IT Salaries See Stingy Increases

More work, less bonus money and salary increases that don't keep pace with inflation. Here's how some IT professionals are coping in parsimonious times.

Walter Scott may not be your typical IT professional. But the circumstances around his current compensation have become all too familiar.

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Scott, a 20-year IT veteran, is a solutions architect at Verizon Business in East Meadow, N.Y., where he helps devise IP telephony systems for the company's commercial customers. Scott says he has helped land a few prominent deals since joining Verizon two years ago, including a $30 million contract with a health care customer in 2007.

But despite his contributions, Scott received a paltry 1.78 percent salary increase in February, and his bosses had to fight for that amount. Verizon's human resources department felt Scott was still learning his position and deserved a smaller raise, he says. Eventually, the HR managers caved in to the pleas of his supervisors, who argued for a bigger, though still minuscule, salary bump.

Like just about everyone else these days, Scott has had to adjust his personal spending in the face of surging cost-of-living increases, including escalating energy costs. After recently paying off their credit card balances, Scott and his wife scaled back their cable TV service and trimmed other extras.

"I've had to do a real drill-down on my budget and make adjustments and still save for retirement," says Scott.

Yet despite his need for financial conservatism, Scott says he's otherwise satisfied in his job. "It's a pretty good gig," he says. "There's no micromanaging. You manage your own schedule, and I get the opportunity to work remotely when I'm not out in the field."

Scott's situation is a snapshot of what's happening to many other IT professionals around the U.S. as employers are pulling in the reins on salaries. According to Computerworld's 22nd annual Salary Survey, based on responses from 6,801 U.S. IT workers, total compensation (salary plus bonus) rose an average of just 3.5 percent this past year, reflecting little change over the 3.7 percent average increase reported in 2007. Meanwhile, bonuses for IT professionals rose by an average of only 0.2 percent in 2008, compared with 3.4 percent in 2007.

"I think IT professionals have reluctantly accepted that the days of special treatment for IT—which did endure for nearly a decade—are gone," says David Van De Voort, an IT workforce specialist at Mercer in Chicago. (Read more about the changing IT profession.)

Certainly, the go-go days of the late 1990s—when Web developers and other IT professionals with hot skills were lavished with signing bonuses and other goodies—are a distant memory, says David Weldon, a former workforce analyst at Aberdeen Group Inc. who is currently with Wellesley Information Services. The best advice for IT workers who have been stuck at a certain pay level is to try to tie their own performance to the company's bottom line or draw a connection between how their work has helped the company to improve its productivity or operational efficiency, says Weldon.

And while IT salaries should see a lift once the economy improves, individual increases will largely hinge on the types of process and technical skills that businesses require, says Katherine Spencer Lee, executive director of IT staffing firm Robert Half Technology and a Computerworld.com columnist. "Technology is all about need vs. want and ROI," she says.

For instance, Lee expects to see continued demand for IT professionals with business intelligence skills who can help design and develop dashboards that senior managers use to track sales and expenses more closely.

Rocky Road Ahead

Despite the muddled outlook for IT wages, 60 percent of survey respondents said they're either satisfied (43 percent) or very satisfied (17 percent) with their total compensation packages.

"I feel good about my compensation," says Chris Ritchie, a technical analyst at Catholic Health Initiatives in Exton, Pa., who received a 2.5 percent salary increase after his first seven months of full-time employment with the nonprofit health organization. "I feel that my original salary for this role in this [industry] was competitive."

Still, more than half the respondents (52 percent) said they're looking for new jobs, with higher pay the prime motivator for 63 percent of them.

One—Mark Rathwell, a programmer at Michigan State University Federal Credit Union in East Lansing—is taking steps to blaze his own trail as an independent IT consultant. Rathwell has worked in IT at the credit union for four years, but he says opportunities to tackle new challenges there just haven't materialized. Plus, he says, "the pay is just awful."

Rathwell says he received a 3 percent salary increase earlier this year, which maps with his previous raises. But with gas prices surging and monthly student loan payments of $350 having recently kicked in, Rathwell has had to take on a second job as a part-time webmaster. "I've cut [my expenses] as far as I can," he says. "There's nothing else left to cut."

At a median annual base salary of $72,450, IT staffers are still earning well above the median household income of $50,233, according to figures from the U.S. Census Bureau. Still, the weak economy and an inflation rate of around 5 percent are taking a toll on all types of workers, including those in IT. Plus, their problems are being further compounded by shrinking corporate revenues and profits. As IT departments are being forced to cut costs, many CIOs are giving more work to their existing IT staffers rather than hiring for open positions or replacing departing IT workers. Forty-six percent of IT workers surveyed reported taking on extra work because of budget cuts and layoffs.

"CIOs are dealing with employees who feel they have too much on their plates," says >Umesh Ramakrishnan, vice chairman at CTPartners, an executive search firm in Cleveland. Consequently, IT leaders need to keep a close eye on their troops "to make sure no one is beyond their breaking point," he adds.

Although more than half of this year's Salary Survey respondents (56 percent) said their stress levels at work are about the same as they were a year ago, Greg Felt is among those who report that the pressure is mounting.

Felt has been a database analyst at Arrow Electronics Inc. in Phoenix for 12 years. But the company has closed several facilities over the past few years, and Felt says that as IT head count has dwindled, he and other remaining IT workers have absorbed the workload.

Felt estimates that his own stress level is about 30 percent higher than it was three years ago. "I try not to let it get to me," he says. "I just try to let it go before I go home in the evening."

Scott, a former layoff victim, has come to learn that job security is a tenuous thing, even when business conditions seem relatively strong. Although there are staff openings at his company, "you never know what upper management is thinking," he says.

"At the end of the day, the guy at the top is looking at the numbers and what the stock is doing," says Scott. "I've seen it where the business can change direction and people are here today and gone tomorrow."

This version of the story originally appeared in Computerworld's print edition.

This story, "IT Salaries See Stingy Increases" was originally published by Computerworld.

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