by Steff Gelston

No Break Seen in the IT Talent Wars

Dec 19, 2007 11 mins
IT Leadership

Job demand is forecast to remain strong in 2008, which means CIOs will pay higher salaries for quality talent. Learn from four staffing specialists about 2008's trends in IT staffing, recruiting and compensation, including jobs that will be most in demand.

IT managers hoping for the staffing situation to ease up next year are bound to be disappointed, as experts expect the talent wars to continue to rage in 2008. The trends that shaped IT’s hiring landscape in 2007—including low unemployment, a limited talent supply, increasing reliance on technology and demand for business acumen—will remain in play during the coming year. And that means rising salaries, increased benefits and a choice of employment opportunities for job hunters who have the right skill sets.


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“It’s a good time to be a technology professional,” says Katherine Spencer Lee, Executive Director of Robert Half Technology, an IT staffing provider. “It boils down to simple supply and demand.”

CIOs, on the other hand, will still be locked in a fierce struggle to recruit and retain the best and brightest IT workers in their quest to drive competitive advantage.

But this isn’t a case of dotcom deja vu. IT leaders must now compete for talent in an uncertain business environment in which the housing slump and tightening credit are blunting U.S. economic growth.

“If the economy does take a turn for the worse, a lot of companies’ plans will be dead in the water and we’ll be back in a scarcity model,” says David Foote, CEO and chief research officer, Foote Partners LLC, an IT workforce research consultancy.

Of course, no one can predict the future. But to get a feel for how trends in IT staffing, recruiting and compensation are likely to shape up for the year ahead, we asked four specialists—Spencer Lee; Foote; Liz Brady, senior analyst of Forrester Research’s Leadership Boards; and Jim Lanzalotto, vice president for Yoh, an IT talent and outsourcing services firm—to look into their crystal balls. Read their predictions regarding the state of IT staffing in 2008. What is the IT hiring outlook for 2008?

Katherine Spencer Lee: Ongoing business expansion and increased reliance on technology are resulting in a strong demand for IT professionals with real-world experience. Areas where companies are having difficulty finding strong candidates include Web and application development, network administration, database management and systems administration.

Unemployment in technology has been at historically low levels for the past few years. Employers are responding to this shortage of talent by raising salaries and improving other benefits. The 2008 Robert Half Technology Salary Guide, for example, is projecting average salary increases of more than 5 percent for the 60+ IT positions we track. In-demand positions like network manager, data modeler and applications architect are projected to see salary gains of more than 7 percent higher than 2007.

Liz Brady: It depends on whether you’re hiring or looking for a job! The demand for quality IT talent is booming, while the talent pipeline is more constrained than ever. CIOs are finding it very difficult to recruit top talent because of a culmination of factors: decreased enrollment in technology majors; the impending retirement of a large population of IT workers; and a general misperception of the IT career as a dead-end path, subject to eventual outsourcing.

What CIOs and organizations find alarming about a weak pipeline is that it creates a shortage of crucial midlevel talent ready for future IT leadership roles. But in the short term, they have an open headcount (even with low attrition rates) and a struggle to find quality talent with the right amount of experience and the critical skills they need to be a strategic driver for the company.

David Foote: The convergence of business and IT hasn’t really happened as anticipated, with the exception of intensely competitive customer-driven industries such as gaming and hospitality. Still, the most exciting IT jobs in 2008 will be so-called IT/business hybrid roles that combine functional area and/or vertical business knowledge and specific process and operations acumen with a wide range of technical skills.

It will be a watershed year for IT professionals examining their long-range career ambitions and deciding once and for all, Do I have what it takes to be this type of person? Too many have been avoiding this, but employers have become desperate for such talent and in 2008 will force the decision like never before.

Jim Lanzalotto: The hiring outlook for 2008 is a little like Goldilocks and the three bears. Some markets will stay hot, including functional and technical consultants, project managers and security experts. Others will be lukewarm, such as Web development, networking and data administration. And still others will be too cold, including help desk and tech support roles. Which IT jobs will be the hottest—and hardest—for the CIO to fill next year?

Katherine Spencer Lee: Networking and end-user support are two traditional job categories experiencing significant growth within IT departments. In addition, there are talent shortages in a number of specialties, such as applications and Web development and database management.

Offering competitive compensation is crucial for recruiting candidates with experience in these and other high-demand specialties. Sign-on and annual bonuses, equity incentives, professional development programs and other perks also are becoming more common.

There also is strong demand for messaging administrators—the air traffic controllers of IT. They manage the vast amount of information passed among e-mail systems, corporate networks and, increasingly, handheld devices like BlackBerrys.

Liz Brady: The most in-demand talent for 2008 will be those workers who have the three key abilities: technical versatility, business knowledge and interpersonal skills. They play critical liaison roles for the IT organization, typically filling project management, business analyst and relationship management positions.

CIOs also will find it difficult to recruit talented IT managers, database administrators, architects and those with Oracle and SAP expertise. Recruiters I interviewed said that the global CIO role is in high demand among global organizations.

Jim Lanzalotto: The jobs that will be in most demand by CIOs next year include SAP functional and technical consultants, project managers and security experts. What’s the overall compensation trend for IT staff?

