IT salaries aren’t keeping up with inflation — but that may soon change

Pay for some IT professionals is failing to keep up with inflation, according to a salary survey by IT employment consultancy Janco Associates for calendar year 2021. But preliminary data indicates pay for tech workers could soon change drastically with job market in IT tight, and many companies eyeing major tech projects in the year ahead.

With inflation in the US running at about 8% over the past year, salary increases — even for IT execs — have failed to keep pace.

The mean compensation for all IT pros last year rose only 2.05%, with the median salary at $100,022 for those at large enterprises and at $95,681 for IT workers at mid-sized firms, according to Janco.

Not surprisingly, the largest pay increases went to IT executives in bigger companies; they received, on average, a 3.47% pay hike, bringing the median salary to $176,231. General IT staffers at large enterprises staffers saw an average 3.23% increase, bringing the median salary to $80,914.

Middle managers only saw a slight increase — up 1.2% to $97,189.

Overall, salaries for IT professionals in aggregate rose just under 3% during the past four quarters, Janco said in its report. “With inflation at 40-year highs, compensation for IT professionals is not keeping up,” the company said. “In conversations with over 100 CIOs, CFOs, and heads of IT hiring groups, we found that staff issues are a primary concern.”

Janco Associates

Over the past three months, 43,200 Jobs have been added to IT job market in the US, a pace of expansion that exceeds the same period in 2021, according to the US Bureau of Labor Statistics.

With unemployment in the tech industry hovering around 2%, companies need to scramble to meet the concerns of new hires if they’re going to succeed in attracting — and keeping — top talent. The hiring of IT professionals is at a record high level, according to Janco and others,” even with inflation and the specter of a possible economic downturn. All signs point to that growth continuing.

“Many of our clients use the data from our mid-year salary survey to set the ranges of bonuses for the end-of-the-year pay raises, and pay ranges for 2023,” Janco said.

The company is in the final phases of completing its IT Mid-Year 2022 IT Salary Survey, which is why the data is still preliminary.

In an interesting twist, bonuses paid to workers with non-certified IT skills lept in 2021, with the average being 9.5% of base salary, according to new research by Foote Partners LLC. That wasn’t the case for 579 IT certifications: they decreased 1.2% induring the same period after two consecutive quarters of growth.

It was the largest quarterly decline for certified IT pros since late 2020, Foote Partner’s report said.

Foote Partners LLC

“We’re not at all surprised by this recent acceleration in cash premium bonuses for non-certified IT skills,” said David Foote, chief analyst at Foote Partners. “Most employers are struggling with pay issues in their tech workforce, and it’s mostly that they’re underpaying their workers in a ‘sellers market.’ So any way they can find to increase compensation is key.”

Skills-based pay works well because it’s usually paid outside of salary and tied to a specific skill or skills cluster, Foote said. “That makes it easier to convey the value of what extra pay can deliver in persuading management to support this pay strategy,” he said.  

There were 44 non-certified IT skills that earned premiums well above average and are still growing, according to Foote. Those skills include the use data analytics engine Apache Spark; artificial intelligence for IT operations; big data analytics; data migration; DevOps; DevSecOps; MapReduce; MongoDB; NoSQL; PostgreSQL; security auditing and testing; smart contracts; and software development lifecycle management.

Still 22 out of 579 certified skills did buck the overall downward trend in bonuses; among those were AWS Certified Security; certified healthcare information security and privacy practitioner; Cisco Certified CyberOps Associate; Cloudera Certified Associate Data Analyst; InfoSys Security Management Professional; Oracle Certified Master DBA; Microsoft Certified DevOps Engineer Expert; and GIAC Security Expert.

Janco Associates

In 2023, CIOs will face a myriad of budget issues, including attracting new employees and retaining current workers, upskilling staff, and boosting overall benefits and compensation. “It will not be unusual for pay ranges to go up by 5% to 10% from current levels,” Janco said.

Given that many enterprises are looking to expand the size of their IT staff as the economy recovers — and app development, security issues, and digital transformation projects remain top of mind — the preliminary data indicates IT salaries and bonuses are likely to jump.

Janco also found CIOs are keenly aware they need to reduce burnout among IT pros who are under stress from dealing with remote and hybrid-work environments.

Two other recent surveys — by consultancy Deloitte and software vendor Robin Powered — showed that younger workers are burned out and want better pay and benefits, including mental health care from organizations.

During the second half of 2021, more companies were investing in IT, according to Janco. “The emphasis over the past several years is in both e-commerce and mobile computing. At the same time, with the ever-increasing cyber-attacks and data breaches, CIOs are looking to harden their sites and lock down data access so that they can protect all of their electronic assets.”

Janco also found:

• Work from home is here to say for many IT pros, and many have opted out of going back to their original pre-pandemic employers.
• Retirements of IT pros have increased as more Baby Boomers opt-out of returning to work.
• About 116,000 IT professionals were laid off or terminated because of the COVID-19 shut-downs.
• Salary compression is occurring as “new hires” are offered salaries at the top end of the pay ranges for existing positions — often being paid more than current employees in the same positions.
• Total mean compensation for all IT pros increased from $94,729 to $97,872.
• Attrition rates in mid-sized enterprises are rising faster than in large enterprises.
• Salary levels in mid-sized enterprises are rising faster than at large firms.
• Consultants who augment IT staff and skills now are in high demand.
• Demand has remained highest for IT pros who support security, Blockchain, work-from-home plans, and e-commerce.
• Staffing and retention are now a primary priority for C-Level managers.

The salary survey, which is updated twice a year in July and January, queried 252 large companies and 722 mid-sized firms. Large companies are those with gross revenue equal to or greater than $500 million mid-sized companies are those with revenues less than that.

Seventy-three positions were surveys, including executive roles such as CIOs, CSOs, vice presidents of information services and technical services, and directors of IT planning. The survey also queried technology middle managers and staff members.