IT staff salaries to escalate

IT staff salaries will increase by as much as 10%-15% over the next three years, according to Meta Group. This salary inflation will drive up labour costs through 2007.

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By  Matthew Southwell Published  December 6, 2004

IT staff salaries will increase by as much as 10%-15% over the next three years, according to Meta Group. This salary inflation will drive up labour costs through 2007, when they will represent upwards of 55% of an organisation’s IT budget. Furthermore, as the economy improves during the next 12 months, key IT employees will seek ‘greener pastures’ with competitive firms. Meta recommends that, to prevent a mass exodus of highly valued employees, CIOs need to pay closer attention to their human capital management programmes, including management development, employee welfare/morale programmes, recruiting/retention programmes, and perhaps most important, compensatory strategies such as performance-based incentives. “The ‘grass is greener’ mentality must be dealt with head-on,” says Maria Schafer, senior programme director with executive directions at Meta Group. “CIOs must begin to work more closely with human resource professionals to implement strategies that address human capital management trends and innovative retention programmes — an area in which IT has historically been reactive rather than proactive.” Meta’s analysts point to a range between 4% and 6% as the ‘magic’ turnover rate threshold. They also believe the IT organisation must devise particularly innovative retention strategies such as enabling more flexible work rules that encompass job sharing and teleworking. “As the economy heats up, so does the desire and incentive to seek higher-paying work and greater development opportunities,” says Schafer. “Although this is true throughout all industries, it is particularly indicative of an industry such as IT, which has had one of its longest periods of job and salary stagnation. A steadily improving economic climate is already changing these dynamics, and CIOs must tackle this issue immediately, using a variety of tools to compete with competitor firms — or face a real workforce crisis in the months to come.”

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