VP and CIO, Arizona Public Service Co.

A strengthening economy that is fueling higher IT spending and a tight labour market for U.S. IT workers is creating moderate pay gains for technical workers such as application developers and database administrators, according to new research and interviews with IT executives and analysts.

“There is a noticeable wage increase” for technical skills, said David Myers, director of project management at Solo Cup Co. in Highland Park, Ill. Myers believes that the gains are the result of a general rise in IT spending, which has led to the launch of more IT projects; a decreasing supply of available domestic IT labour; and the maturation of IT offshore outsourcing, where foreign labour costs are rising.

Other IT executives are also seeing higher IT salaries in the U.S., although not all agree that rising foreign IT labour costs are a significant contributing factor.I don’t feel that increases of offshore salaries are the driver. It’s more driven by local economies improving…Denny L. Brown>Text “I don’t feel that increases of offshore salaries are the driver. It’s more driven by local economies improving and fewer available resources,” said Denny L. Brown, vice president and CIO at Arizona Public Service Co. in Phoenix. After freezing IT salaries for the past two years, Brown said he is contemplating a moderate increase for some of the utility’s roughly 400 full-time IT workers.

Earlier this week, Foote Partners LLC, a New Canaan, Conn.-based market research firm, released a report that found that pay for noncertified and certified technical skills is up 3.8 percent and 1.3 percent, respectively, through the first six months of this year. Pay raises this year have been particularly strong for people with skills in operating systems (up 8.2 percent), networking/internetworking (up 5.1 percent) and databases (up 4.3 percent).

The results, which are based on a survey of 1,800 North American and European organizations from April to July 1, suggest that wage deflation for U.S. IT workers due to lower-cost offshore outsourcing may have been overblown.

“There’s no doubt about the fact that offshoring is continuing to grow,” said David Foote, president and co-founder of Foote Partners. But many organizations “have had less-than-ideal experiences” with offshore outsourcing, “and there are concerns about the risks involved,” he said.

Other factors contributing to the rise in domestic IT salaries include growth in corporate IT project portfolios and the availability of additional money to reward high-performing IT workers, said Foote.

NeoIT Inc., an offshore outsourcing consultancy in San Ramon, Calif., has also tracked moderate growth in U.S. IT salaries, said Eugene Kublanov, vice president of corporate development. Still, he believes that rising salaries for U.S. IT workers are due to increased demand — not the rise in offshore wages.

“Even though salaries offshore are rising significantly in some locations, the base from which they are rising still makes offshore resources quite attractive from a cost perspective,” said Kublanov. “So I think part of the wage appreciation in the U.S. has to do with supply of available resources with the right qualifications in higher-value technical skills.”

A tighter job market is making it particularly tough for Harrah’s Entertainment Inc. to find experienced IT project managers, business systems analysts, data warehousing managers and other specialists, said Tim Stanley, senior vice president and CIO at the Las Vegas-based gaming and hospitality company.

Allan McLaughlin, senior vice president and chief technology officer at LexisNexis Group, a legal research provider in Dayton, Ohio, said hiring requests for IT workers are getting more specific — another factor contributing to competition for technical skills.

For its part, LexisNexis has an increased demand for networking specialists and is planning to grow its five-person IT security team to nine or 10 people over the next six months, said McLaughlin.

Related links:

Tech firms hang out “Help Wanted” sign

Offshore pay increases won’t raise outsourcing costs

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