Salary Survey Commentary for July 2010
Overview
Life for those IT professionals seeking employment will be cheered by the news that recruitment in the second quarter of 2011 continues to improve. This is the fourth consecutive quarter that the number of permanent IT jobs being advertised has increased. Whilst previously the increases seen in the last six months of 2009 were modest, the figures being recorded so far this year have been somewhat higher, with the number of jobs advertised increasing by 8.1% since the previous quarter. From 69,744 jobs to 75,379.
However since the start of the recession in late 2007 the number of available jobs has almost halved. Recruitment consultancies continue to dominate the market with 88.3% of all IT jobs being placed by them. Companies advertising directly make up the remaining 11.7%. There has recently been a significant movement towards more company direct advertising. At the start of the year the figure was just 9.5%. This means that an extra 1,600 jobs were advertised directly in the second quarter compared with the first quarter. This is reflected in that the number of consultancies involved in IT recruitment has fallen yet again. The number of consultancies that are still active this quarter totalled 3,746 compared with 3,948 in the previous quarter. This is in contrast to 2,789 companies advertising directly. Up from 2,425.in the first quarter.
The first two quarters of 2010 has seen pressure on pay easing off slightly. This followed five quarters of declining salary offers. The effect of this is not uniformly distributed, with substantial variations being seen across different geographical regions, industry types, and where relevant individual software skills. Average pay on offer across all job functions and locations has increased by 1.1% since a year ago and by 0.4% quarter on quarter.
The impact of the financial crisis on freelance IT staff during the past few years has been traumatic for those seeking contract positions. Compared with two years ago the number of contracts being advertised fell from 40,398 at the start of 2008 to 18,155 now. The good news is that 2010 has seen a revival with jobs up by 11% quarter on quarter and by 22.1% since the end of 2009. Pay has reflected the increase in demand with rates up by 3.2% on last year, and by 2.1% quarter on quarter.
Skills Summary
The top skills in demand have again shown little change since the previous quarter. SQL remains the top skill in demand followed by C, C# and .Net. Elsewhere demand for the top 10 skills remain virtually unchanged. Javascript moves up a place to eight position, HTML moves down one to ninth and Linux moves up to enter the top ten for the first time. Linux has rapidly been replacing Unix for some time and is now the preferred operating platform for most companies. Linux ,C# and .Net have all seen demand increase by more than 7% since the previous quarter.
There were no changes to the top ten contractor skills in demand. SQL remained the top skill followed by C, Java, C#, Oracle and .Net. Demand for C# contractors is up by 8.8% and for .Net by 10.4% quarter on quarter. SAP is the only top ten skill to see demand fall, with job counts down by 4.4%.
Regional Summary
The split between the fortunes of the Northern and Southern parts of the UK continues to widen, even though the South has suffered most in recent years. During the second quarter of 2010 London and the South, combined with the M4 corridor to the West, attracted 74.1% of all IT jobs being advertised. This is up from 69.7% against a year ago. London now represents 36.5% of these jobs, up from 33.9% last year. London vacancies are up by 9.1% and in southern England by 8.3%. In the northern regions jobs are up by 1.2% in the North West, by 0.9% in Scotland, but down by 1.9% in the North East.
Contract jobs also show a major split between the North and South, with 80.1% of vacancies being placed in the South. In general jobs in the North are up by 7.1% and in the South by 9.4%. The smallest increase is being seen in the North East with jobs up by just 3.3%.
Industry Summary
The trend over the past few years has been towards software houses and consultancies providing software solutions rather than for in house ad hoc development. The main exception to this has been the finance sector, which historically supports large IT development and support. The massive layoffs seen during 2008 and 2009 have now abated with 7.9% more jobs on offer since the previous quarter. Meanwhile software house recruitment is up by 7.7%. Public sector recruitment is being hit as can be seen by a 21.4% reduction in recruitment quarter on quarter. All other sectors are up on last quarter.
Contract demand within business sectors shows a somewhat different profile to permanent recruitment. Here software houses make up 43.5% of the market and finance 34.6%. With the exception of the public sector all sectors are increasing their demand for contractors.
