Don't worry. The millennium boom party may be over, but the IT industry remains in high spirits. The rate of salary increases may be slowing, but this is more a sign of the pre-2000 fever breaking rather than the approach of a recession. The fact is, we've become so used to the huge salary hikes and severe staff shortages over the last few years we don't know what 'normal' is anymore. The 1999 National Computing Centre (NCC) Salary and Staff Issues in IT Survey shows reduced use of contract staff, lower staff turnover and fewer staff shortages, as well as a salary slowdown. But these are reductions only because of the inflationary effect of year 2000 projects on previous figures. So you can wave goodbye to 10%-plus salary increases for a start. Top-line increases for 1998/99 look dowdy compared with past years. The average increase in total salary has fallen from 7.1% to 5.1%. But all we're seeing is a reduction in the rate of growth, not a reverse of growth itself. The good news is that these increases, although lower than last year, are still way ahead of inflation and are more sustainable then the extreme rises caused by the year 2000 blip. (see graph: Average increase in total salary for all IT staff, 1989/90 to 1988/99). In 1998, year 2000 projects meant that development staff were the favoured group among IT workers, receiving higher-than-average salary increases. This year, IT managers are the leaders in the salary stakes, receiving average increases of 5.5%. This has brought together salary increases for IT managers, senior developers and developers, reflecting the need for a balance between management and development skills. At the bottom end of the scale, operators - with a closer-to-inflation-rate increase of 3.9% - are less well rewarded by comparison. Location, location, location Regional and industry sector differences still have a major effect on salaries. If earning big money is your main goal then the best rates are still paid in Greater London, which includes parts of Essex, Hertfordshire, Kent, Middlesex and Surrey. Here salaries are 15% above the average and 20% to 25% higher than those paid in the rest of England, excluding the south-east. The latter still remains lucrative, boasting an average IT salary of £26,913. Those who choose to work in the south-west and Wales obviously do so for lifestyle reasons rather than remuneration, because despite the growth of business such as Bath and Swindon, the average IT salary for this region is just £23,097. (See graph: Average salary of all IT staff by region). Drill down into the regional figures and you'll find areas that buck the trend. For example, system development staff in Greater London earn an average salary of £30,415, barely different from the regional average of £29,659. Industry sector Industry sector has a major impact on salary levels. IT services and finance and business services pay the most in terms of all IT salaries. IT managers, technical support and network support staff fare particularly well within the finance and business services sector. IT services generally pay above the average for development staff and IT managers. The utilities also pay their development and user support staff well. But sympathise with staff in the government, health and education sectors; their average salaries are 12% to 15% below the average. And there are few perks or extra benefits to make up for it (see graph two: Average salary of all IT staff by industry sector). Career strategy With so many variables, planning a career strategy is vital. So we analysed the NCC data to see which factors have the most significant effect on salary. We looked at the effect of region, industry sector, IT department size, IT budget and company turnover on the salaries of IT managers, project leaders, senior technical support staff and network controller/administrators (see graph: percentage salary variation. NB: not supplied by the NCC). Company turnover and IT budget have the biggest effect on IT managers' salaries. As you might expect, the best-paid managers work for large organisations. But bear in mind that although the bosses in small companies may not be as well paid, they don't carry the same level of responsibility. Region has the least effect on IT managers' salaries. This bodes well for those who want to move around the country, because it shows their value is determined by factors other than their location. A career strategy has to take non-financial factors into account. Even though managers in smaller IT departments are on lower salaries than their corporate counterparts, they benefit from having fewer staff to manage. The smaller the staff the lower the hassle factor, and the greater the freedom to take action rather than merely manage. When assessing the value-versus-hassle factor, remember that in general there is a consistent correlation between installation size and salary. Get-ahead project leaders should reach for a map of southern England. For them, region - rather than size of company - is the most significant factor in determining their salaries. As a senior technical support worker, your salary will be mainly influenced by company turnover - indicating that corporates take the support issue seriously - followed by industry sector and IT budget. Like IT managers, you have the scope to move region without taking