Salary Survey Commentary for April 2009
Overview
The effects of the financial crisis started to affect IT recruitment during the first quarter of 2008. Since then the number of jobs being advertised has more than halved. From 153,596 jobs down to 72,355, a fall of 52.9%. During the fourth quarter of 2008 jobs had fallen by a further 24.3%. This continued into the first quarter of 2009 with job counts down by a further 26.3%. This trend is now comparable with the wholesale loss of jobs seen during 1990/1992 and more recently in 2001/2003.
Advertising in magazines and press is down this quarter by 30.1% and on the main internet job boards by 26.2%. Internet advertising continues to be dominated by recruitment consultancies with 93.5% of all jobs being placed by them and just 6.5% jobs being placed directly by companies. However this is up from 5.4% during the previous quarter. This means that an additional 750 jobs were advertised directly and not via a consultancy. The number of consultancies in business reflected the downturn with the number advertising IT jobs falling by 25.4% compared with a year ago. From 5,414 consultancies down to 4,391.
The downturn is now clearly having an effect on the level of salaries being offered. For the first time since 1992 average pay across all types of IT jobs fell by 0.5% compared with a year ago. This figure is set to rise with salaries falling by 0.8% in the last quarter compared with the previous quarter. There are however wide variations dependent on skills, location and business sector.
The contract market is always the first to suffer during a recession. It is no different this time round with the number of contracts advertised down by a 32.1% compared with the previous quarter. Down from 22,594 jobs to 15,371. Since twelve months ago there has been a massive reduction of 62% in demand. Rates on offer are generally down by 2.2% since the previous quarter.
Skills Summary
SQL again remained the skill most in demand, but with quarter on quarter demand down by 18.1%.
In general the top ten skills cover products used primarily by developers. Here the skill that is declining most in popularity is C++ with jobs down by 27.1% followed by Oracle down 26.6%. However surprisingly demand for HTML and Javascript are up by 10.2% and 8.9%. Skills such as C# and ,NET that have until recently weathered the storm are now losing out, with demand down by 20.4% and 17.4%. Linux has now consolidated itself ahead of Unix, with demand down by only 9.5%. Elsewhere demand for Java is down by 23.1%, C by 17.4% and Unix by 16.1%.
The contract market also has SQL as the skill most advertised, and here the number of jobs on offer is down by 34.8% since the previous quarter. The remaining skills making up the top ten for contractors are C, Oracle, SQL Server, C#, Java, .NET, SAP and ASP all down by an average of 34.8%.
Regional Summary
The impact of the recession is now evident across the whole of the UK having rippled outwards from London during the past twelve months. During this period London based vacancies shrank by 67.6%. This may be starting to change as for the first time in over a year the quarter on quarter decline of 10.7% in vacancies in Inner London (which includes the City) is the lowest of any area. Outer London saw jobs down by 41.5%, the South by 27.9%, North West by 27.9%, West/Wales by 25.5%, East Midlands by 25%, North East by 23.3%, Scotland by 19.6% and West Midlands by 16.4%.
Contract vacancies are also down in all regions, but unlike permanent vacancies the impact is falling mainly on contract vacancies in the City and London in general. Jobs in Inner London are down by 31.5% and in Outer London by 35.6% compared with the previous quarter.
Industry Summary
In terms of sheer numbers software houses continued to be hit the hardest with the number of vacancies down by 10,158, from 42,744 to 32,586 since the previous quarter. A substantial portion of software house development is associated with the finance industry which itself is next in the firing line with vacancies down by 7,221, from 19,814 to 12,593. These two sectors make up almost three quarters of all jobs advertised. The position is no better in other sectors with retail down by 36.9%, manufacturing by 28%and media by 25.5%.
The demand for contractors to work in finance is in virtual free fall with the number of vacancies falling by 1,582, a drop of 35.3% compared with the previous quarter. There are now 72.6% fewer jobs in finance than the same period twelve months ago. Other sectors are also reducing their commitment to contractors with software houses down by 27.2%, retail down by 43.9%, manufacturing by 39.2% and media by 38.8%, quarter on quarter.
