Life after the downturn
Salary survey: What are you worth now?
By Loretta W. Prencipe and Stephanie Sanborn
(IDG) -- Welcome to the return of technology as a good job -- not an automatic ticket to wealth.
"IT was so hyped up in the last two or three years with stories about massive salary increases," says Stacy Hayes, executive recruiter at The McCormick Group, in Arlington, Virginia.
The tech run-up of 1999-2000 brought hyper-aggressive growth, intense competition for IT talent, and a rapid rise in tech salaries. "The [market] balloon expanded," Hayes says. "[Now] the dot-com balloon has deflated. Some regions, like Silicon Valley and Atlanta, are seeing more pronounced [economic] effects."
Hayes' comments are echoed in the 2001 InfoWorld Compensation Survey results. Some 3,629 survey respondents described an IT compensation market in flux. Exactly who received a salary increase, saw no change in pay or took a cut depends on the IT professional's job title, geographic region, industry and the economy.
According to the survey on compensation trends for the 12-month period ending in April 2001, some tech workers still command big salaries, big raises, and big bonuses. For instance, senior managers at non-startup Internet companies nationwide earn an average $141,843. But that's just part of the picture.
Nearly 42 percent of IT professionals working at ISPs reported receiving no salary increase during the 12 months ending April 2001.
Over half of responding independent contractors-consultants reported an average salary of $129,810, an increase of 32 percent over last year, and an average bonus award of $38,588.
But 8 percent reported an average salary decrease of 18 percent. That's no surprise given the dot-gone landscape and near-daily reports of missed corporate earnings.
Fortunes, rising and falling
With the shine off Internet pure-plays -- and former optionaires turning into regular Joes -- recruiters and hiring managers report that established notions such as job security and stability have become hip in the IT work force. Yesterday's less-than-glam organizations in more traditional industries such as government, insurance, product distribution and health care might be viewed as safe -- and maybe even sexy -- IT-career havens in this rocky economy, according to survey results.
This attitude change by many is nothing new for David Deakin, vice president of IT at YSI, a manufacturer of environmental and sensor instrumentation based in Yellow Springs, Ohio. Deakin hasn't lost anyone from his nine-member IT staff in two years, a feat he attributes to external and internal factors, namely the Dayton-area job market and opportunities for his staff to affect business decisions.
"At YSI," he says, "the people haven't always been looking for the highest salaries. Ohio isn't near the highest IT compensation levels. The certain security that IT folks had in [getting high salaries] during the last few years, that's gone.
"People here are looking for things other than money; they're looking for the total package. [IT workers] like to feel they can be more broad-based in making the company more successful. I bring them into the business basics, rather than just the technical process."
Kurt Kline says he's also seen his traditional-line company, Mutual of Omaha Insurance, benefit from what some call a recruitment and retention renaissance.
"We have a high-quality IT shop with high-quality management and pay that stays close to the market. People are thinking, 'I have a good thing. Now's not a good time to be jumping around,'" says Kline -- he's a first vice president of IS human resources and started with Mutual as an IT worker.
This resuscitation may be coming about in part as a result of a perceived easing in the supply of IT professionals, despite recent reports to the contrary. Information Technology Association of America estimates the 2001 IT work force at 10.4 million and projects an estimated 900,000 open IT jobs, 425,000 of which will go unfilled.
The numbers at Mutual of Omaha reflect this looser IT job market. Open positions at the company dropped to 15 from 60 just 18 months ago.
"There's definitely been a change in the last six months," Kline says. "The number of voluntarily terminated employees has dropped. Our attrition rate in Oct 2000 was 10.5 percent. The current 12-month attrition rate is 6.9 percent.
"A year ago, managers got lots of input from our people about the money out there [at startups and other companies]," Kline adds, noting that as the economy slowed, so did staff/manager discussions on the subject. Today Kline and recruiter Hayes say they see more and better resumes popping up in their e-mail. As a result, Kline says he turns away better-qualified candidates more frequently than in the recent past.