a major drop in salary. Network controller or administrator salaries are almost equally effected by the size of their firms' IT budgets and their industry sector, followed by their location. So look for large IT departments in the finance and business services sector. New directions If you are tired of the traditional IT career path, which forces IT professionals to swap the technical track for a management role if they are to gain recognition and rewards, there is fresh hope. Over the past year two new IT jobs have emerged: client account manager and IT consultant. Client account managers are senior staff responsible for managing liaison between IT and business. IT consultants are senior technical specialists with a variety of roles, including assessing new technologies, formulating strategy and troubleshooting. Both positions are management-level and together they show how IT skills requirements are broadening. They also illustrate how operational and support staff are no longer being favoured over managers - a point underlined by last year's large salary increases for management. The median salary for client account managers is £34,429, which positions them just above project leaders, but little below the median IT manager salary of £38,452. IT consultants are more technology-focused, but the value of their experience and expertise is being recognised, as their median salary is £36,071. By combining business and technology skills, these new jobs offer IT staff a chance to break through the technology ceiling. They also show how the role of the IT department is developing into the business area. Client account managers are in place across all regions, sectors and department sizes, although they are more likely to be found in companies with large IT departments. The return to favour of managers and systems development staff, plus the addition of two new management-level positions, shows that organisations are taking a more sophisticated view of staffing and skills. They know the value of high-level technically-oriented people when it comes to maintaining competitive advantage, especially if they are planning ecommerce activity. This also helps explain why region has less of an impact on salary at senior management level. Recognition of the role played by senior technical staff also helps to explain why functional tasks are being outsourced while strategic positions remain in-house. Taking into account this pattern, it comes as no surprise that over 50% of survey respondents expect the number of IT staff to grow over the next two years, and that most of the growth will be in the IT services sector. With their senior staff in place, what will organisations be doing in the first few years of the millennium? Over 60% of those surveyed are looking for new skills, and of those a third of respondents seek Internet skills. This figure has risen sharply from last year, showing one clear strategic change of direction following the millennium boom. Java skills are high on company shopping lists, along with knowledge of ecommerce. Web specialists can look for 20% salary premiums or £1,500 cash bonuses. Significantly, the NCC has introduce a third new job category this year: web masters. In addition to Internet and ecommerce skills, generic skills in networking, project management, database administration and business analysis - which are all essential for ecommerce - are in demand. There are plenty of openings here, as organisations are seeking to fill these vacancies with new recruits, rather than internally. Although demand for skills to implement, manage and support Windows NT has dipped slightly, indicating that organisations are training staff in-house or have by now acquired many of the NT expertise they need, some organisations are willing to offer a salary premium of 10% or a £3,000 bonus to attract skilled NT staff. Application-specific skills are falling out of favour. Lotus Notes/Domino and Oracle knowledge is less in demand than last year, and only 13% of respondents pay more for specific skills. In the short term, Notes specialists will continue to do well financially; they are still commanding a bonus of 25% of salary or £3,000 in cash, and Oracle skills are still worth a 15% premium or £5,000 in cash. However, the number of times organisations cite these skills as necessary is dropping. Similarly, the demand for C/C++ skills is down, while the call for knowledge of Visual Basic has increased - a pattern reflected in efforts to stock up on Internet and ecommerce development skills. So, should you stay with your current employer or move? On one hand, recruitment rates are down to pre-1998 levels, turnover is down (churn is 12.7% instead of 16.2%), and there is a corresponding drop in the perception of perceived skills shortages from 11% to 7.7%. Also, although turnover rates for technical support staff, network support and systems developers are high, systems developers are in short supply. On the other hand, organisations are recruiting people with Internet and ecommerce skills - which encompass generic networking and software skills such as Java - and are putting IT professionals in senior positions. It is clear that organisations are backing IT professionals who can adapt and show an awareness of strategic planning issues.
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