IT Pay to Rise 10% to 15% Through 2007, Study Says

Computerworld - An improving economy and heightened demand for technology workers with certain skills will help drive 10% to 15% salary increases for seasoned technologists through 2007, according to a new study unveiled by Meta Group Inc. this month.

The predictions seem to fly in the face of conventional wisdom following more than three years of a weak IT job market, a rise in organizations' use of lower-cost offshore labor and marginal pay increases for full-time domestic IT workers.

Still, recruiters say there's plenty of evidence to support the predictions for salary gains, including a relatively low unemployment rate for U.S. high-tech workers and a shortage of new workers entering the market. According to the U.S. Bureau of Labor Statistics, the unemployment rate for computer and mathematical occupations at the end of September was 3.3%.

However, a half-dozen IT managers interviewed last week said they don't expect IT staffers to receive increases of more than 3% to 5% for at least the next year. "I just don't see a 15% increase over the next two years; the market doesn't warrant this," said Rick Peltz, CIO at Marcus & Millichap Real Estate Investment Brokerage Co. in Encino, Calif.

Peltz is looking to fill three IT positions and has been screening resumes on Monster.com rather than advertising for the posts, which include an opening for a business analyst.

"If anything, there's an abundance of overqualified workers applying for this position," said Peltz, who anticipates providing his 15-person staff with 3% cost-of-living increases in 2005 "and maybe a little bit more for merit."

Conservative View

"I do expect salaries to grow over the next several years, but I expect the growth rates to be much more modest," said Bill McQuiston, CIO at Truman Medical Centers Inc. in Kansas City, Mo. As the economy heats up and companies begin to invest more heavily in IT, he said, "we are going to see another shortage of [technical] people."

That maps with the perspective of several recruiters. Scot Melland, president of Dice Inc., a Web-based IT job board in New York, said technical job postings on his site are up more than 90% from September 2003 to September 2004. With fewer computer science graduates coming out of colleges, as well as stricter post-9/11 security restrictions on student visa programs for foreign-born students, "it's quite possible we could have a skills shortage in the coming years," he said.

Maria Schafer, author of the Meta Group report, said seasoned IT professionals with coveted database, networking, security, architecture and project management skills are already commanding 10% to 12% annual pay increases. The report is based on a survey of 650 companies that was completed in late May.