Management
Unfortunately management vacancies are not improving at the same rate as other job functions in IT. This is the only group where the number of jobs advertised actually fell. Jobs here are down by 1.4%. From 4,071 jobs to 4,016. There are substantial differences across the group with the most widely advertised job of System Development Managers down by 2.2% quarter on quarter. Other job functions seeing downward pressures include Software Managers down by 7.6% and MIT Managers down by 6.3%. Other roles fared somewhat better with increased demand for Computer Services Managers, Technical Support Managers and Communications Managers.
The pay offers being made for managers is slightly above that seen twelve months ago, with just a 0.5% increase, almost the same as the start of the year. Quarter on quarter the trend in quoted salaries is negative with advertised pay down by 0.2%. Although pay being offered for System Development Manager is down since the previous quarter by 1.4%, it is still higher by 3.7% than a year ago.
System design, business analysts & project management
The number of advertised jobs this quarter is up by 6.2% compared with the previous quarter. From 13,728 jobs to 14,578. Project Managers represent the largest job function in this group and here the number of vacancies are up on the previous quarter by 2.2%. From 2,929 jobs to 3,492. Increase in demand is also being seen for System Auditors up by 14.9%, Business Analysts by 13.6% and, System Analysts by 11.7%. The only job function seeing reduced demand is for Training Officers down 12.4%. The top skills requested for Project Managers are Prince, SAP, ERP, Focus and Oracle. Salaries across all job functions in this group are up by an average of 1.3% since last year, but with a zero per cent increase since last quarter.
Contract vacancies this quarter are up by 12.1%. Since the end of 2009 jobs have increased by over 31%. The key job of Project Manager has seen vacancies up by 14.7% quarter on quarter. The rates for this job are reflecting the surge in demand with an annual increase of 5.3% and a quarter on quarter increase of 3.8%.
System development & programming
This benchmark group of jobs represents over 41% of all jobs advertised and as such is a key indicator of what is happening within IT recruitment. This figure is up from the 39% reported at the start of the year. This quarter shows the number of jobs increasing by 8.3% quarter on quarter. Up from 28,623 jobs to 31,018. The prime job of Systems Developer has seen jobs increasing by 7.3%. Up from 21,591 jobs to 23,165. The main employer of developers continues to be software houses and financial organisations. These two sectors account for over 83% of all IT development staff recruitment. During the past two years the pressure on pay has kept developer increases to a minimum. The first sign of this changing appeared in the first quarter of 2010 with advertised pay up by 1.1%. This change has now accelerated to an annual increase of 3.3%, with increases of 1.6% being recorded since the first quarter of 2010.
Pay can vary considerably dependent on the region, industry sector and software skill. Developers in London are seeing salaries that average £47,041, whilst those in the North East are looking at £35,434. Senior Developers are seeing offers averaging £54,946 nationally, but with variations showing pay in London up at £62,227 and in finance even higher at £70,812. A developer in manufacturing located in the North East averages £35,600. This highlights the large variation in salaries dependent on location, experience and business type. Further variations are also dependent on the software skills being requested. At present the top skills in demand are for SQL, C, C#, .NET, ASP, Java, SQL Server and Javascript.
The demand for contract developers continues to be healthy with job counts up by 10.5% since the previous quarter. Rates are to reflect a more buoyant market with national rates for developers up from £48/hour to £49/hour. This average varies from £61/hour in Inner London finance to £35/hour in the North East. Software skills most in demand are for SQL, C, Java, C# and .NET.
PC Support
Jobs for permanent PC support staff this quarter are up by 10.7% against the previous quarter. From 3,571 jobs to 3,944. This reverses the downward trend seen in the first quarter of 2010. Demand for the key job of PC Support Analyst, which makes up 49.8% of the jobs in this group, is up by 13.5%.
Despite this average salaries on offer for this job are up by only 0.7% on last year, and remain unchanged since the previous quarter. Basic PC Support roles are still suffering slightly with jobs down by 0.8%. Top skills required are for Office, SQL, Exchange, Citrix, Unix and Access.
