factor. The Foote study was referenced in an article published on January 14, 2004 by (a TechWeb publication). The article stated:

In a year long study of 400 Fortune 1000 companies, researchers found that by 2006, the organizations expected from 35 percent to 45 percent of their current full-time IT jobs to go to workers overseas, David Foote, president and chief research officer for Foote Partners, said.

“What we found is a lot of correlation between a decline in pay for skills and certification in areas that are actually moving offshore,” Foote said. “There’s no need anymore for premium pay for those skills … and also, a lot of bonuses have quite frankly been redirected to a very small number of people.”

Foote points specifically to declining US IT salaries in application development and maintenance, tech support call centers, and some database work. But there are some areas where salaries are holding up better:

There are areas in IT where jobs are expected to remain onshore–at least for a while, Foote said. Those jobs tend to require a deep understanding of a company’s business processes. Those jobs involve system architecture and prototyping, data and process modeling, and other pre-implementation work. Work related to security and network administration and management also appears safe.

Editor’s Note:
CEI’s 2004 IT Salary Report will be published within the next few days. The annual report covers over 70 IT positions across every major metro area in the U.S. Like the Foote report, our latest research indicates that the annual compensation levels for many IT disciplines has remained flat or declined over the past three years.

January 2004