IT Salaries Heading North in 2006

2006 is looking good for IT professionals. Business confidence is prompting new technology spending which, in turn, is expected to translate into increased hiring and salaries.

The slight increase in compensation and hiring that occurred in 2005 will continue and escalate in 2006; increasing demand for all IT skills.

“There’s great news for the IT professional as we move into 2006. The job market in the U.S. is improving and is doing so quite rapidly,” said Scot Melland, president and CEO of Dice Inc., a leading provider of online recruiting for technology, engineer and security-cleared professionals.

While, over the past two years, there was an up-tick in the hiring of people with core technology skills, such as developers, systems analysts, database administrators and network engineers, salaries didn’t keep pace.

In fact, after a couple of years of salaries being flat to down, the first real rise in IT compensation, of 2.4% (or $66,300 to $67,900), was at the beginning of 2005, according to Dice surveys.

As 2006 nears, skilled IT workers can expect to see increased job opportunity and a rise in compensation of five percent or better, particularly in job categories where demand will outpace supply.

Reason to Smile

International recruiting firm, Robert Half Technology (RHT) and Janco, a Utah-based international consulting company doing salary surveys since the 1970s, corroborate the good career news for the IT sector.

In a recent survey of CIOs, recruiting firm Robert Half Technology found that 16% of executives had plans to hire full-time IT staff in the fourth quarter of 2005. Specialties experiencing the most growth, for this time period, are networking (19%); help desk/end user support (15%); application development (12%); data/database management (11%); and, information security (9%).

However, Matt Sullivan, a branch manager at RHT in King of Prussia, Penn., notes that the top five jobs with the greatest increases in both salary and demand are:

  • IT auditor (salary range $67,000-$94,250, an 11% increase over 2005);
  • lead application developer (salary range $72,000-$98,250, a 5.3% increase over 2005);
  • network security administrator ($67,500-$94,750, a 5.2% increase over 2005);
  • business systems analyst ($58,750-$84,750, a 5.1% increase over 2005); and
  • data analyst/report writer ($54,000-$71,250, a 5% increase over 2005)
  • .

    Taking a more general, across-the-board look at IT salaries for the 2006 timeframe, Victor Janulaitus, president of Janco, expects compensation to cap at five percent. The story gets better for senior level IT executives. CIOs and directors who report to the CIO can expect to accrue bonuses based on company performance.

    “In 2005 we began to see companies give bonuses of 20% to 30% to senior level IT executives. We expect that trend to continue in 2006,” he said.

    Hot Jobs

    One of the most in-demand IT professionals for 2006 is the rare breed of technologist with a firm grasp of business processes who can deliver on projects. Industry recruiters say it’s becoming a buyers market for project managers.

    “The individual who meets the job criteria can pick where in the country they want to live,” said Janulaitus.

    According to Dice, the number of jobs for project managers was up 370% over the last two years, compared to an increase of 162% for the total number of positions for the same time period.

    The steep increase in demand stems from a backlog of projects after the slump of 2002-2003 when companies not only downsized IT staff but eliminated entire groups. “When the market improved, companies hired outside consultants. Now they want to build internal staff,” said Melland.

    Compensation for project managers who bring to the table both technology and business acumen, can manage large projects with lots of people, and meet critical timeframes, is about $125,000 to $130,000, according to Janulitis.

    Another very hot job area on Dice is systems administrator, especially with Linux experience. Melland reports a 388% increase in systems administrator positions on the Dice job boards over the last two years.

    There’s also a strong call for IT professionals with any core technology skill set who have active government security clearance. Job postings were up 233% over the last two years, according to Dice, with demand driven by defense building and homeland security.

    Increased demand and technology spending over the past two years has tightened the pool of network engineers, developers, especially with Java and .NET expertise, systems administrators and database administrators.

    “What that means for 2006 is skills shortages in some metro areas, a rise in compensation and increased turnover,” said Melland.

    Hot Areas

    Hot job markets such as New York and Washington D.C. are expected to remain active. Secondary areas such as Boston, Philadelphia and Los Angeles where a lot of job growth occurred over the past six months, expect to see continued activity into 2006.

    Nationwide, businesses required to comply with the Sarbanes-Oxley Act (SOX), Gramm-Leach-Bliley Act (GLBA), and the Health Insurance Portability and Accountability Act (HIPAA), need IT auditors to document the capabilities of their existing systems in light of compliance.

    “These government regulations have brought a new found respect to the position of IT auditor with CISA certification,” said Sullivan.

    The financial services sector is expected to take the lead in IT hiring as they upgrade trading systems and CRM systems, for example. Hiring is also expected to be strong in the defense and aerospace sectors, where security clearance is required.