Back to Main Site

Salary Survey Commentary for October 2008

Overview

The impact of the financial problems besetting the country has now had a real impact on the recruitment of IT professionals during the third quarter of 2008. For the second quarter in a row the number of jobs advertised is down. This time by 8.6%, from 141,810 jobs to 129,672 compared to the second quarter. Over the past six months jobs have declined by almost 14%. This is the largest sustained fall off in IT recruitment since the collapse of IT jobs seen during the years 2000 to 2001. Advertising in magazines and press is down this quarter by 9.3% and on the main internet job boards by 8.6%. Internet advertising continues to be dominated by the recruitment consultancies with 93.3% of all jobs being placed by them, with only 6.3% jobs being placed directly by companies. In total 4,269 consultancies advertised jobs in this quarter, down by 15.2% on the previous quarter. In contrast 3,737 companies advertised directly, down by 8.5%. On average each of the 4,269 consultancies advertised 28 jobs each compared with an average of just 1.2 jobs placed directly by companies.

Advertised salaries in the first quarter 2008 are up by only 1.3. % compared with the average twelve months ago. The lowest annual increase recorded for almost eight years. Quarter on quarter salaries remain virtually unchanged, with a small average increase of 0.6%. Within these figures there are wide variations dependent on skill sets, location and business sector.

For contractors demand continues to decline. The number of contracts on offer fell for the third successive quarter. This time by 13.3% compared with the previous quarter. Since the start of 2008 the number of jobs advertised has fallen by over 30%. This level of decrease has not been seen for over seven years. Contract rates are also starting to be affected by the reduction in demand, with rates seeing little growth since the start of the year.

Skills Summary

SQL again remained the skill most in demand, but with quarter on quarter demand down by 5.5%. However Linux bucked all the trends by recording a jobs increase of 4.5%, the only skill in the twenty to show any positive movement. In general the top ten skills cover products used primarily by developers. Within this demand for C# and .NET has remained at almost the same level as the previous quarter, with job counts down marginally by just 0.2% and 0.5%. The skills that are most affected this quarter are headed by C++ down 16.4%, HTML by 16.4%, SAP down by 13.3% and Oracle by 12.4%. SAP continues to suffer with demand falling for the second consecutive quarter.

The contract market also has SQL as the skill most advertised, and here the number of jobs on offer is down by 19% compared with the previous quarter. The remaining skills making up the top ten for contractor are C, C#, Oracle, Java, SQL Server, .NET, ASP and Unix.

Regional Summary

The turmoil in the financial markets seen in the first and second quarters continued right through the third quarter and seems to have had a major impact on recruitment in London. The number of jobs advertised in Inner London fell by 7.7% and Outer London by 14.5% compared with the previous quarter. Since last year the London area has seen vacancies fall by over 27%. Vacancies in the south are down by 4.9%, somewhat less than the national average. Recruitment in Scotland continues to be severely affected with jobs down by 30.9%. Demand for jobs in the North West are down by 9.3%, Wales by 6.4%, North East by 5.8% and the Midlands by 5.0%.

Contract vacancies are down in all regions and generally reflect what is happening with permanent recruitment. The Inner London and Outer London areas are recruiting 8.5% and 12.5% less contractors than in the previous quarter. Other regions are seeing a similar decline in demand.

Industry Summary

The main influence again came from the financial sector, which combined with financial software houses account for a substantial proportion of all IT recruitment. Compared with the previous quarter job counts in finance are down by 14.9% and in Software houses by 9.4%. This remains significant in that finance accounts for 28.4% of all jobs advertised. The biggest employers are software houses who account for 53.1% of jobs advertised. Demand here is down by 9.4%. Other sectors such as the public sector are down by 20.5%, Media by 14.0% and Manufacturing by 9.0%.

For the second successive quarter contractors working in finance continue to see cutbacks in the wake of the economic crisis. Since the start of 2008 job vacancies here have fallen by 40.2%. Quarter on quarter the number of vacancies advertised is down by 20.4%. The largest fall seen in this sector since 2001. To compound the problem contract vacancies in software houses are down by 9.7%.