Management
The number of management vacancies this quarter fell by 18.1% compared with the previous quarter. Down from 5,306 jobs to 4,352. MIS managers employed in the financial sector have seen jobs disappear at the rate of 21.3%. Quarter on quarter vacancies for the leading job function of System Development Manager are down by 10.3%, somewhat less than for other managers. Elsewhere jobs for Technical Support Managers are down by 30.4%, Software Managers by 35.2%, Helpdesk Managers by 20.3, Computer Service Managers by 16.4% and IT Directors by only 3.8%.
Salaries continue to be held back with average advertised pay down across the group by 0.5% since the previous quarter. In particular pay offers for System Development Managers are down by 2.8% and Software Managers by 2.8% in just one quarter. Pay for support grade managers (technical, services, communications and help desk) all bucked the trend with marginal increase being recorded.
System design, business analysts & project management
The number of jobs advertised this quarter was down on the previous quarter by 32.8%. From 19,905 jobs to 13,258. The main impact of this decrease were felt by Management Consultants and Project Leaders where the number of jobs on offer are down by 60.9% and 37.2% respectively. Project Managers represent the largest job function in this group and here the number of jobs are down from 4,483 to 3,359 jobs, a fall of 31.2% on the quarter. Business Analysts form the next major job function and here the total number of jobs fell by 36.3%, and within software houses by 41%. Prince, UML, SAP and Oracle are the main software skills being sought. Advertised salaries are up on last year by 0.4%, but down by 0.7% quarter on quarter. Project Leader pay offers are down by 3.5%.
The number of vacancies for contractors is down this quarter by 35.2% compared with the previous quarter. In particular the demand for Business Analysts in financial consultancies fell by over 40%. Demand for the key job of Project Manager is down by 25.9% and for Project Leaders by 36.7%. The rates on offer have also suffered and are down by 2.1% on a year ago and by 5% since the last quarter.
System development & programming
This benchmark group of jobs represents over 35% of all jobs advertised and as such is a key indicator of what is happening within IT recruitment. The trend here is that the quarterly decline in job offers has accelerated from the 9.9% fall recorded in the third quarter 2008 to 25.5% during the latest quarter. Job counts are down from 34,396 jobs to 25,647 compared with the previous quarter. The main employer of developers continues to be software houses and financial organisations. These two sectors account for over 72% of all IT development staff recruitment. It is here that demand continues to weaken with combined job offers down by 29.6%. Significantly the share of jobs in finance over the past year has dropped from 26.8% to 22.1% of all the jobs advertised. For the group as a whole salaries on offer are now 0.7% down compared with the previous quarter. Despite this public sector pay still managed to break into positive territory with average increases of 3.4%. However these figures need to be treated with some caution as salaries can vary considerably depending on location, business sector and software skills. The difference in pay being offered for specific software skills can vary by up to 42% between the lowest and highest average for a developer The spread of salaries based on location can also be substantial. This is shown in that a developer employed by software houses earns 26.8% more in London than in the North East. The top skills required are for SQL followed by C, C#, ASP, .NET, SQL Server and Javascript.
The demand for contract development staff has now been in decline for six successive quarters. In the latest quarter the number of jobs on offer is down by 29.2%. Contracts in finance are again the problem with vacancies down by 32.8% quarter on quarter and by 72.9% since the start of the year. Software houses are the main employers of development contractors and here the fall was not quite as severe with 20.8% less jobs this quarter. Top skills required are for SQL, C, C#, .NET & Java.
PC Support
The number of jobs advertised this quarter was down on the previous quarter by 34.1%. From 6,601 jobs to 4,305. The demand for the benchmark job of PC Support Analyst is down by 38.4% quarter on quarter and by 55.9% since a year ago. Help Desk support vacancies are also down with 35.1% fewer jobs available this quarter. Salaries being offered are down quarter on quarter by 0.3% and by 1.6% on a year ago. Top skill requirements are for Office, Windows XP, SQL and TCP/IP.
For the fifth quarter in a row demand for contract PC support staff is also down. This time by 39.3% compared with the previous quarter. It is evident that contracts for front line support staff are fast disappearing. Rates reflect this and are down by 3.7% quarter on quarter and by 5.6% annually. Top skills requested are for Office, Windows XP, Exchange, Citrix and SQL.
