IT workers hang on in tough times

Jeff Skrysak feels pretty lucky these days. He’s two years out of college and working as a senior Internet developer in Rosemont, Ill., for a large multinational company that manufactures fluorescent and HID (high intensity discharge) ballasts. When his colleagues were signing on with dot-coms, Skrysak wasn’t swayed by dreams of stock-option riches. He was thinking more about IT practices and methodologies and took a job at a division of Koninklijke Philips NV.

“I realized that it is better to be with a larger company rather than a dot-com. My friends that are unemployed now went with dot-coms or startups. There are a lot of good people out of work,” Skrysak says.

It’s been a tough year or two all around the IT job market. With high-profile layoffs, some of the largest bankruptcy filings ever, and sagging markets, it became clear that IT salaries, which once seemed on a continual rise and which fuelled the growth of industries around IT recruitment, were not immune to the economic slide. Many mid- and staff-level IT professionals found themselves going without pay raises or bonuses – or worse, found themselves out on the street. Over 1,800 of the total 3,295 respondents to the InfoWorld 2002 Compensation Survey report that their companies had layoffs or instituted hiring freezes in the past 12 months. (The survey was conducted in April 2002.)

Despite the downturn and stunningly slow IT job market, survey respondents are largely holding tight. The majority earned slight but not altogether unimpressive gains in base salaries.

Over 64 per cent of mid-level managers and 61 per cent of IT staffers report receiving an increase in base salary (not including bonuses or profit sharing). These mid-level managers received an average increase of 7.4 per cent in their base pay in the past 12 months; staffers report a 6.3 per cent mean increase in base pay for the same time frame.

These same respondents, however, have seen the downturn affect bonuses. Over 66 per cent of middle managers and 71.6 per cent of staffers report receiving no increase in their bonus pay from 12 months ago. Nearly 20 per cent in both categories report a decrease in bonus dollars awarded to them.

Market pressure cooker

IT professionals during the last three years were on quite a ride – complete with the frenetic pay increases, extravagant perks, and cushy sign-on bonuses of 1998 and 1999. Then the economic downturn, starting in 2000, hit. Businesses retreated and asked more of an IT department that was also experiencing layoffs or had frozen open positions.

What this has meant for many mid-and junior-level IT staffers is pressure – pressure to do more with fewer team members and pressure to do more with fewer fiscal and technical resources. The situation at Skrysak’s company illustrates what’s going on in the broader market. “Generally, we have one or two open positions a month. They either get filled internally or are cancelled due to budgetary constraints. Instead of hiring, they eliminate the position,” he says.

As a result, Skrysak says his workload has increased. But he also believes that his work has become more critical to the company. “The work that I do is more important. IT needs to make money and help increase the bottom line,” he says.

With increased pressures and fewer resources, some IT professionals are not taking the same view as Skrysak. Grumblings can be heard from many in the IT ranks. Almost 40 per cent of middle management and staff-level IT professionals responding to the InfoWorld 2002 Compensation Survey feel they are not fairly compensated for their level of responsibility and workload.

That sense of dissatisfaction could make for some interesting dynamics between corporate management and the IT department once the economy picks up, and the tensions may be acutely felt in those companies that did not handle difficult times well, says Diane Tunick Morello, a vice-president and research director at Gartner Inc. in Stamford, Conn. “Businesses will vastly underestimate the damage that they have done to their credibility and appeal through callously laying off people.”

A company’s reputation as an IT employer is still important, although somewhat downplayed in this market. But the economy will “pick up over the next six months,” Tunick Morello says.

Other economic and employment news of late has been mixed. On May 20, the Conference Board, a private research firm, reported that its index of leading economic indicators decreased by 0.4 per cent, the first decline since September 2001. Economists and industry analysts generally agree that this decline points toward recovery from the recession. But on May 15, 2002, the U.S. Department of Labor reported that for two months new jobless claims continued to be above 400,000 per week. The Labor Department also reported that across all job categories the number of persons receiving extended benefits is at its highest level in 19 years. Clear signs of an economic recovery are difficult to see, but many experts and business executives are looking for an upturn later this year – if not, then in 2003.

With a possible upturn in the economy looming, IT staffing could again become a problem. In those organizations where managers communicated ineffectively or handled downsizing poorly may face retention difficulties as business output and demands picks up prior to any increases in IT staffing.

IT departments that are “heavily tethered to budgets set during leaner times [will] bear the brunt of increased business needs and output,” Tunick Morello says. “The IT organization will be hit with high demand for investments. People will be unable to hit demand internally….If a company pulled back on everything in the past few years, it will find that as demand picks up, employees will be faster to move out the door.”

In fact, the Information Technology Association of America (ITAA) is projecting an increasing demand for IT professionals in the next year. The IT workforce fell from 10.4 million in 2001 to 9.9 million in early 2002, according to the Arlington, Va.-based association’s report “Bouncing Back: Job Skills and the Continuing Demand for IT Workers,” released in May 2002. But according to ITAA, hiring managers project an aggregate demand for IT workers of 1,148,639 in 2002 and expect 578,711 of those positions to go unfilled.

IT professionals are not as optimistic as those hiring managers. Nearly a third of the InfoWorld 2002 Compensation Survey respondents project continued layoffs at their companies in the next 12 months.

A wait-and-see strategy

For that reason, IT workers are taking a cautious approach in the workplace. No one wants to “be the tallest blade of grass” in the company and possibly be laid off, says William Campbell, a senior staff software engineer at KLA-Tencor Corp., a San Jose, Calif.-based supplier of process control and yield management tools for the semiconductor industry.

