IT Compensation Getting Better

With a strong economy, fewer tech grads and more senior level professionals retiring at a faster rate, in 2007 IT managers will be challenged by a tighter market for skilled IT professionals and IT salary levels that are rising across the board.

According to a new Computer Economics study, 2007 IT Salary Report , while the IT job market will not be nearly as frenetic as it was in the late 1990s, we expect it to be more active this year than at any other time this decade.

“I think it’s a trend we’ve seen for several years; of the IT job market tightening and salary increases are consistent with that,” said Frank Scavo, president of Computer Economics, a provider of original research and advisory services on the strategic and financial management of IT.

Additionally, while the projected average salary increase in 2007 across all IT positions will reach 3.8% (the highest point since 2001), it will still lag behind the 4.2% average U.S. wage increase for all professions, as reported by the U.S. Bureau of Labor Statistics in 2006.

With a favorable job market, many IT specialists will have increased leverage this year, which will translate into larger compensation packages. This could also result in more individuals changing jobs in 2007 as they look to maximize their earnings.

This may be especially true for senior managers and technicians as these groups continue to experience a “thinning in the ranks,” which means companies will likely pay a premium for the key experience these individuals offer.

Based on a recent staffing survey, over 50% of all companies will increase their IT staff headcount by five percent or more in 2007. The data also shows that 25% of all companies will increase their headcount by at least 15%.

This growth, coupled with the fact that less than one-fourth of all companies are projecting an IT staff decrease in 2007, will likely translate into an even greater shortage of IT personnel to fill the anticipated growth.

IT Salary Trends

Starting in 2005, salary increases began to accelerate. In 2005, the average increase for all positions was approximately 2.5%. This upward trend continued in 2006, when the overall average exceeded three percent for the first time since 2001.

The 2007 IT Salary Report also includes analysis of current IT salary and staffing trends, such as employee turnover rates by organization size and changes in the use of outsourcing by organization size. It also analyzes the factors that affect variation in salaries by job function and geographic region.