IT gets its groove back

Salaries are rising, and bonuses are back. Though workload worries remain, optimism among IT employees is running high. Here's why.

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A year and a half ago, David Collins was trying to move from contracting work to a full-time position in IT. With rampant downsizing and a flood of new graduates, the job market was looking bleak in central Ohio, where he lives. "I knew of candidates with 20 years of experience and master's degrees who were taking entry-level positions just to get back into the industry," he says.

Today, Collins is an IT infrastructure manager at Residential Finance, a national mortgage lender in Columbus, and IT looks to him like a more solid profession.

"We've certainly seen a market shift," he says. "There are more offers, and candidates can be more selective." Collins notes that he has "great" benefits, and since he was hired 18 months ago, his salary has increased and his company's IT staff has tripled in size (from seven to 21 employees) to keep up with business growth.

Optimism is growing among IT workers, according to the results of the 2013 Computerworld Salary Survey. The 4,251 technology professionals who participated in this year's survey seem to be feeling better -- not just about IT as a profession but also about the improving economy and the resulting improvement in job prospects.

As was the case last year, only a minority of survey respondents said a career path in IT and the potential for salary advancement are as promising now as they were five years ago. But optimism is on the rise: 38% of this year's respondents said they felt that way, up from 29% last year.

And while IT workers have wondered whether they would ever recover from the years of salary cuts, the percentage of 2013 respondents who said they gained ground financially in the past two years was slightly higher than it was in 2012 (33%, up from 29% last year), and the percentage of those who said they lost ground dropped (28%, down from 32%).

Another indicator of increased confidence: The percentage of respondents mentioning the economy as a challenge for IT workers continued to tail off, falling to 17% this year from 19% last year and 28% in 2011. "I don't know whether we'll ever see the [salaries] we saw during the dot-com boom, but depending on your skill set, I certainly think salaries are pretty comparable to before the big downturn," Collins says.

Money's up, jobs are back

The optimism may be partly due to a three-year streak of modest pay increases. Respondents to the 2013 survey reported that their salaries rose an average of 2.3%, which is slightly better than last year's average increase of 2.1% and 2011's more modest 1.5% uptick. Meanwhile, average bonuses across all job titles rose only 0.9% this year, but that too is an improvement over 2012, when bonuses decreased by an average of 1.1%.

Some job titles showed better-than-average gains. To cite just two examples, total compensation (salary plus bonus) rose 3.9% for business intelligence analysts and 3.6% for software engineers.

Overall, more than half (57%) of this year's respondents reported receiving a raise, compared with 47% last year.

All that reflects what recruiters are seeing in the marketplace. Matthew Ripaldi, senior vice president at IT staffing firm Modis, reports salary hikes of about 5% for both permanent and contract positions, and even higher bumps -- into the double digits -- for developers and software engineers. "We're seeing validation of this every single day, in all of our branches and across industries," he says.

The positive vibe could also be the result of ongoing reductions in negatives: This year's survey showed that budget cuts, hiring freezes, layoffs, training cuts and cancelled projects continued to tail off, after a more dramatic decline in 2012.

Perhaps the biggest driver of the new optimism is an increased demand for IT professionals in what recruiters are calling an employee's job market. The Association for Computing Machinery, for example, projects that the number of new computing jobs will increase by 150,000 per year for the next eight years. Meanwhile, the unemployment rate among U.S. IT workers was significantly lower than the overall unemployment rate in the fourth quarter of 2012 -- 3.3% versus 7.8% -- according to technology job board

That robust demand likely explains the precipitous decline -- from 36% in 2012 to 27% this year -- in the percentage of survey respondents who cited a poor job market as their reason for not seeking new employment.

"If you look at time-to-fill ratios, we're seeing an increased sense of urgency among hiring managers," Ripaldi says. "If we have a candidate interview at 10 a.m. and the manager doesn't call back by 4 p.m., there's a good chance [the candidate] will have already left for another opportunity." Ripaldi is also seeing employers work harder to secure talent, offering perks such as flexible hours and the opportunity to work from home.

Greener pastures

Samuel Satyanathan has benefited from the increasingly generous offers. He recently accepted a new position as senior solutions architect at a large telecommunications company. He was generally happy with his former employer, a financial services company, but was open to the right opportunity, he says.

The offer Satyanathan accepted was "appealing in every way, in terms of career growth and compensation package," he says. "But the important part was really getting to be part of something where I get to do more and possibly grow more." It also helped, he says, that the new company was very flexible about the timing of the transition, allowing him to collect a promised bonus from his former employer before starting in his new job.

During his time in the job market, Satyanathan says he observed a higher demand for and lower supply of IT professionals, and salary offers that were roughly 10% higher than job hunters' current salaries. Demand seems particularly high for people with expertise in iOS and Android development, Java, J2EE, application/enterprise architecture and agile development, he says.

Maurice Jenkins, director of information systems and telecommunications at the Miami Dade County Aviation Department, says salaries have suffered in his organization because of government spending cuts. With IT compensation improving in the private sector over the last year or so, he has seen 5% attrition among his staff as higher salaries are offered to people with in-demand qualifications such as Cisco networking certifications, Oracle development experience and expertise in forensics, firewalls and other enterprise security specialties, Jenkins says.

In addition to offering higher salaries, companies are wooing employees with quality-of-life perks like telecommuting, Ripaldi says. And in some instances they're offering better health insurance and other benefits, which had taken a hit in recent years.

Last year, Satyanathan declined to accept a position that delayed health insurance benefits for three months after the new hire's start date. "The hiring manager mentioned that the delay in the start of benefits was a sticking point for a lot of candidates," he relates, adding that a recent ad for a similar job at the same company stated that benefits would start on day one.

Workload pressures continue

If salaries and demand are up, so too is the pressure to perform. As they have for several years, survey respondents reported a disconnect between compensation and workload. Among those who said they felt more pressure over the past year to increase productivity (68%) or take on new tasks (75%), only 12% reported that their salaries had been adjusted to reflect the added workload.

In some cases, technological developments that were supposed to make IT's life easier are at least partly to blame. "Virtualization was supposed to make everything easier, right? Wrong," says George Theochares, IT director at Campbell Campbell Edwards & Conroy, a law firm in Boston. "They just expect more out of you. Where I used to maintain a dozen machines, I'm now managing 50 or 60 [virtual servers]." And as reliance on technology increases, business users' expectations are higher than ever. "In the past, if we were down a few hours or even a day, people didn't panic, but that's not the case anymore," Theochares says.

The consumerization of IT is also increasing pressure on tech professionals -- without an accompanying increase in pay. "In the last three years, it's become harder to keep up," says Eric Shaver, senior vice president of IT at The Plateau Group, an insurance holding company in Crossville, Tenn., that specializes in credit insurance and other loan-related products for financial institutions.

Shaver's company is growing quickly. Its accounts have tripled and its revenue has grown from $43 million in revenue to $88 million in two years, as it has expanded into 48 states from just eight. Although Shaver has been able to expand his IT staff, and hopes to add more employees this year, "it's been tight because of the additional areas we have to cover," he says.

Salaries at Shaver's organization have increased 3% in the past year, and benefits have improved, thanks to changes in healthcare options. However, "overall compensation is lower than we'd like to see," he says. "It's not as competitive as we'd like it to be, and it's something we're working on."

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