Management

The number of management vacancies this quarter fell by 5.9% compared with the previous quarter. Down from 7,412 jobs to 6,793. Managers employed in the financial sector have seen jobs disappear at the rate of 24.3% during the same period. Since the previous quarter vacancies for the main job functions of System Development Manager and Computer Services Manager are down by 0.5% and 4.7%. Elsewhere jobs for Software Managers are down by 21.3%, Helpdesk Managers by 6.9%, MIS Managers by 0.5% and Communications Managers by 21.4%.

Average salaries across the group are up by only 0.8% compared with a year ago. Annualised salary increases for System Development Managers are static. Surprisingly Computer Services Managers are showing annual increases of 5.1%. However as we noticed in the previous quarter there are signs that these annual increases are not being sustained as quarter on quarter salaries show that pay for Computer Services Managers fell by 1.6% and by 2.3% for Communication Managers.

System design, business analysts & project management

The number of jobs advertised this quarter was down on the previous quarter by 4.5%. From 31,212 jobs to 29,807. The main impact of this decrease were felt by Project Leaders and Management Consultants where the number of jobs on offer are down by 23.1% and 16.6% respectively. Project Managers represent the largest job function in this group and here the number of jobs are down from 7,854 to 7,261 jobs, a fall of 7.6% on the quarter. Business Analysts form the next major job function and here the overall number of number of jobs fell by 9.5%, and by 10.4% within the finance sector.

PRINCE, Oracle and .NET feature as the main software skills being sought. Annualised salaries are now being affected with annual pay increases across the group of just 1.6%. This is mainly due to the rate of increase slowing down during the past two quarters. The number of vacancies for contractors is down this quarter by 9.7% compared with the previous quarter. In particular the demand for Management Consultants in financial consultancies fell by over 17% compared with the previous quarter. Demand for the key job of Project Manager is down by 15.9%. Rates are beginning to see some pressure with a fall of 1.4% quarter on quarter.

System development & programming

This benchmark group of jobs represents almost 35% of all jobs advertised and as such is a key indicator of what is happening within IT recruitment. The trend here is that demand is continuing to decline, with the number of jobs falling by 9.9% compared with the previous quarter. Down from 48,019 jobs to 43,121. The main employer of developers continues to be software houses and financial organisations. These two sectors account for over 70% of all IT recruitment. It is here that demand has weakened considerably with combined job offers down by 11.3%.The development group as a whole has seen salary increases slowing down to 0.8% year on year. However this does disguise that salaries in the latest quarter have actually fallen for a number of job functions in this group. In particular pay at the top end for Senior Developers is down by 1.3% on last year and for Development Team Leaders down by 5.6%. Developers as whole are still in positive territory on pay with annual increases of 2.1%, but reducing to 0.3% quarter on quarter. However these figures need to be treated with some caution as salaries can vary considerably depending on location, business sector and software skills. Twelve months ago the difference in salary between finance and all other sectors was 21.9%. It is now down to 18.1%. The spread of salaries based on location is also substantial. This is shown in that a developer employed by software houses earns 32% more in London than in the North East. The top skills required are for SQL followed by C, C#, .NET, SQL Server and Java.

For the fourth successive quarter demand for contract staff declined. This time there are 17% fewer jobs advertised than in the previous quarter. Jobs in finance are again the problem with vacancies down by 16.4% quarter on quarter and by 34.5% since the start of the year. Difficulties in finance is also affecting recruitment in software houses with vacancies down by 18.7%. The overall result is that rates are now down by 1.8% quarter on quarter. Top skills required are for SQL, C, C#, .NET & ASP.

PC Support

The trend for more support staff reported in the previous quarter has now been reversed with the number of jobs advertised down by 12.1% since then. From 10,317 jobs to 9,077.

The demand for the benchmark job of PC Support Analyst is down by 12.4%. Help Desk Support staff have born the brunt of the downturn with 16.7% fewer jobs on offer. Salaries are also starting to stagnate with annual increases down to 0.3%. For senior grades salaries being offered have actually fallen by 2.3%. Top skills required are for Office, Windows XP, SQL and Exchange.