The demand for contract PC support reverses previous trends with an increase in job counts of 15.5%. From 753 jobs to 870. Support Analyst jobs are up by 12.7%. The top software skills required are for Office, Windows XP, SQL and Citrix.
Technical support
For the second successive quarter the number of jobs in this group increased. This time from 9,731 jobs in the first quarter to 10,731 jobs in second quarter. A jump of 10.1%. The benchmark job of System Administrators make up 45% of jobs in this group. Vacancies for this job are up by 4.0% on the previous quarter. Technical Pre-Post Sales support people make up a further 27.5% of the group and here demand is up by 16.2%. The increase in jobs for System Administrators is mainly coming from the financial sector and from software houses where jobs are up by 13.4% in finance and by 11.2% within software houses. Over 61% of all jobs advertised for System Administrators require skills in Linux, Unix or Solaris. Having made rapid inroads over the past two years Linux has now firmly established itself as the main platform, with 16% more jobs advertised than for Unix. In the previous quarter the difference was 10%. The movement away from Unix now looks unstoppable. Salaries for the group are not showing any signs of improving with pay offers showing no change on a year ago and up by just 0.2% quarter on quarter. National salaries for administrators now average £36,720 up by 0.1% on the quarter. Equivalent figures show Senior Administrators with substantial experience average £49,212, with no change quarter on quarter.
Jobs for contractors followed the overall trend with jobs up by 13.5%. From 1,880 jobs to 2,134. The increase can mainly be attributed to a 23.9% surge in demand for System Administrators. Elsewhere demand for Systems Architects is up by 5.9% and for Pre-Sales people by 0.5%. The improved demand for contractors is reflected in annual rate increases of 7.0% for System Administrators. The top administrator skills required are for Linux, Unix, SQL, Exchange and Solaris.
Software engineering
The number of jobs for software & test engineers increased by 12.4% compared with the previous quarter. Up from 3,864 jobs to 4,355. This reverses the decrease seen in the previous quarter. Vacancies for the main job function of Software Engineer are up by 15.0%, whilst jobs for Test Engineers are up by 4.0%. Salaries on offer for the group compared with a year ago are up by 0.8%, and by 1.7% quarter on quarter. Software Engineers are now being offered average salaries of £36,216, with variations of up to £47,787 for Senior Software Engineers. The top skills required are for C, C++, Embedded software, Java, SQL, .Linux and .Net.
Demand for contract Software Engineers is down by 3.6% compared with the previous quarter. This had some effect on rates which remained the same as a year ago but fell by 2.9% against the previous quarter. Skills required are for C, C++, Embedded software, Java and C#.
Database administration
The number of jobs advertised for Database Administrators/Analysts increased by 12.8% compared with the previous quarter, up from 2,078 jobs to 2,345. 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. Average salaries for Database Administrators are down by 1.2%, compared with last year and are now being advertised at £38,455. Senior Database Administrator pay however is up by 4.6% over the past year and now stands at £51,982 with variations of up to £65,550 within the finance sector. Software skills being sought cover SQL, SQL Server, Oracle, Access and Unix.
Over the past quarter contract vacancies are up by 7.4%. From 625 jobs to 671. This has had some effect on pay for Database Administrators in that rates are up from £43/hour to £44/hour since a year ago. Senior Database Managers are currently attracting rates of £60/hour nationally. Top skills required are for SQL, Oracle and SQL Server.
Networking & communications
For the second successive quarter the demand for networking jobs has increased. Compared with the previous quarter the number of jobs is up by 7.4%. From 2,118 jobs to 2,274. The increase can totally be attributed to network support roles such as Network Support Engineer and Network Pre-Post Sales Support. Network Support Engineers make up 44% of the vacancies in this group and here jobs are up by 1.7%. Salaries for this job role now average £30,767. Down by 0.5% quarter on quarter, but up by 4.0% on a year ago. The top skills being looked for are Cisco, Firewall, Exchange Linux and Lan's.
