IT Salaries

[renferme]

Read something the other day that reinforced my feelings as to what's happening in the IT world.
What I read was that IT salaries had gone down an average of about 3k per year in 2004 ; went down in 2003 also, if I remember correctly.
WHY is this happening. Only a few years ago, we were reading that there would be a big demand for jobs such as Systems Analysts, Systems Programmers, Programmer/Analysts, Systems Engineers, Data Base specialists, etc.
But here's what's happened. There has been a big move away from Mainframe computing over the last 5 or 6 years.
The mainframe IT folks were the ones making the big bucks.
Now, with the 'takeover' of Unix boxes, and what I like to call 'Donkey Kong' software that run on the Unix boxes, the mainframers have been put out of business - laid off, retired, fired. The young people have taken over - new and recent college grads. And those folks make less money.
Just look at IBM, for example. Many of their retirees are teaching what's left of the mainframe education classes.
When they go; there will be no one left to educate folks about the mainframe.
Take my company , the one I retired from last year.
They decided to convert all the legacy systems to SAP.
And running on a sh*t load of Unix boxes - hundreds of them. Imagine how many people it takes to manage that managerie. To date they have spent over 2 billion dollars and it's still not totally implemented. Not only that, when it's finally completed, they'll have to do it all over again because the version they implemented is old and no longer in support.
I could go on an on, but the point is - some companies make some really stupid choices just to save a buck, when in the end they spend millions or billions more.

 

[John Galt]

When I read stuff like this it makes me proud to be a closet Luddite

JG

 

[renferme]

what's a Luddite ?

 

[John Galt]

You can look it up quite easily. Better than me explaining I am sure.

JG

 

[renferme]

Why didn't I think about that ? just dumb I guess.

anyway:
" The Luddites were a group of English workers in the early 1800s who protested – often by destroying machines – against the changes produced by the Industrial Revolution that they felt threatened their jobs. "
.
But John, if you're thinking that companies are better off with SAP or SAP-like software over their existing legacy software, let me assure you , that's not true. SAP is a jack of all trades and a master of none. Home grown software, that SAP replaces,was designed to meet the needs of a particular function within a particular company. Modification/enhancements to SAP is extremely difficult, if not darn near impossible. But give credit to the marketers of SAP; they've successfully pulled the wool over many IT managers in this country.

 

[KB]

Many of the jobs are going Global also, at salaries 40 to 60% of US salaries.

I still work on a mainframe system because the Account I support processes too many millions of records to be moved to another platform. They keep looking though.

 

[johnlw]

What KB said regarding Globalization is dead on. That is the real reason there has been downward pressure on IT salaries.

Overseas (India, China, etc.) labor is very cheap, in many cases, the cost can be 25% of what an American salary is. Many companies have silently moved massive amounts of jobs out of this country. They have also made infrastructure investments in other countries rather than in the U.S.

Sadly, the trend is not limited to only IT jobs either...

John

 

[unclemick]

Nope.

Louisiana Seafood Campaign is one indication locally - of the level of pain. The seafood industry generally is not noted for high paying jobs.

 

[Guest]

Yep, it's global competition that's lowering IT salaries. It's not just current jobs being moved, but the new jobs that are not staying here, but going overseas instead. That's what is lowering the demand. There's no answer for it. Eventually it will settle out, but it'll hurt some people before it does.

 

[ganda]

I work for a tech company. They claim I cost five times more to employee than an Indian in Bangalore (where my employer has a large and rapidly growing office). It's hard to compete with people who will work for so little money, and (even allowing for my bias) I think I'm better than 95% of the Indians I've worked with, but I can't match the productivity of five people.

 

[Hyperborea]

I work for a tech company. They claim I cost five times more to employee than an Indian in Bangalore (where my employer has a large and rapidly growing office). It's hard to compete with people who will work for so little money

I've had some interesting discussions with folks, usually over a beer, in the last couple of years about the Indian software issue - including Indians in the US. One claim which has come up a few times is that roughly the top 20% of the Indian software engineers are working outside the country already. The next 20% are already working in good jobs for interesting companies. If you go to hire you are mostly getting the middle quintile down.

I think I'm better than 95% of the Indians I've worked with, but I can't match the productivity of five people.

H3ll, I think I'm better than 95% (or more) of the people I've worked with no matter what their nationality.

In fact, in Silicon Valley I would suggest that on average the non-US software/hardware engineers are better than the US ones. Why? Selection bias. A company might hire someone "local" because they don't cost as much to bring on board and they are easier to find. Someone from outside the US costs a lot more and needs to be worth more to justify the cost.

 

[ganda]

Woo hoo, I was originally a Silicon Valley based non-US imported techie, I must kick butt

I wasn't saying I was better than any particular nationality, what I meant was if the company gets 1.0 units of work from me and my Third World counterparts are only capable of 0.5 unit each, the company gets 5 lots of 0.5 for the same dollar cost if it employs abroad instead of people like me.