For the third quarter in a row demand for contract PC support is also down. This time by 19.6% compared with the previous quarter. Rates have shown some improvement and are up by 3.6% on last year. Top skills requested are for Office, Windows XP, Exchange, Windows 2000 and SQL.

Technical support

The number of jobs for this group decreased by 6.4% compared with the previous quarter. Down from 20,481 jobs to 19,173. System Administrators make up over 44% of all the jobs within this group. Recruitment by software houses is down by 4.8% and in finance by 17.9%. These two sectors respectively account for 58% and 29% of recruitment. As seen in the previous quarter the downward trend in recruitment from software houses also affected technical sales support with jobs down here by 10.1%. National salaries for administrators this quarter averaged £36,896 up by 3.5% on last year, but with variations that show salaries going down in software houses by 1.1% in the last three months. Senior Administrators with substantial experience average £48,106. Annual increases across the group are being held at 0.6%, equaling the rise recorded the previous quarter. Over 52% of all jobs advertised for Administrators are for skills in Unix, Linux, Solaris or AIX. The popularity of Linux is now on a par with Unix. The remaining top skills cover SQL, Exchange, TCP/IP and Oracle.

Jobs for contractors this quarter decreased by 15.6%, down from 4,519 jobs to 3,186. Rates for the group as a whole are also down on a year ago by 1.7%. Since the previous quarter rates for the key job of System Administrator has seen a fall of 0.6%. Software skills required are for Unix, Exchange, SQL, Solaris and Linux.

Software engineering

The number of jobs for software engineers decreased by 11.9% compared with the previous quarter. Down from 8,601 jobs to 7,575. Vacancies for the main job function of Software Engineer are down by 10.7% and for Software Test Engineers by 13.4%. Salaries compared with a year ago are up by 1.2%, but remain unchanged since the previous quarter. Software Engineers are now being offered average salaries of £36,140, with variations of up to £45,718 for Senior Software Engineers. The top skills in demand are for C, C++, Embedded software, C# and Java.

The demand for contract staff in this group remained slightly above that recorded in the previous quarter with the number of jobs on offer going up by 0.6%. From 1,362 jobs to 1,370. Rates of £37/hour for Software Engineers are up by 4.2% against last year. Senior Software Engineers with substantial experience are being offered up to £53/hour nationally. This could be short lived as this rate is already down from the £56 being offered six months ago. Skills needed are for engineers with experience of C, Embedded, C++, UML and Linux.

Database administration

The number of jobs advertised for Database Administrators/Analysts fell by 13.3% compared with the previous quarter, down from 5,622 jobs to 4,877. 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 1.8%, compared with last year and are now being advertised at ££39,525. This however is 2.4% less than the average salary being reported in the previous quarter. Senior Database Administrators pay is also up and is now averaging £57,415. Software skills being sought cover SQL, Oracle, SQL Server, Unix and Access.

Quarter on quarter contract vacancies fell by 9.7%, down from 1,605 jobs to 1,449. For the third successive quarter the main impact came from a reduction in demand from the finance sector where the number of jobs is down by 27.9% compared with the previous quarter. Contractors are also seeing rates going down by 4.2% on a year ago. Most of this downward trend in rates has occurred in the last 6 month. Top skills required are for SQL, Oracle, SQL Server and Access.

Networking & communications

The number of jobs for this group decreased by 16.6% compared with the previous quarter. From 6,282 jobs to 5,242. Salaries for the group were up by 1.6% on last year, with pay for the main job function of Network Support Engineer up by 1.4%. Salaries for this job role now average £29,269 nationally, with up to £39,466 for more experienced engineers. Historically network people have enjoyed constant above inflation increases. This is rapidly coming to an end with salaries now falling quarter on quarter by 1.3%. The top skills being looked for are Cisco, Firewalls, Exchange, WAN, LAN, and TCP/IP.