Technical support
The number of jobs for this group decreased by 22.6% compared with the previous quarter. Down from 14,954 jobs to 11,568. System Administrators make up over 41% of all the jobs within this group. Recruitment by software houses is down by 21.6% and in finance by 35.7%. These two sectors respectively account for 49.9% and 21.9% of administrator recruitment. As seen in the previous three quarters the downward trend in recruitment from software houses also affected technical sales support with jobs here down by 32.7%. National salaries for administrators this quarter averaged £36,587 up by just 0.2% on last year, but with variations that show offers going down in software houses by 1.5% in the last three months. Senior Administrators with substantial experience average £48,505, up by 0.2% on last year. Annual increases across the group are down by 0.8%, much the same as reported in the previous quarter. Over 56% of all jobs advertised for Administrators are for skills in Linux, Unix, SQL or Solaris. Having made rapid inroads over the past two years Linux has now established itself as the skill administrators need to have. The remaining top skills cover Exchange, TCP/IP and Citrix.
Jobs for contractors this quarter decreased by 27.6%, down from 2,816 jobs to 2,038. Rates for the group as a whole are also down on a year ago by 3.1%. Since the previous quarter rates for Pre-Sales Technical Support have gone down by 4.0%. In contrast rates for the key role of System Administrator have remained static during the same period. Software skills required are for Unix, Linux, Exchange, SQL and Solaris.
Software engineering
The number of jobs for software engineers decreased by 20.2% compared with the previous quarter. Down from 6,444 jobs to 5,118. This is somewhat less than that experienced by other job groups. Vacancies for the main job function of Software Engineer are down by 19.5% and for Senior Software Engineers by 14.1%. Salaries on offer compared with a year ago are actually up by 1.6%, but perhaps a sign of what is to come is shown with salaries over the past quarter down by 1.4%. Software Engineers are now being offered average salaries of £36,511, with variations of up to £46,553 for Senior Software Engineers. The top skills required are for C, C++, Embedded software, C# and Java.
The number of contract vacancies for Software engineers fell by 33.1% compared with the previous quarter. Rates of £35/hour for Software Engineers remained static during the quarter, but are down from £37/hour compared with six months ago. Senior Software Engineers with substantial experience are seeing rates tumble by up to 18% on a year ago. Skills needed are for engineers with experience of C++, Embedded, C, Linux and GUI.
Database administration
The number of jobs advertised for Database Administrators/Analysts fell by 29.7% compared with the previous quarter, down from 3,854 jobs to 2,709. This group of jobs is intended to reflect the design and administration functions related to large-scale corporate databases. In smaller installations the responsibilities may well be covered as part of system administration or even PC Support. Salaries for Database Administrators increased by 1.2%, compared with last year and are now being advertised at £39,615. This however is 0.6% less than the average salary reported in the previous quarter. Senior Database Administrators pay is down 0.1% over twelve months and by 3.4% quarter on quarter. Software skills being sought cover SQL, SQL Server, Oracle, Access and Unix.
Over the past quarter contract vacancies fell by 35.1%, down from 1,201 jobs to 781. For the fifth successive quarter the main impact came from a reduction in demand from the finance sector where the number of jobs are down by 44.8% compared with the previous quarter. Contractors are also seeing rates going down by 6.3% on a year ago. This is the fourth consecutive quarter in which we have seen rates dropping. Top skills required are for SQL, Oracle, SQL Server, Access and Unix.
Networking & communications
The number of jobs for this group decreased by 25.1% compared with the previous quarter. From 3,958 jobs to 2,957. The slowdown in recruitment is showing up in the level of salaries on offer. Across the group they are down by 3.1%, with Network Controllers down by 3.1%, Network Analysts by 1.1% and for the main job function of Network Support Engineer by 1.8%. Salaries for this latter job role now average £29,565 nationally, but with up to £39,090 for more experienced engineers. The top skills being looked for are Cisco, Firewalls, Exchange Wan and TCP/IP.
