Thursday, January 15, 2004

Offshore outsourcing driving down US IT salaries

A new study by Foote Partners LLC, a salary research group, confirms what has been obvious: IT salaries are dropping. The study indicates that although the general economic downturn is partly to blame, offshore outsourcing is another contributing factor.
In a year long study of 400 Fortune 1000 companies, researchers found that by 2006, the organizations expected from 35 percent to 45 percent of their current full-time IT jobs to go to workers overseas, David Foote, president and chief research officer for Foote Partners, said.

"What we found is a lot of correlation between a decline in pay for skills and certification in areas that are actually moving offshore," Foote said. "There's no need anymore for premium pay for those skills ... and also, a lot of bonuses have quite frankly been redirected to a very small number of people."
Foote points specifically to declining US IT salaries in application development and maintenance, tech support call centers, and some database work. But there are some areas where salaries are holding up better:
There are areas in IT where jobs are expected to remain onshore--at least for a while, Foote said. Those jobs tend to require a deep understanding of a company's business processes. Those jobs involve system architecture and prototyping, data and process modeling, and other pre-implementation work. Work related to security and network administration and management also appears safe.
Excepts above are from this TechWeb article on Yahoo.

Update, Jan. 15: Datamation has another article on the Foote survey plus a similar one from Janco Associates. This article is more positive on salary increases for those jobs that remain onshore, including CIO salaries.

Update, Jan 16: Meanwhile, business is good for Infosys, one of the leading offshore service providers in India. Most recent quarterly revenues are up 38%, with margins holding up nicely. Infosys added 3,666 new employees during the quarter, bringing total headcount to 23,209. Top Consultant has the story.

No comments: