IT Pay: Premiums for IT Skills Drop as IT Departments Reorganize

CIO — While staffing firms report that IT salaries are growing, Foote Partners, a boutique IT benchmarking and research firm in Vero Beach, Fla., has been observing a different trend.

Founder and CEO David Foote says pay premiums for 82 specific technical skills and 88 different technical certifications have been dropping for a year. Premiums are the extra cash companies sometimes pay to full-time employees or contractors on top of their annual salaries or hourly rates in order to acquire a specific, desired skill or certification.

Foote isn't surprised to see pay premiums for technical skills and certifications plummet. The value of IT certifications, he says, has been sliding for five years. Meanwhile, pay premiums for technical skills began falling at the end of 2010, after 20 consecutive months of increases.

Foote says the dip in demand for technical skills and the corresponding drop in pay premiums for them represents a "correction" in the way IT leaders are structuring their IT organizations, and consequently, in the way they value various skills.

In short, according to Foote's assessment of the market, IT leaders see technical skills and certifications as a dime a dozen, and thus, not worth paying premiums to acquire. Moreover, IT leaders are not necessarily looking for pure technical skills as they re-staff their IT departments, undertake new projects and focus on innovation. "Tech skills are third, fourth and fifth on their lists of desired skills," says Foote.

Number one and number two on their lists are business skills. IT leaders surveyed by Foote say they're seeking IT professionals who can help their companies innovate, who possess industry knowledge, customer awareness and proven experience. They want people who can wear multiple hats and jump from job to job.

"They're looking for walking Swiss army knives," says Foote.

He adds that the restructuring of IT departments that took place during the recession, which in some cases continues today, is driving demand for business skills and contributing to the devaluing of pure tech skills.

"Companies are going through huge reorganizations," says Foote. "They dumped a lot of talent during the recession. These were a lot of infrastructure jobs they didn't want in the first place. Now they're saying they want to produce value for their organizations, and they're overhauling their focus on skills, away from siloed tech skills to more IT-business hybrid jobs, to get the innovation they need."

The more business-minded skills that Foote tracks that are in greater demand and commanding the highest pay premiums are risk management, business performance management, business process management/improvement, quantitative analysis, predictive analytics and modeling, change management, IT governance and requirements analysis.

The one technical skill area that is bucking the downward trend is application development. Employers are paying premiums for certain development skills including Java, Ruby on Rails and Groovy/Grails.

Foote expects the drop in pay premiums for technical skills to continue through the rest of the year, but he anticipates they will rise again next year. "It's a cyclical thing that happens after recessions," he says.

Foote Partners tracks pay and demand for 279 technical skills and 245 IT certifications by continuously collecting data and insights from 2,257 public and private sector organizations.

Meridith Levinson covers Careers, Security and Cloud Computing for CIO.com. Follow Meridith on Twitter @meridith . Follow everything from CIO.com on Twitter @CIOonline and on Facebook . Email Meridith at mlevinson@cio.com.