 

[renferme]

You're all partly right and partly wrong.
IT salaries are down because:
1. Mainframers made the big bucks. They've been mostly laid off or retired because the mainframe is mostly dead.
2. The replacements for the mainframers are young and make less money. They are the people running the Unix boxes, Lotus Notes people, Oracle programmers and data base people.
3. Off shore out-sourcing is a small part of it.
.
What my company experienced is that Indian programmers speak very poor English. It's difficult to communicate with them. They require extremely detailed specs in order to write a program. In fact if you PRACTICALLY write the program for them, send it to India, then they'll be able to successfully write a program for
you ! It may take a few years, but companies will find out that outsourcing to India does not work.
Someone mentioned that the best and brightest Indians are already in this country. That's true.

 

[JOhn Galt]

The "best and brightest Indians" were already in this country when we got here. We killed them.

JG

 

[cute fuzzy bunny]

My old company had a surprisingly substantial mainframe implementation. However having a job working on the mainframe "sucked" and was one of our lowest ranked/paid jobs.

I looked at several decent, in-depth analyses of so called "outsourcing" and "globalization". In almost every single case there were huge cost and performance leaks that simply went undetected. You give people bad service and bad products, after a short while they quit complaining and take their business elsewhere, do it themselves or just get used to the bad service/product and the inefficiencies it creates. Nobody measures those costs/losses. Some schmuck sits in a cube and cheers his paper cost savings that just put a couple of huge holes in the company. On the "globalization", with a few exceptions in certain job types, you can mark down the cost savings of cheaper employees with lower productivity and real long term results. Language and cultural barriers, completely different sets of expectations, and decoupling of the real results and data from the decision makers.

One of my primary pitches was for businesses to use their IT resource as a competitive advantage. A way to create and foster improved revenue opportunities. A partner with your business units. Put together a platform of hardware, software and services that you can leverage to dictate what you want to do in your business segment.

Sadly way too many companies keep taking an exacto knife to IT, frittering it away, then wondering why they have so many problems as an end result. They end up with 20-40% per-worker inefficiencies and having their mishmash of crappy systems dictate to them what they can and cant do.

How many times have you as a customer watched someone serving you struggle with a half-assed system that didnt let them do a simple thing for you simply? Heard their frustration and stress over the phone? There's your frickin cost savings bleeding right onto your customer...

The problem is you've got a high hurdle to get over. Some managers cant make intuitive or complex decisions based on a variety of hard and soft data. If you cant show them a bar chart in a powerpoint presentation that explains where the money and benefits come and go in a manner a 12 year old can comprehend, you wont get them to bite on it.

I got an interesting exposure to cultural differences in management when working briefly for a company in San Francisco. About 20 guys straight from Singapore that started their own consulting business. I'd talk to the owner for 20 seconds about a few ideas...he'd look up at the ceiling and say "Yes! I can see where that will be very beneficial to us when we're doing x, y, and z...that makes a lot of sense. Do it now."

What a difference...

 

[Spanky]

According to Software Development magazine, the trend is as follows:

Mean Salary - National
       Staff   Management
1999:  66K     81K
2000:  73K     88K
2001:  75K     93K
2002:  82K     95K
2003:  81K    100K
2004:  81K     99K

The Salary in the Bay Area is 25% higher.

I do not see the IT salary is decling. The pay is still very attractive relative to other occupatiions.

 

[renferme]

Spanky,
wish I had kept the article that said that IT Tech salaries went down from about 69k to 66k last year.
But, I throw the paper away every day. Oh well.

Of course, even your mag. says that salaries have stagnated the past several years and with inflation, they did indeed drop.

At my company I'm sure salaries have declined as the mainframers are all gone and the young 'donkey kongers' have replaced them.

 

[johnblake]

Outsourcing and offshoring has certainly had an effect, but don't foget the fast run-up in salaries in the 1990s. I know I was hiring entry level people for only a little less than what the experienced folks were making. Job hoppers were getting 20% raises.

Software developers (especially specialized ones) usually make more than traditional IT jobs.

 

[Spanky]

According to this aarticle:
http://www.itworld.com/Career/1745/041223itsalary/pfindex.html

The decline of IT salary is due to the slowdown of US economy and not outsourcing and hiring of foreigh workers.

The salary is still very good according to the article, "The median income of IEEE-USA members surveyed dropped from US $101,000 for a full-time worker in 2002 to $99,500 in 2003. Until now, respondents' salaries increased even during the first years after the 2000 dot-com bust. Median income of survey respondents rose from $82,000 in 1998 to $93,100 in 2000, before topping out at $101,000 in 2002."

Spanky