Skills shortage in IT leads to rise in pay and jobs despite slowdown

Despite the economic downturn, IT departments still need more staff, and salaries for mid-level technicians are rising as the perennial skills shortage continues to bite.

Nearly half (49 per cent) of the IT directors surveyed by ReThink Recruitment say they will be increasing employee numbers over the coming 12 months, and just 13 per cent anticipate having to lose staff. More than two-thirds (69 per cent) are also looking to either maintain or increase the number of contractors they employ.

IT departments are not only recruiting more staff, but are offering better wages. Some 55 per cent of IT directors expect permanent salaries to rise in the next year, and 22 per cent predict contractors' rates will also go up.

The problem is that there are not enough professional skills to go around. Despite the shortages and the rising wages, the number of people coming into the IT industry continues to decline – the number of applicants for technology degrees is down by 48 per cent since 2001. Nearly three-quarters (74 per cent) of IT directors are concerned about attracting sufficiently high calibre candidates, and more than four-fifths (81 per cent) are worried about retaining existing staff, according to the survey.

Michael Bennett, director of ReThink Recruitment, said: "During the last downturn, we had reports of rates for contractors being slashed by major banks, but more than four times as many IT directors think rates will rise than fall, which shows that skills shortages are still very much an issue."

The issue is at its most pronounced at the mid-level. Pay rises for support and technical staff are the highest in the sector, jumping 13 per cent in the last year, according to Income Data Services (IDS). Network and systems engineers are also in demand and salaries are up 9.5 per cent on average.

Ken Mulkearn, from IDS, said: "The sizeable pay increases we are seeing in mid-level IT support and technical roles is being driven largely by acute skills shortages. As the UK IT sector continues to specialise increasingly in more high-end technical work, and more entry-level jobs are outsourced overseas, there are fewer opportunities for graduates and others with less experience to get a foot on the first rung of the career ladder."