CIO Jury: Will skills shortage lead to IT wage spike?

Increased demand for skilled IT professionals is putting them in a stronger bargaining position with employers compared to the recent downturn years – but some IT bosses warn that offshore outsourcing will prevent the wage spikes of the dot-com boom.

A host of surveys over the past week have highlighted recruitment and retention problems faced by UK businesses because of the shortage of certain IT skills in the labour market.

We asked the silicon.com CIO Jury user panel if this has put their IT workers in a stronger bargaining position over wages and benefits. Ten said 'yes' and just two said 'no'.

But some of the IT bosses warned that the consequence of a sharp wage spike in the UK IT staffing market as a result of this would be an increased move towards outsourcing and offshore outsourcing.

JP Rangaswami, global CIO at investment bank Dresdner Kleinwort Wasserstein, said: "Demand will be met by the appropriate use of outsourcing and offshoring. Rollercoaster wage spirals will not be allowed to return. The downturn was not a blip but a maturing of the sector."

Dharmesh Mistry, CTO at Edge IPK, agreed that employees are in a stronger bargaining position but also added a similar note of caution.

"If prices escalate too much there will be more exodus of development to offshore. I am not down on “onshore” developers, and I do feel local staff provide more loyalty, but getting onshore contractors from offshore companies is still cost effective over local contractors, so I believe developers need to ensure they do not price themselves out of the market," he said.

The fight to keep hold of good staff has already begun for Steve Anderson, European IT partner at property consultancy Davis Langdon.

"We have already seen evidence of ad-hoc salary reviews outside of the annual cycle, more head-hunting and higher expectations for annual increases and bonuses. However the strong IT leader will hopefully have emphasised the benefits of non-monetary motivators to their team and created an environment that excites and inspires people to achieve their best," he said.

Graham Yellowley, director of technology at Mitsubishi Securities International, said the problem is particularly acute with IT staff with sought-after skills. "This does increases the pressure on recruitment trying to get the right person at the right price and also raises the retention pressure," he said.

Bob Silverman, CIO, at recruitment firm Spring Group, said the trick is keep employees happy so they don't look in the first place, while Peter Pedersen, CTO at online betting company Blue Square, said the pick-up in the IT staffing market also makes it easier for bosses to "encourage" some workers to move on.

But Phil Young, head of IT operations at Amtrak, said staff retention is not an issue for him at the moment. "To be quite honest I think this is very regional and sector based. However, it does have the potential to become an issue if staff start to believe some of the hype that they read."

Today's CIO Jury was…

Steve Anderson, European IT partner, Davis Langdon
John Keeling, director of computer services, John Lewis Partnership
Dharmesh Mistry, CTO, Edge IPK
John Odell, group IT director, BBA Group
Peter Pedersen, CTO, Blue Square
JP Rangaswami, global CIO, Dresdner Kleinwort Wasserstein
Bob Silverman, CIO, Spring Group
Richard Steel, head of ICT, London Borough of Newham
Gavin Whatrup, IT director, Delaney Lund Knox Warren & Partners
Ted Woodhouse, IT director, Leeds Teaching Hospitals NHS Trust
Graham Yellowley, director of technology, Mitsubishi Securities International
Phil Young, head of IT operations, Amtrak

Plus: Take our Skills Survey and share your opinions on the UK workforce

If you are a CIO, IT director or equivalent at a large or small company in the private or public sector and want to be part of silicon.com's CIO Jury pool, or you know an IT chief who should be, then drop us a line at editorial@silicon.com