Vacancies for contract network people are up for the first time in over two years. This time jobs are up by 10.0% compared with the previous quarter. This has had a corresponding effect on national pay for Network Support Engineers where rates are up from £32/hour to £35/hour compared with a year ago. The top skills being requested are for Cisco, Wan's and Lan's.
Operations
This group covers operations roles that are predominantly seen in large-scale computer centres. 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 for Hardware Engineers is up by 11.3%. This upturn is reflected in the pay on offer, which has increased by 4.3% on a year ago and by 0.7% in the previous quarter. The average national salary is now £25,609, ranging from £28,235 in Inner London to £20,600 in the Scotland. Top skills required are for Office, Windows XP, Exchange and SQL.
Contract Hardware engineers represent 70% of the jobs in this group and here job counts are down by 24.4%. Rates compared with a year ago are down by 4.8% at £20/hour. However this is higher than the rate of £19 seen in the previous quarter. Skills sought are for Office, Windows and Exchange.
Internet Design
The number of jobs on offer within this group increased by 4.9% compared with the previous quarter. Up from 1,365 jobs to 1,432. The main job function of Web Designer accounts for 80.5% of the jobs advertised in the group. However demand for this role is up by only 0.5% quarter on quarter. Average salaries on offer for Web Designers reflect the low increase in demand as pay is down by 1.6% on last year. The main skills being requested are for Photoshop, Flash, Illustrator, Javascript and Dreamweaver. It should be noted that the job functions in this group can also be associated with other design and development jobs where similar software skills are requested.
Summary
Although the economic recovery is regarded by most economists as being somewhat fragile there does seem to be a sustained recovery in opportunities for IT professionals seeking employment following the financial crisis of the past two years. The first signs of a real recovery were seen in the last quarter of 2009 when the number of IT vacancies advertised increased by 1.2% compared to the third quarter of 2009. Then in the first quarter of 2010 the quarterly increase accelerated to 4.4% and then up to 8.1% during the second quarter of 2010. As previously reported the recovery is very much on a North/South split. Virtually all the growth has been driven in the southern part of the country with the London area's benefiting the most. In particular financial organisations in London and the South were badly hit during 2007 through to 2009.
During the peak recruitment period of the first quarter of 2008 there were a total of 36,085 jobs advertised in finance and 62,919 for software houses/ consultancies. During this quarter the equivalent figures are 13,317 for finance and 34,303 for software houses/consultancies. The impact on financial organisations recruitment levels have clearly been severe with 170% less jobs advertised. Software houses/consultancies fared slightly better with vacancies down by 83.4%. These figures suggest that recruitment by software houses/consultancies has been at a faster rate over the past nine months than in other sector. Whilst the financial sector is now recruiting at a higher rate than a year ago it seems unlikely that it will reach the levels of two years ago. The main reason for putting forward this view is based on two factors. First the banks were able to clear out a high proportion of non effective positions (essentially dead wood) and secondly there has been a concerted effort to outsource as many functions as possible. This includes major project development as well as traditional support roles. The net effect is that the software houses/consultancies that have picked up the outsourcing deals have needed to recruit staff, having laid people off in the initial stages of the credit crunch when clients cancelled or delayed projects.
Hopefully the resurgence of recruitment into software houses/consultancies will not be held back by the cancellation of major public sector projects such as the ID card system. A recent statement by the DWP implies that 30% of all public sector IT projects are ineffective. However the fall out might result in more efficient and cost effective systems being developed and supported in the future, without the inevitable cost overruns that seem to plague the public sector. It is to be hoped that that the increased level of outsourcing that might accrue from government action are directed towards retaining IT staff within the UK, rather than being outsourced offshore. With the government intending to place a cap on the total number of non EU migrants it is essential that outsourcing contracts use the available talent of UK based IT professionals laid off in the past few years. There will clearly be some problems where offshore companies bring in their own staff to work in the UK under the pretence that suitable candidates are not available. The cap will hopefully restrict this and start to curtail the stream of lower cost personnel being brought into the UK.
Commentary by : George Molyneaux
Research Director for Salary Services Ltd. - www.salaryservices.co.uk
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