"Eighteen months ago I would have taken [systems professionals] at 75- to 90-percent qualified," he says. "At career fairs now, I see lots of senior-level professionals, some with 10 to 15 years' experience as analysts, not making the cut."
According to the 2001 InfoWorld Compensation Survey, salaries can vary anywhere from an average of $133,267 for senior managers in the tech-heavy ASP field to $88,741 for senior managers in the more traditional wholesale-retail distribution industry, where IT staffers pull down an average salary of $58,315.
But it's not just salaries that are changing. The work itself at traditional companies has changed, too, uncovering some good IT career opportunities.
"You're going to get more Web-ification of internal processes for manufacturing and distribution," says Joel Abraham, Milwaukee-based director of Midwest operations for ProQwest, a staffing company.
Abraham, who is also president of the Wisconsin Technical Recruiters Network, says he sees supply-chain systems as the next big manufacturing IT push because "that's where the true savings is. The Web lets [manufacturers] do more with what they have."
As a result, he says, Web developers and supply-chain specialists in the Midwest are generally "commanding a higher salary" than they did in the recent past.
The next big thing
IT professionals looking for other opportunities might consider the health-care industry, which is facing a "Y2K problem" of its own. Spurred on by the possible passage of the Health Insurance Portability and Accountability Act (HIPAA), many health-care organizations are implementing new or reconfiguring legacy systems in order to protect patient privacy.
Micki Krause, director of information security at PacifiCare Health Systems in Santa Ana, California, says there are good career opportunities in health care and at her company. "We have management and midmanagement incentive programs. We also award bonuses for large, highly visible projects that are multifunction."
But it's in her 10-member department -- and in information security in particular -- where Krause says she sees great IT career potential.
"Security is such a multidisciplinary area. [Information security experts] need to have a large breadth of experience and a large knowledge base, such as Internet and wireless technologies," she says. Finding those people is difficult, which explains why her staff gets regular calls from headhunters.
The next big thing, say many experts, is biotechnology. "IT is going to become a bigger and bigger piece of the biotech industry," says Trevor D'Souza, managing director of Milwaukee-based Mason Wells, a private equity group. The fast-growth, R&D-heavy industry is attracting former dot-commers still willing to accept some adventure and risk, D'Souza says.
Biotech and bio-info-netics startups need programmers, network engineers, and Web developers to link products and testing. Industry salaries, from the employers' standpoint, "have become reasonable again because of the massive layoffs in the Internet-based companies," D'Souza says. But he says he still sees above-average IT compensation and stock options that some believe could make them tomorrow's optionaires.
Whether in the private or public sector, where you work affects IT compensation trends and demands. Startup companies in Boston or the Silicon Valley, for example, may find workers still interested in stock options. But not as many IT professionals look for startup risk in, say, Milwaukee, says ProQwest's Abraham.
Harry Gruber, CEO of startup Kintera, an Internet marketer for nonprofit organizations, sees a silver lining in today's slower economy, particularly in San Diego. "We're hiring at about 30 percent below what the candidate's salary was [last year]. We're bringing in candidates who are taking pay cuts. Their companies are about to close. The salaries a year ago were insane. Now it's better with the demise of the dot-bombs."
San Diego is representative of many areas where startup communities were founded and of how the job market has changed in the past year. On the other hand, Denver; Omaha, Neb.; and Yellow Springs, Ohio, all show compensation trends influenced not only by the local cost of living but also by another factor. These second-tier markets, as some experts call midsize regions, didn't experience the full dot-com heyday and are less likely to feel the market impact of its decline, says Hayes.
Sean Scott, CIO for the law firm Womble Carlyle in Winston-Salem, N.C., agrees, noting that "It's still a tight market in Winston-Salem." But even with area banks and retailers laying off workers, Scott is optimistic. "There are still lots of tech jobs. You can find one very easily. It might take longer than last year...four weeks now."
"I still see strong companies interviewing and hiring strong people" in the Midwest, adds ProQwest's Abraham. "Now there is more of an emphasis on these jobs as a career, because of [market] instability and the [dot-com] scare. There are good jobs out there. It's just about trying to find the right company."
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