IT Salary Survey 2017: Tech pay holds tight (for now)

Our annual survey shows moderate 3% growth in IT pay -- but salaries could be headed for a roller-coaster ride, with wildly different forecasts from experts on IT spending, hiring and compensation.

roller coaster hang tight cc0 by angie via pexels

If you had asked Samuel Vivian about the long-term prospects for his IT career at this time last year, he would have said, “It’s kind of iffy.”

Back in the United States after four years in India, where he found IT work during the recession, Vivian, 45, landed a job as a senior technical analyst at a large food processing company in Arkansas in 2015.

At the time, many other businesses in the region were opting for contract workers instead of full-time employees. “The message I was getting out of the job market was that nobody was confident enough to make any major investments or commit to any serious projects or hiring,” Vivian says.

Today, he has a newfound optimism buoyed by the strong pro-business stance of the new White House administration. “I think [the job market] is going to be a lot stronger this year,” he says. “Companies are suddenly talking about making billion-dollar investments in the U.S. again. They’re starting to talk about hiring large numbers of employees again. It makes me feel a lot more confident.”

Meanwhile, in upstate New York, Corey Hart has been with the same global shipping and mailing company for five years. The 33-year-old business analyst has received small raises over the past two years and feels secure in his job, but he has noticed a troubling sign — a drop-off in the number of calls from headhunters. “I used to get two to three calls a month, but I don’t think I’ve had a call since November,” he says. “I wonder if that’s why I see a decrease in the calls — uncertainty over how things are going to go.”

When it comes to the outlook for IT salaries and jobs in 2017, it’s hard to know what to think. According Computerworld’s annual IT Salary Survey, average total IT compensation grew 3% this year. That’s a bit softer than the strong pay gains of 2015 and 2016, when compensation rose 3.6% and 3.9%, respectively, but certainly better than the anemic raises IT pros saw for years following the economic downturn that began in 2009.

Is the slight lag in pay raises an early indicator that a spending slowdown may be on the way, as some industry watchers have speculated? Or is it merely a speed bump, with strong IT spending, hiring and pay gains to continue next year?

Outlook hazy

Executives and analysts have wildly different forecasts for IT hiring and salaries going forward. Based on interviews with dozens of CIOs conducted before and after the 2016 presidential election, management consulting firm Janco Associates in December sharply raised its tech hiring forecast from 90,000 to 136,500 new domestic IT jobs to be created in 2017.

“After the election, CIOs were much more optimistic,” says Janco CEO Victor Janulaitis, pointing to the Trump administration’s promises to increase infrastructure spending, revise the tax system, bring jobs back to the U.S. and revamp the H-1B visa program. If those changes are implemented, “there will be greater need for U.S.-based IT resources,” he says. Janulaitis notes that he is most encouraged by the possibility of “repatriation of dollars that are overseas, where there is some type of tax break that corporations would get for bringing those dollars back to create jobs in the U.S.”

But other industry watchers, questioning whether such campaign promises will come to fruition, are less bullish on the new administration. Forrester Research, for instance, has lowered its 2017 IT spending forecast. After learning that many multinational corporations are taking a wait-and-see approach to spending this year, the firm revised its predicted increase in U.S. tech spending from 5.1% before the election to 4.3% post-election.

“There is tremendous uncertainty about what trade, spending and tax policies will actually take place,” says Forrester analyst Andrew Bartels. “The reality of this administration’s policies is a mass of contradictions. Maybe there will be tax cuts, but maybe it takes the form of imposing taxes or tariffs on imports. That will be a real challenge for retailers’ and manufacturers’ supply chains. Many CEOs and CIOs are saying, ‘This could play out in any number of ways. Until it’s clear, let’s hold back on what we’re spending.’”

Forrester predicts that if the Trump administration continues down its current path, then the growth in tech jobs will slow down, but salaries might inch up a percentage point or two in 2017 and 2018, especially if inflation rises, Bartels says.

Computerworld’s 2017 survey shows the hiring outlook remaining steady: 43% of the 1,263 IT managers who took part in our survey expect their companies’ IT staffs to expand in 2017, while 49% said they expect head count to remain the same. Just 7% said they anticipate a decrease.

“I would say the pace or frenzy [of IT hiring] that we saw a couple of years ago isn’t quite the same — but that’s to be expected,” says John Reed, senior executive director of IT staffing firm Robert Half Technology. “You have the scarcity mentality, and companies are competing for the same people, compensation is skyrocketing and people are overpaying. Then once teams are built, it becomes a more normalized picture again: ‘We’ve got our staff now, so we won’t be adding net-new [IT employees] at the same pace, but we’ll replace as we lose people.’ I think that’s where we are right now — but it’s still incredibly competitive out there.”

Salaries are up — a bit

Although Computerworld’s annual survey shows that pay raises have chugged along at or above 3% for the last three years, only 50% of our 2017 respondents reported that they are satisfied or very satisfied with their compensation, down slightly from 54% last year.

Just 21% of those polled said that their salary is keeping pace with business growth and demands.

And not everyone got a raise in the past year. The percentage of respondents receiving a pay bump dropped slightly from 71% to 67%, largely due to wage stagnation rather than pay cuts: 29% reported no change in their base salary and only 4% reported a decrease in salary.

According to Computerworld’s 2017 survey, cash bonuses increased by 2.4% on average, down from 3.2% in 2016. Of this year’s 2,782 respondents, 35% said they received annual bonuses, 23% reported performance bonuses and 14% said they got profit-sharing bonuses, while 40% said they received no bonus at all.