Katherine Spencer Lee: According to research conducted for the “Robert Half Technology 2008 Salary Guide,” the projected increase in average starting salaries for technology professionals in the United States is 5.3 percent over 2007, compared to a 2.8 percent projected increase last year.

Liz Brady: I did not ask this specific question in my research but the general sense I got from interviewing more than 20 CIOs and experts is that compensation is on the rise for the IT staff and the CIO because of a general talent shortage. By key roles I mean those that are typically not outsourced, such as project management, business analysts, relationship management and mission-critical technology positions.

Compensation is also on the rise in India, which is lowering some of the cost savings for organizations who leverage offshore talent. CIOs are evaluating other locations in the global talent pool, such as China, Brazil, Argentina, Eastern Europe and the Philippines. If there are non-mission-critical roles that can be fulfilled by talent that is located in another country, CIOs are lowering those costs and focusing on offering the best package possible to those they keep in-house.

David Foote: Research involving 1,900 employers for Foote’s Partners’ quarterly “IT Skills and Certifications Pay Index” indicates the most growth in skills pay in 2008 will be in database, applications development, security and the especially fast-growing skills group known as management, process and methodology (e.g., ITIL, business intelligence, business analysis).

Experienced SAP workers will continue to top the hardest-to-hire list but expect a surge in spending for a range of security skills as accelerating customer fears force vendors to be much more aggressive in fighting rampant data theft.

Jim Lanzalotto: Wages for technology professionals continue to improve year over year. These are the good old days for IT, and wage growth will remain strong as demand for IT talent continues to increase. What about overall compensation for the CIO?

Katherine Spencer Lee: Salaries for senior IT executives will continue to grow significantly in 2008. With IT fully integrated into all other aspects of a company’s operations, the demand for CIOs with business and leadership skills is strong. CIOs are taking on more strategic roles in their organizations, helping to shape business vision and objectives, and contributing to key decision-making and planning processes. What three IT staffing trends should be on the radar of every CIO in 2008?

Katherine Spencer Lee: Virtualization is hot right now. Few IT professionals possess experience in virtualization technologies and hardly any computer science programs teach the skill set. Savvy companies are training existing staff, but there still aren’t enough people with years of practical experience in virtualization. Companies can save a lot of money with resource consolidation, but they need to find and/or train people to do the work.

For a short-and-sweet intro to virtualization basics, see ABC: An Introduction to Virtualization.

The need for skilled Web developers who have experience in the creation of Web 2.0 functionality is high now as well. Developers who possess programming skills in areas like Ajax, straight Java, .Net and open-source applications are highly sought.

Need an overview of Web 2.0 technologies? See our primer on the subject.

Another big-picture staffing trend for 2008 is the common theme of recruitment and retention. CIOs are struggling to find enough talented development and support staff to compete. And with many baby boomers retiring, this dynamic will get worse before it gets better.

A lot of companies are doing succession planning to prepare the next generation of leaders, or ramping up their recruitment efforts at college campuses in order to secure new talent. Smart CIOs realize that it’s a comprehensive effort to find new IT professionals and keep them on board. It’s not something they can solve overnight.

Liz Brady: CIOs should be thinking now about how to:

  • Tap into new talent pools. There just isn’t enough talent to go around, and CIOs tend to overfish in the same pool. They all want the existing IT professional with experience under the belt.

  • Recent college graduates and graduate students are one pool of talent that more CIOs would benefit from leveraging. Many students today are willing to give two to three full days per week to a job and arrange class schedules around internship experiences. They are often very loyal when the organization offers scholarships and compensation for work they do. The key is for CIOs to give them challenging, rewarding work that would make them want to accept a full-time job offer.

  • Hire globally. CIOs have to take on a global hiring mind-set. Whether that means setting up remote offices in other countries, helping IT talent get the appropriate visas to work locally, or some combination, the best approach to hiring in 2008 is to take advantage of the best talent, no matter where that talent lives. Remote workspaces and communications/collaborations tools have become robust enough to sustain a workforce that is “virtual.”

  • Sell what’s unique about your IT organization. CIOs have to hone their sales skills, practice their pitch and get on the road with the “wow” factor—what makes their IT organization unique. We also call it “branding” the IT organization. It could be work-life balance, the opportunity to work with innovative technologies, the amount of training provided, etc. Also remember to educate those who recruit for you, including human resources, internal staff, and third-party recruiters.

David Foote: 2008 will be a “come to Jesus” year for the 52 percent of IT workers—according to surveyed employers—who hold job titles that aren’t consistent with what they actually do on the job. Why is this a problem for CIOs? Because salary survey benchmarking is done predominantly by job title. These mismatched professionals tend to be paid below market levels, much to the chagrin of their HR departments. Recruiters have caught on to this and in the coming year will brutally exploit this weakness—targeting the best people—unless IT moves aggressively to recognize its vulnerability.

What to do? Either retitle people or pay premiums (in cash bonus or salary adjustment) for hot IT and business skills in order to bring their total pay to true market levels.

Jim Lanzalotto: Going into the next year, every CIO needs to prepare for and pay attention to talent availability, IT pay rates and talent retention. These three trends are going to be the biggest ones to watch next year.