No Recovery for IT yet --- WHEN??
Cost Cutting Eliminates Many Jobs - Surplus of IT Professionals Increases!
Park City, UT - M. Victor Janulaitis, CEO of Janco Associates, announced today results of its July 2002 Salary Survey. In the ongoing survey, the effects of the economic downturn are reflected in the overall compensation paid at all position levels in technology. Many positions have been cut in IT organizations at the same time as bonuses have been all but eliminated.
“As the economy worsens, most IT organizations are effected more cost cutting and eliminating staff”, stated Janulaitis. “Almost all organizations we have surveyed have hiring and pay freezes in place. In the past six months there has been a significant "thinning" of the layers within many IT organizations. Many organizations have even eliminated a layer of management. The greatest cuts are those associated with growth and expansion of services such as Capacity Planning and Training/Documentation. "
Janulaitis also said, "There are some bright spots. The good news is that over-all productivity is up in IT organization and demand is high for Security positions and Wireless applications. From all of the data we see there will be NO recovery in the IT job market until at least January of 2003. "
In post interviews, Janco found reduced corporate earnings, which make up key components of most performance bonus plans, have driven the trend to lower total compensation. There has been a decrease in demand for IT professionals due to extensive across the board head count reductions. In addition as more companies have closed their doors, the surplus supply of senior level IT professionals has exploded. Many have lost major portions of their retirement programs as values of 401K and stock options have plummeted. Individuals who were going to retire between now and 2006 are now planning on working at least until 2010.
There has continued to be an increase in the Benchmark for SELECTED positions within the IT functions. A consolidation in IT organizations has taken place and many enterprises have “eliminated” a layer in the management of the function. This has resulted in a reduction in the number of top level individuals like Vice Presidents, Directors, and Managers who report to the CIO. The table below depicts some of the short term compensation trends.
Over just the past six months, the mean salary level for all IT positions has been pushed to $73,856 (3.42% Increase) in large enterprises and to $669,962 (5.12% Increase) in medium sized organizations. This while the Benchmark compensation for has decreased - this is a sign that there are fewer newer employees and the employees being retained are typically the better performers who are more highly compensated.
These figure includes all forms of compensation comprising of items like bonuses and stock options to other special fringe benefits such as special trips. The survey of over seventy technology positions is based upon responses given in extensive Internet polling as well as a “survey of surveys” that includes data from across the United States and Canada.