Tom Heinlein, a technical architect at Walgreens Boots Alliance in Deerfield, Ill., says he received a 2.5% salary bump this year, but he and others in the IT department also earned on-the-spot performance bonuses during the year for jumping in on high-priority, high-profile projects. Spot awards can equal 10% to 20% of an IT employee’s annual pay, says Heinlein, 44. His IT peers at other companies in the Chicago area have also seen these ad hoc bonuses, as opposed to big annual salary increases, popping up in the last two years, he adds.

Money isn’t all that matters

Pay is just one factor keeping IT professionals at their current jobs. Many people stay with a particular employer because of its location or mission even when they feel they’re not being paid what they’re worth.

For example, Kirsten, a corporate IS product services and systems operator at a large Midwest agricultural supplier, says she received a raise of about 3% this year. She says her salary falls short for her skill level, but she believes in the company’s mission of providing food to underdeveloped societies. “I can totally get behind the company’s vision. If that means I get a smaller raise, I’ll do that,” says the 54-year-old.

(Editor’s note: Due to the sensitivity of discussing salary and hiring issues, some of the people quoted in this story asked to remain anonymous, and some asked that their employers not be named.)

Aaron Richards, an IT coordinator at Daughters of Charity, a St. Louis-based outreach program for the poor, received a 3% raise this year. The 45-year-old has been with the nonprofit for five years and says his responsibilities have “steamrolled” from tech support to managing network infrastructure. Previously, he worked for three years as a contractor through Chickasaw Nation Industries, a federally chartered organization that helps support the Chickasaw people.

“I’m in the nonprofit sector, so my salary is quite a bit less than other IT people,” says Richards. “But within the [nonprofit] field, I’m paid well. I’m very happy where I’m at.”

A 46-year-old senior engineer for a major cruise line in South Florida just received a 3% raise and an 8% bonus. The engineer, who has been with his company for 12 years, believes he’s paid what his skills are worth in the region, but he’s not on par with his peers nationally. “I’ve gotten offers nationwide that are quite a bit better, but I do enjoy living in Florida,” he says. “You have to take the good with the bad, I guess.”

Job security concerns

Overall, 63% of Computerworld survey respondents said they feel secure or very secure in their current jobs, a figure that’s virtually unchanged from last year. Those who are worried about job security say their concerns have less to do with the new administration’s possible effect on IT spending than with modern business realities, such as IT outsourcing and corporate mergers and acquisitions. For instance, 30% of survey respondents named “lost jobs due to outsourcing” as among the top five challenges facing IT workers today. 

The cruise line senior engineer notes that one of his company’s major competitors recently outsourced a large portion of its IT work to Paris-based Capgemini. “I don’t expect any changes in my company for at least a few months because we’re going through quite a bit of transition,” he says. “But after that, who knows? It’s possible that they’ll outsource the IT department. It seems to be the industry trend.”

An IT business architect who has worked for a major airline for 22 years reports that he got a 9% raise for the second year in a row, putting his salary back on track after several lean years in the airline industry. But the company has recently gone through a merger, and its headquarters is now in another city. “We’re now a satellite office, so my concern is more around forced relocation or shutting down a location,” says the business architect, 45. “Is somebody going to walk in and say, ‘This office is done’?”

Forging ahead with hiring

The uncertain political and business climate isn’t curbing some companies’ hiring plans. Maritz Motivation Solutions, a provider of customer loyalty, sales incentive, employee recognition and channel loyalty programs to U.S. and global companies, expects to add 10 full-timers to its team of 300 IT employees this year as it transforms into a consumer-facing software company with expanded platforms and business offerings, according to senior vice president of technology Bryan Phillips, 55.

“Front-end Java development is a hot skill for us. Business intelligence is another one,” he says. “We’re getting very heavily into machine learning and predictive analytics.”

A senior customer relationship manager for a cloud hosting company in St. Louis says his employer plans to add full-time system administrators, first-tier call center technicians and possibly some project managers in response to increased competition from other hosted services providers.

“I’m excited about the changes [in the political climate], but those changes also bring a whole lot of unknowns,” says the 60-year-old, who has been with the company for nine years. “But I’m generally optimistic for the overall IT industry. I hope to be relevant and needed by my employer for many years to come.”

Last fall, Robert Half Technology surveyed 2,500 CIOs about their hiring outlook for the first half of 2017. At that time, just 16% of the respondents said they planned to add more IT staffers, but 69% said that they expected to hire people to fill open IT jobs. Just 12% of those polled reported that IT hiring plans were on hold. “The hiring picture overall continues to be very positive,” says Reed.

“Companies continue to have [jobs] that chronically remain open because they can’t find the right person,” he says, adding that such vacancies are especially common in database management, desktop support, network administration and security.

Indeed, 37% of the managers who took Computerworld’s survey reported that they have spent three to six months filling certain open IT positions, and 15% said they’ve spent more than half a year trying to find the right person for an IT job.

Despite the demand for IT talent and the lure of higher salaries elsewhere, it seems that many IT pros are happy right where they are: 45% of the respondents to Computerworld’s salary survey said they aren’t looking for new jobs. And when asked where they expect to be in five years, 46% said they would likely be working for the same employer, either in the same position or a higher one.

Overall, “it seems like a lot of things have leveled out,” and the job-hopping race for bigger salaries has slowed, says Heinlein, who joined Walgreens right out of college 20 years ago. “I’ve noticed the larger companies are rewarding people who have hung around and have some experience with the company.”

Editorial project manager Mari Keefe oversees the survey and data analysis for Computerworld's annual IT Salary Survey and other editorial research projects.

Copyright © 2017 IDG Communications, Inc.

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