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By CNET News.com staff, 10 June 2004 12:30

NEWS Morale among IT workers has dipped to an all-time low, even though demand for certain skills is rising, according to a new study from Meta Group.

Seventy-two per cent of the 650 organisations contacted by the research company said the continuing lack of job growth in the industry is dampening the spirits of IT staff. More than half of the companies said they lost staff this year.

Some of the companies are paying attention to retaining key performers, because doing so is less expensive than replacing staff. But the combination of fewer employees, fewer dollars for projects, and the perception that there is no need to focus on retention will not help productivity, the research company said.

Eighty-one per cent of respondents, compared with 86 per cent last year, said they hired staff this year. However, the overall loss of employees seems to be slowing, according to Meta Group.

The survey showed that skills in some areas, such as database management systems and Web infrastructure, are still hot this year, as companies continue to build internal IT infrastructure and feel the need for better management of the huge volumes of data they're accumulating. Also in demand are software development skills, in areas such as Oracle and Java application management and networking.

The fact that the skill sets being favoured now are the same as in recent years, according to Meta Group, indicates that enough is not being done to develop these abilities.

The survey did find that IT workers' salaries are at least 20 per cent higher than their non-IT counterparts'. The research company attributed this in part to three factors: companies are willing to pay more to retain key contributors; there is a strong market for experienced individuals with critical skills; and the job market is looking up.

Companies are continuing to turn to offshore outsourcing, because it offers substantial savings on labour, with average salaries that are up to 60 per cent less than in the domestic market. But hurdles such as language barriers and cultural and political differences will prevent a major increase in the use of offshore labour, even if it makes steady progress, Meta Group said.

For 55 per cent of respondents, India is expected to be the major outsourcing destination for the next three to five years. But China’s ever-lower cost of labour will become more attractive in the near future, Meta Group said, because the communist country is beginning to relax its difficult, bureaucratic environment.