IT Salaries Take a Jump
 

Prepared by PERSONNEL SYSTEMS
 

This summary represents an update to the 1999 study prepared for the Software Human Resource Council (SHRC), undertaken to determine the salary increases in Software/IT jobs over a two-year period (1997 to 1999).  This data has now been updated (October 2000), to review significant salary movement for these jobs during the past year. 

The underlying premise of the study was to affirm that there is a strong correlation between salary increases and skills shortages.  It is intuitive and logical that jobs for which salaries are increasing at a greater rate than the industry average are being paid more because of a shortage of skills.

The following table shows some of the positions for which salaries are growing at a rate above the average for the high technology industry (4-5% per annum), and well above the national average across all industries (3-3.5%).

These numbers represent base salary only; however this alone does not provide the complete picture of compensation for these types of positions.  Increasingly, companies are making use of cash incentives and stock options to compensate employees as additional components of compensation over and above base salary.

Current base salary for a senior level Software Development Manager is $104,468, an increase of 9% from $96,361 in 1999.  Software Developers continue to show strong growth, but the rate of increase is starting to slow somewhat and stabilize at around 8% per annum – still significantly above industry average. 

Jobs in the Customization area are realizing significant increases in salary across all levels.  Most of this significant growth can be attributed to the emphasis on customizing applications to client specifications as well as e-commerce applications.

Technical Architecture & Network Support: 

Senior positions in Network Administration realized a healthy increase to $58,946 from $52,025 in 1999 (13%).  The expertise required to run increasingly complex networks and systems is expected to continue showing strong growth into next year.  By the same token, jobs working with less complex systems showed significantly lower rates of increase (approx. 4%) indicating that the shortages for skills required for less complex systems is beginning to ease.   

Quality Assurance: 

This group is continuing to experience strong growth in earnings.  Management in QA realized a substantial 15% increase this year, to $94,265 from $82,052 in 1999.  This growth was matched at the engineering level.  Salaries for Test Engineers increased 14% to $63,805 from $58,493 in 1999.  In what seems to be a growing pattern, salaries at levels requiring lower skills levels (i.e. Test Technicians) did not benefit from these strong increases.

Problem Management: 

Salary growth in this area reflects the increasing necessity of supporting product functionality by end-users.  However, it should be noted that these magnitude of increases were only identified at levels requiring the use of a high level of technical knowledge.  In short – help and support activities that required the attention of engineering level technical knowledge drew these increases.  More straightforward support and assistance showed fairly flat profile of increase – at or below industry average.

Customer Education & Training: 

The healthy increases in Customer Education and Technical Writing indicate the increasing need and importance of supporting end-users of a product.  Rates for Senior Customer Training Instructors increased to $62,208 from $56,344 in 1999.  Technical Writers at all levels increased by 8%, with an entry-level position earning $39,656, up from $36,144 in 1999.  As the complexity of products continues to increase, it is expected that these areas will continue to show strong increases over the next year.

Patterns and Trends

The magnitude of salary increases continues to support that notion that there are skill shortages across most job classes.

Historically, we have observed larger increases for design positions than for implementation and support groups.   However, it seems now that these larger increases are also now appearing in these other areas, specifically Customization, Quality Assurance, Implementation and Training. 

Consistently across functional groups, it appears that more significant increases are occurring at full working and senior levels.  Conversely, increases at entry level are only keeping pace with the market.  By the same token, those activities requiring higher knowledge levels (engineering or equivalent) are also receiving significantly higher increases than less skilled jobs.  This reflects shortages of individuals at these highly skilled levels, but may also reflect the fact that a company will pay premium rates to obtain an individual that can ‘hit the road running’ rather than the time required to train up less skilled levels.  With the incredibly aggressive recruiting environment, skilled employees with experience continue to be a very hot commodity, and companies seem to be allocating resources to attract and retain them. 

U.S. data shows similar trends in the same areas.  The exception is that U.S. rates of pay continue to move upwards at a more aggressive rate (the % change in salaries over the same period would average 2% higher than in Canada with the base the percentage was applied to already approximately 5% higher than in Canada). 

As labour shortages in the U.S. are significant and expected to continue, as in Canada, we fully anticipate salary increases in the informatics streams to remain significant over the next year.

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