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U.S.-based IT organizations expect to hire this year
July 27, 2004
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Bridgewater, N.J. -- A majority of information technology (IT) organizations within companies anticipate expanding their workforce slightly in the next 12 months, according to a new survey by people3, a Gartner, Inc. company.

Sixty-two percent of those organizations surveyed project some level of increase in their IT headcount (which includes full-time employees and contractors as supplementary staff). More specifically, 47 percent project a workforce increase of 1 to 5 percent.

The findings in people3's "2004 IT Market Compensation Study" are based on research compiled from survey data submitted by 153 organizations as of March 1, 2004. The study includes detailed compensation data for 39,759 IT employees within the United States.

"One factor that influences staffing levels is the turnover rate,” says Lily Mok, Senior Consultant at people3.  “In the past 12 months, IT turnover continued to be at a very low level for both employee- and employer-initiated turnovers across the board. Employer-initiated turnover was slightly higher than employee voluntary turnover. This suggests that some businesses continue to exercise reduction-in-force and/or restructuring strategies in an effort to reach an optimal, cost-effective IT staffing level."

The survey showed that a competitive reward package and work/life balance are among the most important components that successfully attract and retain IT talent. The majority of companies continue to set levels for IT base salary and total cash compensation in line with the 50th percentile of current market pay practices. The average budgeted base salary increase for IT employees for 2004 is 3.2 percent, which is 0.3 percent lower than the increase in the 2003 budget reported in the study last year.

"As companies start to stabilize their competitive position on base pay, they tend to use variable pay more stringently as an incentive to improve business results and reward superior performance," says Mok. "Since business results have yet to become substantial enough to warrant more variable payout, a temporary drop in incentive payout this year can be expected."

Other findings from the study include: 

  • The most difficult-to-hire positions for IT organizations include Database Administrator, Internet/Web Architect, Network Architect, Security Analyst, Network Engineer and Project Manager;
  • The skill that IT organizations report having the greatest difficulty recruiting is PeopleSoft and Oracle Financial, followed by Oracle Development, J2EE, Java and Oracle Administration, Microsoft.Net and SAP/ABAP.

The compensation study, published annually by people3, is a comprehensive guide to managing human capital issues within IT organizations. It includes strategic information on IT human capital management practices in areas such as recruitment, retention, reward, recognition, work/life balance, career development and training. The study provides incumbent-based compensation data on base salary, total cash compensation, short-term incentives/bonuses (e.g., project milestone pay, annual incentives/bonuses), and other prevalent compensation practices regarding "hot" skill premium, variable pay and long-term incentives.

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