The number of jobs for contract network people fell by 29% compared with the previous quarter. Within the communications industry itself jobs were down for the third consecutive quarter. This time by 26%. Rates for Network Engineers are down on a year ago by 5.7% and by 11% since the previous quarter. The top skills required are for Cisco, Firewalls, Lan’s & Wan’s.Operations
This group covers operations roles that are predominantly mainframe job functions. The exception to this are Hardware Service Engineers, which covers all aspects of hardware support, including peripherals. Quarter on quarter the number of jobs advertised in this group went down by 16.4%, from 1,115 jobs to 932. Job offers in finance and software houses are down by 26.7% and 21.3% respectively. Hardware Service Engineer pay is showing a slight fall of 0.8% against last year, but is down by 4.1% quarter on quarter. Top skills required are for Office, Exchange, Unix and Linux.
The number of jobs for contract staff this quarter went down by 31.7%. Hardware engineers represent 78% of the jobs in this group and here jobs are down by 23% compared with the previous quarter. Surprisingly rates for hardware engineers are up by 13.6% and now average £22/hour. Main skills required are for Office, Windows XP, Exchange and Citrix.
Internet Design
The number of jobs on offer within this group went down by 18.4% compared with the previous quarter, from 1,536 jobs to 1,249. The main job function of Web Designer accounts for 77% of the jobs advertised in the group and here 19.9% fewer jobs were advertised. Jobs in the distressed finance sector are down by 24.3%. Average salaries on offer for Web Designers range from £26,766 in Scotland to £34,564 in London The main skills being requested are for HTML, Flash, Photoshop, Illustrator and Javascript. The job functions in this group can also be associated with other design and development jobs where similar software skills apply.
Summary
There are certainly no green shoots appearing for IT personnel who have recently been unfortunate to lose their job. The number of vacancies advertised this quarter clearly shows that companies are rapidly reigning back on IT expenditure. As IT spend is put on hold this has a knock on effect which hits software houses, application development, and infrastructure employment. Key support area’s will also face scrutiny as more operations are outsourced and operated offshore. What started in the first quarter of 2008 as a problem in the finance sector has now evidently spread across all industry sectors and geographical regions. Even the public sector seems to have caught up with the rest of the world and is now recruiting less staff than seen previously. Freelance contractors looking for a new placement will also find heavy competition for jobs. As is usual in a downturn companies see reducing contractor levels as a quick way to reduce costs. With an annual reduction of 62% in the number of contracts available there will be a substantial pool of people looking for employment.
None of this however will put the brakes on organisations (including government departments) outsourcing a range of IT activities. This may be through complete offshoring of an operation to a disguised form of UK outsourcing by using non EU imported IT personnel to carry out the operation in the UK. So called onshoring-offshoring. The current recession that we are now enduring should be an opportunity to severely limit the number of visas granted to non EU IT personnel. There clearly is no justification or argument that there are no suitably qualified UK candidates able to meet the level of recruitment currently taking place. The top level graduates employed in the finance and associated sectors over the past decade and now looking for employment can easily meet what is now required.
Whilst the current position should buy the UK some time in balancing the demand and supply of IT people, it will not in itself solve the long-term problem of an IT skills shortfall. The age profile of IT personnel means there will be a need to plug a major gap in the loss of IT people due to retire during the next decade. Declining numbers of IT and science graduates over this period will not be able to plug this gap, unless action is taken very quickly. It would be unfortunate that when the UK economy starts to grow that there are insufficient qualified people available to support the growth, and once more have to import the required staff and related services.
The impact of declining recruitment is also seeing a change in the role of recruitment consultancies. www.jobadswatch.co.uk reports that over 1,000 consultancies have stopped advertising IT jobs during the past twelve months. This has led to a number of consultancies offering companies a service to provide individuals who are being made redundant with a personal consultancy on how to best to seek employment. Whether these people would have priority over other people registered with the agency is unclear.
In conclusion the trend of less and less job opportunities is likely to continue throughout 2009. This makes it absolutely essential that anyone employed in IT is up to date on those skills most in demand. Contractors currently in work should use all available resources to update their portfolio. Alternatively those developers coming up to retirement with old legacy skills such as Cobol may well now be in demand to maintain mainframe systems still operated in some financial centres.
Commentary by : George Molyneaux
Research Director for Salary Services Ltd. - www.salaryservices.co.uk
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