Q&A: David Foote
The CEO of IT workforce analyst firm Foote Partners LLC explains why high volatility in the IT labor and skills markets will remain long after the economy recovers.
First of all, how are you defining and measuring volatility? Pay and demand for IT skills at more than 2,000 employers in North America that participate in our research. We've built several statistical gauges for examining trends in each. The IT Skills and Certifications Pay Index surveys pay premiums earned by 23,000 IT professionals for 438 individual technical and business skills, both certified and noncertified.
Our IT Skills Volatility Index tells us what percentage of these skills are changing in market value, either up or down. We also survey salaries for nearly 100,000 IT workers and a few hundred job titles. All of these are updated continuously, but we tend to analyze labor market trends in three-month increments and have been doing so since 1998. We also stay in regular contact with several hundred IT executives, who provide us with deep-dive perspective that the data itself cannot.
What have you been finding? Quarter-by-quarter skills volatility has been in the 29% to 39% range in the past year and a half. From 2005 to 2008, it averaged only half of that. This index has been swinging back and forth by as much as 10 points over periods as short as three months, which is unprecedented. As for the market values themselves, noncertified skills have shown overall gains in two straight quarters, while average certification pay has been on a steady decline for four years straight. But as you dig deeper into each skill category, consistency is very hard to find. The truth is that IT employment and salaries have been stabilizing, but pay and demand for specific skills and specialized talent remain highly volatile and unpredictable. There are clearly other factors than the recession at work here.
Like what, for instance? An almost seismic shifting to new IT service delivery and sourcing models, for one thing. CIOs have been struggling with this for years, under pressure from their business counterparts to become more agile and flexible, react faster and execute more quickly -- to rise to the challenge of becoming a business impact player. But there's risk involved in organizational and staffing change of this magnitude, and it's not easy. In better times, the general attitude for many was, "Why stick my neck out?" So instead, they'd just sort of rearrange the furniture. What the downturn has done is get IT managers "unstuck" and motivated. For some, it is career opportunism. For the rest, it's survival: fear of losing their jobs if they don't take advantage of a rare window of opportunity to start blasting away at traditional IT staffing models.
What are these new models? Think skills acquisition, not jobs acquisition. Managed services, cloud computing, SaaS, PaaS, IaaS. Contractors and consultants, not full-time hires. Adaptive, iterative execution, not bloated, stagnating project portfolios. High-performance teaming, not reliance on the same exhausted IT superstar performers to get the job done time and again. Being great at operational stuff but having more impact in product development, ideas, innovation and strategic areas that will help businesses survive and thrive in a brutally competitive, fast-moving global marketplace. There is progress being made out there right now by some courageous but very nervous IT executives trying to engineer this transition. It's causing higher volatility in pay and demand for skills and people as the natural condition of a transforming workforce. This is the new standard in market behavior for years -- not months -- to come.
There's no turning back? We will never return to the sort of labor marketplace for IT professionals that existed before 2008. But that's a good thing. Business leaders know that it's not technology per se but the ability to use it wisely that counts. They desperately need to get to the other side of this IT transformation as quickly as possible and get more of these business-technology hybrids into the game.