IT feels the squeeze

In a year when it seemed the entire industry was holding its breath waiting for global uncertainties to play out and for the economy to come back to life, few professionals have been immune to the financial pressures put on IT.

For the third year in a row, IT professionals have seen a soft job market and compensation in decline. Of the 2,884 respondents to the 2003 InfoWorld Compensation Survey conducted in March, 182 reported having been unemployed for an average of 12 months. Raises are limping along in the 1 percent to 5 percent range. And monetary bonuses have been slashed by 12.5 percent (see “What Are You Worth?” below).

“We saw base pay [in IT] from 2002 to 2003 increasing only 1.3 percent. In essence, it was flat,” says Beth Florin, executive vice president of Clark Consulting, a compensation consultancy in North Barrington, Ill. “Managers had a drop of almost 20 percent in their total direct compensation. Their options are really down. They’re still getting the options, … but they’re just not worth anything.”

Peter Panagiotatos, who had been director of BI (business intelligence) at Pittsburgh-based Nova Chemicals for three years, was laid off in August 2002. Since October, Panagiotatos has been working as an independent consultant — work he feels fortunate to have, given the market. Taking home approximately 40 percent less than he did at Nova, Panagiotatos is feeling the squeeze. “Consulting fees are not what they used to be,” he says. “There is too much capacity in consultants.”

Although the 20-year veteran BI professional has been looking for a management position, cutbacks in enterprise BI spending have hampered his search. “[The] kinds of applications that companies are developing are now on the departmental level, not on the enterprise level. The IT budgets are at least 8 [percent] to 9 percent below what they were three years ago,” Panagiotatos explains.

One Lotus Notes programmer, based in the American southeast, has watched his contracting fee drop dramatically during a six-year stint with his current employer, despite having more than 20 years of experience.

“They keep cutting the pay and cutting the rate. I am making 30 percent less than I was six years ago,” says the programmer, who asked not to be identified. “As a contractor, you are always aware that a project could end without any notice, but you didn’t used to think they would cut the rates. There is a lot more pressure to justify the costs of the projects.”

The showdown

Flat salaries reflect tight budgets in a soft job market, and those who do have employment feel a greater pressure to perform. “We and our colleagues are challenged to do more with less,” says Robert Cerny, manager of IT strategy and planning at Elkay Manufacturing, an Oak Brook, Ill.-based manufacturer of sinks, cabinets, and other home-building and -remodeling materials.

Sinking markets and poor corporate earnings have IT under scrutiny from tech-savvy CEOs. Nearly 88 percent of CEOs who responded to the InfoWorld survey said they are the final decision makers when it comes to their company’s IT strategy. Assessments made by IT executives have therefore been under additional bottom-line pressure, and technology departments have suffered as a result. According to the survey, business executives may once again be thinking of IT as a cost center (see “IT Undervalued," below).