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Downturn? What downturn?

Employers are throwing money at those with high-end skills, experience and business savvy, despite the IT downturn. With an abundance of entry-level candidates, there is a shortage of experienced specialised skills, and a wide gap between top and bottom earners.
Read time 10min 30sec

We sliced the ITWeb 2002 Salary Survey data into many different segments to look at a wide range of factors that influence IT salaries: job title, specific skills area, experience, qualification, age, gender, race and locality. We present the findings in chart and table format, accompanied by commentary from local IT skills and human capital specialists.

The view from the top

<B>Remuneration trends</B>

Morag May, director, 21

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Century Business and Pay Solutions: "Approximately 70% of the sample is employed by organisations that remunerate on a total package approach. The trend of paying a basic salary plus benefits is diminishing, with organisations choosing to offer employees the flexibility of a total package at the same time as containing organisational costs.

"It is interesting to note that the majority of participants do not know what grade their particular role/position is, or what, if any, grading system the organisation uses. On the whole, where there was an indication of grade, it appeared to be misunderstood.

"As a broad general trend, there seems to be a lack of understanding of the full monetary value of the total offering of the organisation, ie the sum of both the basic salary and the benefits. In other words, the actual value of benefits (in rand terms) appears to be unclear or misunderstood, and may therefore not be taken into account by individuals when they consider their relative value in the market.

"The majority of organisations review salaries in the first half of the year, with the months of January and April being the most popular in this regard."

When it comes to position and level within the company, we divided the sample into five groups: senior executive, management, general staff, consultants and sales.

[CHART]At the top executive level (MD or CEO), the upper quartile of the sample earns around R48 000 a month (R576 000 per year).

[CHART]Jill Hamlyn, MD of The People Business, says this is far lower than what top executives are being paid and clearly reflects that our respondents are running little operations rather than big companies. Indeed, nearly 40% of senior executive respondents run companies with less than 50 staff.

[CHART]Hamlyn says the minimum packages her company`s executive recruitment division deals with at managing director level are at R600 000 per annum, and typically are around R700 000 or R800 000.

Body shop

[TABLE]Of the general IT staff, the best paid were systems architects, while enterprise resource planning specialists top the consultant`s list. Within particular skills areas, salaries depend heavily on experience.

Patrick Monyeki, chief IT director at the Department of Home Affairs, says that due to a close relationship with technikons, government has never run out of entry-level skills. "They come at ridiculously low salaries, at about R50 000 or R60 000 per year, but after a year or two, depending on how good they are, they can easily double their salary up to R120 000. If they don`t have a diploma, they come at even lower salaries."

[CHART]Monyeki says "it`s at the high-end, specialised skills level where you don`t find what you require". He cites smart card skills with hard-core practical experience as "very hard to come by". "I battle to get project managers in that area - all I could get are overseas people who have to be paid in dollars."

[CHART]Project managers in other areas are also in high demand, and with the right track record and business knowledge, can earn more than our sample indicates.

Technikon training pays off

Nearly 24% of the respondents have a technikon diploma and reported the highest median salary (R34 000). The lowest-paid were the respondents with matric, who account for a quarter of the sample.

[CHART]A high percentage of the sample (over 38%) holds degrees: 10% with honours, 7% with masters, and 17 individuals with a doctor`s degree.

Janette Cumming, director of Paracon Holdings, comments that this finding "does not take your average IT person into account - there are still lots of IT people who don`t have a degree, especially among white males".

When it comes to hiring new staff, "degrees are becoming essential, and post-graduate specialist qualifications are highly regarded," according to Anita Watridge, director of recruitment firm The Personnel Concept.

Org Geldenhuys, MD of Abacus Recruitment, says entry-level candidates with new degrees typically start at about R5 000 per month, while after two years experience, they are being offered between R10 000 and R12 000. Respondents with two years experience reported a median of nearly R13 000. Considering the high percentage of professionals with degrees, this finding points to the fact that those with degrees earn more.

Adrian Schofield, MD of CompTIA, says candidates with an industry certification and no degree can earn 50% to 70% of the salary of an entrant with a degree. However, he points out that there`s more and more pressure on those with degrees to have experience.

Every year counts

There is consistency in the findings when it comes to age and experience as factors of IT salaries - the more experience, the higher the salary.