The job market in Silicon Valley – seen by some as a bellwether of national trends – is still very tight, Campbell says. “There are very few jobs, and employers are really picky about who they are hiring. Now you have to have niche skills,” observes the software engineer, who left contracting for a permanent position about 15 months ago.

According to the InfoWorld 2002 Compensation Survey, 70 per cent of respondents in the Silicon Valley region say their companies conducted layoffs in the past 12 months. Approximately 30 per cent of those respondents in Silicon Valley expect their companies to conduct more layoffs in the next 12 months.

Campbell also says that he is paid near what he believes to be the US$120,000 salary cap for software engineers. The U.S. national average pay for application development managers is US$86,887. The average base salary for senior managers in Silicon Valley is US$140,250; the average for middle managers is US$108,100.

The area’s best jobs, Campbell believes, are in chip design, and unlike two years ago, he now sees few Web development jobs advertised. Campbell, who tracks the IT industry and job market through Nasdaq and changes in job postings on, says that the software job market has “gone down the toilet.”

Job satisfaction may have to wait

The overall downturn in Silicon Valley’s job markets has left the software engineer to put a hold on his career goals. “I feel my career has stagnated. I want to do [3-D] virtual worlds, but that has dried up. I’m waiting for it to pick up again, and that will happen when the [venture capitalists] aren’t so paranoid anymore,” Campbell says.

Still, he is an optimist. Campbell believes that the economy and job market will get better this year, and that biotech and robotics will drive the growth and create many new job opportunities.

As with Campbell, technology plays an important part in job satisfaction for many IT professionals. Over two-thirds of middle managers and staff-level survey respondents cite the opportunities to work with cutting-edge technologies as one of the most important aspects of their jobs.

At a spring Gartner event, Gartner’s Tunick Morello met IT professionals who, like Campbell, are revisiting what’s important to them in their careers. These IT professionals are reassessing available career opportunities. “I’m finding much more that the IT individual will be far more aggressive in scrutinizing employers than employers are in examining potential candidates,” she says.

Making the grade

Deborah Trytten, associate professor at University of Oklahoma’s school of computer science, sees things improving for this year’s college graduates. “We’re seeing students get more job interviews and have better opportunities than they had last year. We’re also seeing fewer past graduates changing employers in quick rotation, as happened when downsizing began,” says Trytten, who is also CTO of Normal, Okla.-based Beyond Paper, which provides an electronic knowledge management framework for use with textbooks and corporate training, as well as general knowledge management.

As the economy receded, students did not get the offers that their predecessors received. “In the spring of 2000, every student had five or six fantastic offers. … In May 2001, we had graduates who were not employed immediately upon graduation for the first time in our school’s 10-year history,” Trytten says. Members of this year’s graduating computer science class are all already employed, she says.

The job market for new Ph.D.s is still good, the professor says. “Many academic programs have had difficulty recruiting new Ph.D.s away from lucrative industry jobs for many years. Now new Ph.D.s are finding the security of the academic job appealing. As a result our candidate pool for new faculty lines was better this year than it was in the past few years,” Trytten says.

According to the InfoWorld 2002 Compensation Survey, the national average salary for IT professionals holding a bachelor’s degree is US$84,100; for those with a master’s, it’s US$95,076; and for those holding a Ph.D, it is US$121,021.

While the news is good for undergrads and for Ph.D.s, it’s not so good for the school’s foreign national students pursuing master’s degrees, Trytten says. “[They] will require an H1-B visa to work in the United States. Companies are not allowed to sponsor H1-B visas when they can find U.S. citizens to do the job. As a result many of our international graduate students completing the M.S. degree have not been successful in finding work. Some are returning home to work,” she says. “This will be the last segment of the job market to recover.”

Market differences

Many professionals say that the H1-B population has affected the IT job market. Consultant Ray Gregoire says that is the case in his hometown of Boston. The contractor, who works primarily in Windows development, feels fortunate to have several repeat customers, because he says much of the work available to contractors is going to offshore developers and H1-B visa holders. “The general consensus among contractors is that so much is outsourced to Indian, Pakistani, Russian and Israeli firms and that the H1-Bs took away a lot of the jobs.”

“Two years ago, you had contracts at US$120 to US$130 an hour….Now I’m seeing things at US$15 to US$20 an hour,” says Gregoire, who attributes this drop-off to low-cost development overseas. To compete with others for programming jobs, he bills by the job and not by the hour. He guarantees fast turnaround in return and includes a penalty clause in his contracts that benefits clients if his work is late.

Still, getting work is tough. “Management industry observers and the media all are saying things are getting back to normal, getting better. But the stark reality is that the telephone doesn’t ring and e-mails don’t come in,” Gregoire says.

On the other coast, KLA-Tencor’s Campbell sees a bright side on the job market horizon. “I’m the eternal optimist. People are worried about their jobs, but there’s something around the corner. You can feel the mood in the air.”

Defining the average IT pro

See that guy walking down the hall – the one who’s fast approaching 40? Maybe his hair is thinning, but only slightly so. And that’s not a paunch around his middle – that’s IT war experience. That guy defines the average respondent to InfoWorld 2002 Compensation Survey, and he is setting trends everywhere.

Our average Joe is male, 39 years old, holds a bachelor’s degree, and earns US$87,385. He received a salary increase in the past 12 months but no increase in his bonus payouts. His bonus payouts total US$8,665. Overall, Joe feels he’s fairly compensated.

And Joe has plenty of experience to fall back on. He’s been employed in an IS/IT function at his current company for 5.3 years and in an IT position overall for 12.4 years.

Although Joe wouldn’t characterize his company as an early or leading adopter of new technologies, Joe says that he is personally an early adopter.

Not bad for an average Joe.

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Jim Love, Chief Content Officer, IT World Canada

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