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November 14, 2001
Rapid Rise of IT Pay Tapers Off
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continues to climb steadily if not spectacularly for corporate IT jobs, a new survey reveals.

But it also shows that many companies are turning to outsourcing and contracting to meet their technology service and support needs.

The survey, conducted by human resource consultants William M. Mercer, found that during the past year, median total cash compensation (base pay plus short-term incentive) for some of the most common jobs in IT rose, at most, 7 percent or 8 percent.

But Mercer notes that pay for most jobs rose 5 percent or less, keeping overall increases in line with national norms for all jobs across all industries.

Mercer's 2001 Information Technology Compensation Survey gathered data from nearly 1,100 mid-sized and large corporations nationwide on base pay and short-term incentive levels for more than 220 IT jobs, as well as overall pay practices affecting IT employees. The survey data represent pay levels for more than 230,000 IT employees across the US.

The participating employers, representing a variety of industries, have median revenues of $1 billion and median employment of 2,839 employees.

Pay increases

For 20 of the most highly populated jobs in this year's survey, seven saw increases in median total cash compensation over the past year of more than 5 percent, eight saw increases of 3 percent to 5 percent, and five saw increases of less than 3 percent. The largest increases were 8.5 percent for intermediate software systems engineer, 7.1 percent for senior software systems engineer, and 6.8 percent for senior database analyst/programmer.

The job family with the highest pay increases across the board was software systems engineer. The five jobs in this family (associate, intermediate, senior, lead, and staff specialist) had increases in median total cash compensation of 5.2 percent to 8.5 percent this past year. Another strong showing was applications systems analysis and programming, with eight jobs showing increases in the range of 3.4 percent to 5.8 percent.

"It has been a challenge this past year to project trends in IT pay," says David Van De Voort, leader of Mercer's Global IT Workforce Effectiveness team. "Weakness in the general economy and the technology sector has removed the extraordinary pressure on IT staff retention, but there still are critical shortages of IT talent."

Staffing issues

Nearly two-thirds of the survey respondents (64 percent) outsource or contract at least a portion of their computer services and support. Of these, 4 percent outsource more than 50 percent of their IT staff, 14 percent outsource 25 percent-50 percent, and 81 percent outsource less than 25 percent. The IT functions most commonly outsourced include applications programming analysis (64 percent outsource this function), PC/desktop support (37 percent), software systems engineering (31 percent), help desk (28 percent), network support (28 percent), and data center operations (17 percent).

Contract staff are most frequently used in the areas of applications systems analysis and programming and applications programming. The contract rate as a percentage of the in-house pay rate is 191 percent for the former and 182 percent for the latter.

More IT professionals are employed in applications systems analysis and programming than in any other area of corporate IT. Mercer's 2001 survey reports pay data for more than 230,000 IT professionals nationwide. Of these, more than 58,000 are in five jobs related to applications systems analysis and programming (associate, intermediate, senior, lead, and staff specialist), including more than 20,000 alone with the title of senior applications systems analyst/programmer. Other common functions include business systems analysis (more than 17,000 IT professionals in the same five job levels) and software systems engineering (nearly 12,000 IT professionals in five jobs).

"Employers must be careful not to squander the investments they have made in IT staffing over the last few years," Van De Voort cautions. "Organizations that sustain their efforts to be an 'employer of choice' for IT professionals, even when business results weaken, will be rewarded with greater loyalty and productivity when the economy strengthens."


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