The number of jobs for contract network people fell by 10.3% compared with the previous quarter. As in the previous quarter the main reason for this is the reduction in demand from the finance sector where vacancies fell by 13.3%. Rates for Network Engineers are up on a year ago by 2.6%, but quarter on quarter Network Support Engineer rates have fallen by 2.7%. The top skills required are for Cisco, Firewalls, LAN, WAN and Exchange.

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 up by 1.1%, from 1,510 jobs to 1,527. The increase is mainly due to a renewed demand for contract Hardware Engineers where vacancies are up by 6.1%. Whilst salaries are up by 4.4% year on year the quarter on quarter picture shows pay down by 0.9%. Top skills required are for Office, Unix, Windows XP, and Oracle.

The number of jobs for contract staff this quarter went down by 2.8%. However this figure needs to be treated with caution, as the numbers involved are low. Hardware engineers represent 73% of the jobs in this group and here jobs were only down by 1.0%. Rates are averaging £20/hour. Down by 3.0% on last year. Main skills required are for Office, Windows XP, EPOS, Exchange and Lans.

Internet Design

The number of jobs on offer within this group went down by 7.8% compared with the previous quarter, from 2,354 jobs to 2,170. The main job function of Web Designer accounts for 72% of the jobs advertised in the group and here 16% fewer jobs were advertised. Jobs in the distressed finance sector are down by 8.4%. Average salaries on offer for Web Designers range from £29,533 in the manufacturing sector to £34,055 in finance. The main skills being requested are for HTML, Flash, Photoshop, Illustrator and Dreamweaver. The job functions in this group can also be associated with other design and development jobs where similar software skills are requested.

Summary

In the previous survey we first saw the effect that the credit crunch was having on IT recruitment in the financial and software consultancy sectors. The consequences of this are now being felt in the wider economy as seen by the recent collapse in financial markets across all business sectors. Firms are clearly tightening their belts and putting a freeze on recruitment. It is inevitable that the next stage will be a rise in redundancies within IT departments. Those financial firms that have faced difficulties have already started this process. This in turn is affecting the front line suppliers of IT equipment, software and services. An example of this is Hewlett Packard's takeover of EDS, a major software and services supplier to the public sector, who have announced 24,500 redundancies globally and 3,300 from the UK. Further indications of a downturn in recruitment comes from the reduced levels of demand for IT contract staff. This quarter has seen an acceleration of the decline, particularly in finance and associated sectors. The levels of contract recruitment are now down to volumes not seen since the first quarter 2001.Then the lay offs were due to the hyped up demand for staff used to replace systems that were perceived to be non Y2K compliant, combined with the collapse of numerous dot com enterprises. The announcement by HSBC of it's plans to lay off hundreds of UK contractors and over 1,000 internationally is indicative of what is happening with contract recruitment within financial and related companies.

Another casualty of the financial mess is the effect it is having on recruitment consultancies. Compared with the second quarter of 2008 there were 763 fewer consultancies advertising IT vacancies than in the latest quarter. This has mainly been at the expense of smaller firms employing minimal staff. The top thirty consultancies continue to make up more than 50% of the jobs being advertised. Whilst the overall volume of jobs has declined most of the consultancies have been able to maintain market share. In contrast there are only 356 fewer companies advertising their vacancies directly, either through the press or job boards. The consultancy and company tables shown on www.jobadswatch highlight the trends in IT recruitment advertising, together with which markets and job types the consultancies specialise in.

As is to be expected the reduced level of demand is starting to have an impact on pay. This is noticeable in that advertised pay over the last quarter has risen less than that currently paid. This is highlighted in that the difference between paid and advertised salaries is down to just 7.4%, the lowest difference recorded since 1992.

In summary the IT recruitment market continues to be fragile. The pressure on companies to improve their bank balances means that IT staffing levels are a prime target. On a more optimistic note the turmoil may put a temporary break on the level of IT offshoring that has taken place over the past few years. The immigration authorities could help by re-evaluating the level at which non EU personnel can obtain work permits. There may be little need to import skills in the short term. Certainly the visa points system needs to reflect those software skills most in demand and not just general IT experience and qualifications.

Commentary by : George Molyneaux Research Director for Salary Services Ltd. - www.salaryservices.co.uk

Back To Top