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Economy Takes Bite Out of IT Salaries

  |  June 14, 2001   |  Comments

For the first time since 1985, there has been an overall decrease in the benchmark salary paid for top IT performers, according to an ongoing survey by Janco Associates.

For the first time since 1985, there has been an overall decrease in the benchmark salary paid for top IT performers, according to an ongoing survey by Janco Associates.

The Mid-Year IT Salary Survey found the economic downturn in the United States is being reflected in the overall compensation paid at all levels in technology, but senior staff levels have been affected the most. While total compensation has gone down, the survey did find that base salaries have inched up.

"As the company worsens, midsize organizations are effected more and thus are cutting costs and staff faster," said M. Victor Janulaitis, CEO of Janco Associates. "Many larger organizations have put hiring freezes into effect as well as stretching out the time period between normal compensation increases."

Janco's survey also found that reduced corporate earnings, which make up key components of most performance bonus plans, have driven the trend to lower total compensation. In addition, there has been a decrease in demand for IT professionals due to extensive headcount reductions in IT and from company closures.

The year-end study due out in January may have even more bad news. The energy crisis in California, which has had a severe impact on the Bay Area, as well as that area's company closures, layoffs and hiring freezes, were not fully reflected in the mid-year study.

Many of the woes in the IT job market are the result of basic supply and demand. With the bursting of the dot-com bubble, fewer jobs are to be had. Displaced dot-com workers are now competing with IT professionals from the non-dot-com world for jobs. Many organizations are also starting to outsource the e-commerce and Internet functions because executive management is questioning revenue projections.

Over the past six months, according to Janco's survey, the mean salary level for all IT positions has been pushed to $70,318 in large enterprises and to $65,792 in medium-sized organizations. This figure includes all forms of compensation comprising items such as bonuses, stock options and special fringe benefits such as special trips.

IT Salaries by Position/Company Size
Enterprise
Size
Position Base
Mean1
Total
Mean2
Prior
Benchmark3
New
Benchmark4
Percent
Change
Large VP-CIO $143,785 $166,566 $434,416 $317,699 -36.74%
Medium VP-CIO $132,550 $158,055 $490,559 $373,941 -31.19%
Large VP-Consulting Services $117,615 $122,074 $198,813 $163,869 -21.32%
Medium VP-Technical Services $114,439 $133,731 $268,784 $223,293 -20.37%
Medium Project Manager-Applications $70,433 $76,673 $167,039 $141,016 -18.45%
Large VP-Technical Services $121,381 $134,414 $240,616 $204,849 -17.46%
Large Data Comm Manager $63,903 $66,456 $74,489 $85,701 13.08%
Large Data Security Manager $50,949 $51,666 $59,739 $69,681 14.27%
Large E-Commerce Specialist $64,875 $70,125 $67,833 $80,438 15.67%
Medium E-Commerce Specialist $60,500 $60,500 $60,300 $77,750 22.44%
Large Project Manager-Network Technical Srvcs $68,924 $72,625 $89,518 $128,587 30.38%
Large Average $66,227 $70,318 $108,963 $108,275
Medium Average $61,097 $65,792 $113,224 $110,578
1 Mean of base compensation excluding bonuses and fringe benefits
2 Mean of total compensation -- bonuses and fringe benefits
3 Benchmark from prior study
4 Total compensation required to obtain top performers
Source: Janco Associates

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