[CHART]At the general staff level, the median reported by professionals with one year of experience was over R11 000, hitting R20 000 after six years.

Colin Smith, director of Brenton Blue Consulting and strategic advisor to Meta Group, says the survey shows "that entry-level jobs within the IT industry do in fact earn more than their contemporaries in other industries".

[CHART] "Providing one has the required skill sets, the progression through the ranks is faster and more meteoric than in other industries," he says.

Hamlyn agrees: "In other industries it takes 80% of your career to get to the top. In IT, in the first 20% of your career, you can be earning an astronomical amount. That`s the nature of IT because it`s still a young industry. But you quickly plateau out and it`s important that people realise this and modify their expectations."

For candidates looking for a new position, Watridge says solid skills with at least two years` experience are required."

IT staff loyalty: An oxymoron

Loyalty and pursuit of new technical challenge don`t go together. Just as last year and the year before, our survey shows that the more you change jobs, the more you earn. However, as over half of the respondents are under the age of 30, those who haven`t changed jobs are in the majority.

Hamlyn believes job-hopping is driven by the dynamics of supply and demand. "It used to be that the average IT person stayed in their job for 18 months - but was it because they wanted to change, or because the economy offered them the opportunity to change, especially as you could sell your skills for a third more by moving jobs."

[CHART]She believes that the number of people who changed jobs last year was far lower than any other year.

Cumming says while job-hopping over the past year was lower than before, because of retrenchments and uncertainty in the market, one of the biggest challenges for IT "is to get people to stay where they are for project continuity".

David Lowry, managing partner at headhunting firm Boyden Global Executive Search, notes: "The rule of thumb is that people will make a move for a 20% higher package." However, he stresses that it`s the opportunity and the technology challenge that matter more than the money.

Employers of choice

Salaries depend on the size, location and kind of company you work for.

[CHART]Geldenhuys says consulting companies tend to draw the best candidates. "At the senior management level in a consulting environment, packages range between R600 000 and R700 000, while partners earn over a million."

[CHART]Consulting is the sector with the highest median salary reported in our survey, followed by manufacturing, telecoms, parastatals and banking. The IT industry, represented by just under 50% of the sample, is in eighth place.

Employment inequity

<B>Salary trends</B>

Colin Smith, director of Brenton Blue Consulting and strategic advisor to Meta Group, says that because the IT industry is such a complex one, it is difficult to make generalisations about remuneration. What an IT specialist earns depends on that person`s specific skill set, the perceived criticality of specific projects within that organisation, the industry or sector employing that IT specialist, locality, performance, age, race and gender.

Nevertheless, he identifies these general trends within the South African IT industry:

Salary increases are finally being based on outputs or deliverables rather than on having "stuck around" within the organisation for 12 months.

Organisations are beginning to look very critically at the return on value being realised by IT roles. The big spend running up to Y2K, a trend for IT projects to run over budget and timelines, and a more IT-literate client base has meant that organisations are beginning to demand measures of value when it comes to awarding premiums on IT salaries.

Cash is valued over and above benefits and this is often difficult for large corporations to come to terms with.

We are seeing large salary ranges within the IT industry, and gaps between top and bottom earners are huge.

Enormous pressure is being put on IT specialists to remain "relevant". Higher salaries are being paid for specific skill sets and organisations have to pay a premium for these at the expense of other IT skills.

As the majority of the sample is white and male, the findings show that males earn more than females and that white respondents earn more than other population groups.

[CHART]But recruitment specialists suggest the ratios among available candidates are much more balanced. Geldenhuys believes that 35% of IT skills in the market are non-white, and that almost 40% are women.

Monyeki says that about 35% of entry-level skills in his IT environment (Home Affairs) are women.

[CHART]Nevertheless, Cumming believes the toughest challenge for IT at the moment is getting the employment equity right as "there just aren`t enough skilled black IT people - black specifically because they are the biggest group that need to come into IT".

Koula Koshiaris, director at Deloitte & Touche Human Capital, says employers are being much harder on the black professional than ever before. "Gone are the days when you didn`t have to show any performance as long as you just filled the quota."

She adds: "Black females are being snapped up by the big, good firms that are paying for quality."

Cumming says there is less emphasis on paying a premium for black candidates. "But certainly if you`ve got an outstanding black IT woman, and someone`s trying to meet employment equity -- she could demand a premium and they will pay."

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