By Naked CIO, 24 November 2008 08:00
COMMENT
Sky-high salaries are giving the IT department a bad time. The Naked CIO outlines a plan for how to revitalise the workforce - and save IT's reputation.
Over the last couple of months as budgets have tightened and questions of efficiency have been raised throughout the business world, I've wondered if the last decade of rising IT salaries is hurting not only businesses but also the ability to develop a sustained IT culture within organisations.
Offshoring and outsourcing remain one of the primary alternatives to high IT staffing costs in the UK. Although I am not a fan of these tactics, the emergence of low cost labour markets suggests staff cost is a real issue - and the growth of these markets suggests it is systemic.
The cost of employing labour cannot be removed from the cost of training and developing emerging IT skills. Has the great growth and success of IT created an overpriced model that cannot work in challenging economic times? How do we as leaders within our industry work to stabilise wages and salaries in order to bring the value or perceived value back into our function?
In the IT department the cost of employing critical staff functions and effective specialties such as project management and software development is much higher than in other departments. This is largely because the shortage of technical skills has increased IT salaries at rates other aspects of the business cannot match.
Yet the staff shortages in key technical areas means finding competent employees remains as or more challenging than it ever was.
This has created a climate where IT has become the primary target of organisations looking to tighten their belts. I wonder if we are not partially responsible for letting it happen. The only way to solve this is to move towards an all-out assault on the very things that threaten our existence and make us the targets in the eyes of our businesses.
We need to stimulate education and training at a reasonable price and encourage young and old people alike to get the technical and business skills necessary to create a viable and competitive IT work force. Through creating opportunities and ensuring we have a sufficient labour pool to draw from, we will be able to create a fair free market for IT specialists at competitive market-based rates. It is simple supply and demand.
Companies need to invest more in internships for students and sponsor university programmes to get the brains of tomorrow engaged today. The industry and the educational system also need to start engaging children at a younger age to encourage them to pursue IT as a career. This means driving more information and knowledge at the pre-uni level.
We also need to expose the breadth of opportunities in IT beyond the purely technical and educate the country that you do not need to be a geek in order to prosper within the IT sector. Very few people outside the industry realise the value of the softer IT skills such as business analysis, project management, contract negotiation and compliance.
There is much work to be done if we are to create a competitive and sustainable workforce that will be competitive with all the alternatives. To expect others to lead this charge is as naive as the ignorance we have demonstrated in not dealing with the impending staffing storm so far.
Comments
There are 9 comments. Join the discussion
1. Michael Saunby
Perhaps Ricardo Semler has the answer here. Don't hire individuals, hire teams. If more effort/resource is required it's for the team to decide whether to work longer hours, hire new team members, or use different technology.
The business needs to keep an eye on things, since it might be better for the long term to have a largish team of average performers, earning average pay, rather than a couple of world-class wizards doing amazing wizardly IT.
As a non CIO, it strikes me as improbable that CIOs actually know how to design jobs, recruit the best staff, enable them to develop, retain them and keep costs down for any sizeable group of IT staff (unless they trained as cat-herds). Then to expect them to actually have any clue about new technologies is clearly far too much.
Shift as much of the non-strategic decisions elsewhere, and that includes worries/speculation about encouraging the next generation. If that is important to you as an individual, volunteer at your local school or college, or give grants and prizes - perhaps to schools in India!
2. anonymous
Where are all these high paying IT jobs, I only earn £13k for providing front line support for a web hosting company ?
3. Jeff Roberts
I think the purpose of this article must be to stimulate responses rather than putting a serious proposal forward. I understand you to mean we should work to develop a large, well-trained, highly-skilled IT workforce in the UK (so far so good) that is paid on par with the alternative labour markets (here we part with reality). Firstly, how do you intend controlling the salaries of IT people in a specific region? A fair free market for IT specialists results in competitive market-based rates that inevitably rise in times of high competition for people with specific skills and experience. You have to pay people the going rate (i.e. what your competitors are paying) and you have to pay even more for good quality people. Secondly, what incentives will people have to become trained? Will you tell them to get three years of full-time study and three years of experience, and then they can earn the same salary as someone in a developing country (where incidentally the cost of living is a lot lower and the quality of life compared to the UK is debatable)? That may be an argument for looking to use the alternative markets yourself, but it won't motivate anyone in the UK into following this career path. They will look at more lucrative careers and abandon IT altogether. Finally, if IT is not being valued in your organisation and is just seen as a growing overhead, then there are probably other reasons for that view than just a rising salary base.
4. Radical Meldrew
Only the the top or specialised tier of IT have still sustained higher than average wages. Newer IT employees are not highly paid and would possibly have to take a further cut to take up the same position in another company. in the future. IT wages have been falling for the last 5 years - its only the huge sums available to a few that distort 'average' salary figures.
I do have a slight confession however -some employees are still carrying a 'weighting' on their salary from as far back as the 90s when employers payed over the odds to secure certain skills, me included Are these the people you are now targeting? Most of us havn't got much time left now - management are getting rid of us all now that we're replacable for less money. Bless 'em. That'll secure them a profit bonus for next year for sure and they don't even pause to consider that they are overpaid too.
5. Karen Challinor
I'll do a deal with you. You cut the cost of living in this country to match that in the countries we offshore to and I'll get IT workers to take a pay cut.
6. Stewart MacDuff
Terribly naive. Outsourcing more often than not derives from incompetent executive IT management (and FD's) who have been unable to devise and implement effective internal Applications, Systems and departments. Furthermore the cost savings of Outsourcing invariably have to be fudged becuase they *actually* lead to same or more cost and reduced flexibility as well as national economic decay. Nobody talks about the cost of legal and accounting resources in companies, often much more sky high than IT.
7. Majito Querido
well this outsourcing nonsense has created the reality for many folks that it is not a good career path...so that leaves the field empty which in turn runs up salaries for not having enough applicants for a particular position...
8. anonymous
Bring down the salaries of the Board Members who take companies to the edge of bankruptcy... bring down the dividends for the shareholders.. invest in what you've got, the people you have, trust them to deliver what you need.
Soon as you start paying peanuts you get monkeys. Stop thinking that training your own staff is someone elses job.
Either that or get a contractor in.
Your choice.
9. Kevin Dee
This is an issue in all of the industrialised nations. We do need to grow our IT workforce and I do believe that the costs will be very much in line with offshore costs ... particularly when you add in the overhead costs associated with managing a remote workforce and the speed at which their salaries are accelerating!
In the not too distant future offshoring will not be done for cost savings, but rather because there are just not enough qualified people in our own back yards!