IT Pay Creeps Up After Two-Year Downward Spiral

After two years of pay cuts and stagnating wages, IT salaries are once again on the rise, driven by demand for contract and permanent IT staff, according to IT staffing industry executives.

Alisia Genzler, vice president of Technisource's northeast region, said her company began to see demand for permanent IT professionals pick up in mid-2010. The need for permanent IT staff has remained steady every since.

"We are seeing more and more requisitions for [IT labor]," she says. "Over the last four to six weeks, the number has increased 30 percent. That's quite a bit."

Genzler and Joel Capperella, vice president with Yoh, both report an increase in the number of contractors who are transitioning into permanent, full-time positions with their clients who now have enough money in their budgets to hire permanent staff.

Meanwhile, Jack Cullen, CEO of Modis, sees the opposite happening. He reports that some IT workers are leaving full-time, permanent positions to become contractors. Those IT professionals want to capitalize on the number of contract opportunities in the marketplace as employers devote a larger portion of their workforces to contingent labor. They also want to cash in on the pay premiums that contingent IT staff are commanding these days.

Whether contractors are moving into permanent positions or IT staff are leaving permanent jobs to become contractors, staffing executives agree that it all indicates the same thing: that IT job opportunities are once again blossoming.

Factors Driving IT Hiring

IT departments are hiring more aggressively for the first time since the start of the recession for a variety of reasons. Chief among them, corporations feel comfortable spending some of the cash reserves they built up during two years of aggressive cost-cutting, says Capperella. That comfort with spending money comes despite rising oil prices and flagging consumer confidence.

Indeed, companies see IT investments as a way to hedge against economic uncertainty. John Baschab, senior vice president of management services with Technisource, stated in a previous CIO.com article that companies are investing in capital projects aimed at automation to lower their rising labor costs. Baschab's colleague Genzler notes the same trend: "By developing certain applications, they can do away with another function that's being done manually," she says.

IT departments are also hiring permanent and contract staff to work on infrastructure upgrades that they had avoided during the recession. "A lot of companies had put infrastructure projects on hold," says Genzler. "You can only hold on so long before you have to roll out new PCs or move to Windows 7."

Regulatory compliance and the consumerization of IT are additional factors influencing IT hiring. Genzler says companies in the financial services industry are hiring application developers who can get their systems into compliance with new financial regulations. Companies also need software engineers to develop new iPad applications, says Capperella.

"The commercialization of consumer products is something that companies, whether they like it or not, are forced to respond to," he says.

The specific IT skills that staffing executives say are most in demand--and that are commanding the highest pay rates--include Java, C#, PHP, Ruby on Rails, .NET, SQL and Oracle DBAs. Genzler says Technisource's clients are looking for mid- to senior-level IT professionals with those skills. Companies are also seeking business analysts, network engineers and project managers, they say.

The Effect on IT Salaries and Wages

The increased demand for contact and permanent IT staff, especially in the area of web application development, is starting to have a positive effect on wages.

"What we're seeing our clients paying for full-time positions is typically higher than what the market paid over the last two to three years," says Modis's Cullen. "A company that paid $139,000 a year for a Java developer is now looking at paying more for that talent."

Cullen adds that as IT hiring heats up, companies are going to have to pay to recruit top talent. He says he's seen IT workers with Java, SAP, .NET, C#, project management and business analysis skills boost their pay between 10 and 20 percent by moving on to new opportunities.

Aside from those bumps in pay, none of the staffing industry executives that CIO.com interviewed for this article predict IT salaries and wages will skyrocket. "You'll see continued, moderate increases in the price of talent," says Cullen. "We knew last year when the [stock] market started doing better, wages would improve as more jobs were created. If the market continues to stay hot, wages will slowly continue to rise. We're slowly getting back to where the numbers were before the recession."

Adds Genzler: "All indications in terms of the requirement pool and what we hear from clients and analysts is that we will continue to see an increase in demand for full-time hires through the remainder of the year. We believe raises will continue to go up, but it's hard to quantify how much."

Meridith Levinson covers Careers, Project Management and Outsourcing for CIO.com. Follow Meridith on Twitter @meridith. Follow everything from CIO.com on Twitter @CIOonline and on Facebook. Email Meridith at mlevinson@cio.com

This story, "IT Pay Creeps Up After Two-Year Downward Spiral" was originally published by CIO .

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