Chicago — While this economic crisis may be a tough time for the American workforce, it’s proving to be inordinately rough for IT professionals in the insurance industry and beyond. A myriad of factors have combined to create what is, in effect, a perfect storm for IT workers, and the outlook is grim.

This was the message from Janco Associates Inc., Park City, Utah, which released its January 2009 IT Salary Survey this week. The survey charts the salaries of IT workers, and includes data from insurance companies, among others.
 
“The job market for IT professionals is one of the worst that I have seen since the late 1970s,” says Victor Janulaitis, CEO of Janco Associates. “There is a surplus of IT talent and companies are in a cost-cutting mode. The dot com bubble was a cakewalk compared to this job market.”

Survey results show that many companies have responded to the economic downturn by instituted hiring and spending freezes. These changes, augmented by extensive layoffs, outsourcing, bonus reductions and elimination of IT contractors, have decreased the demand for IT professionals and, in some cases, lowered wages, with higher-priced positions being eliminated.

Additionally, companies have reduced the benefits provided to IT professionals. While benefits such as health care are still available, IT professionals are now paying a greater portion of that cost.

Whereas flexible hours and work schedules were beginning to be the norm for many companies looking to attract top talent and a younger workforce, it’s now not as available as before given the recent economic decline.

“Right now, because companies are assessing the value of their employees in all departments, the visibility and presence of individual workers is critical,” Janulaitis tells INN. “If people don’t see someone, they say ‘What value are they bringing to the organization?’ Because IT—in the last year-and-a-half to two years—has slowly become a utility function within an organization, it’s no longer the mysterious ivory tower that doing all those wonderful things. Now companies are saying ‘If my marketing and manufacturing and distribution people have to be in the office, you have to be in the office as well.’”

The prevalence of outsourcing also has taken its toll on IT personnel. In addition to many companies moving their helpdesk operations overseas, Janulaitis says they’re also sending their data processing along with it. Because it takes more people to design a system than to maintain it, application development also is effected, whereas before a company would increase their staff to build systems in-house, that’s being outsourced as well.

“The problem you have in many organizations is that if they design a system, they increase staff for it,” he says. “But when it comes time to maintain the system, they never cut back their staff, and the infrastructure costs begin to rise. Organizations are starting to have people develop systems outside for a fixed cost, get the application up operational, and then train their people to maintain it.”

Coupled with the rise in outsourcing, lower bonuses and the recent rise in layoffs has resulted in a decrease in the mean compensation paid to IT professionals, the report goes on to say. The mean compensation for CIOs in large enterprises has dropped to $168,839 (a 6.11% decrease), and $163,211 (a 4.97% decrease) for mid-sized enterprises, which correlates directly with the loss or reduction of bonuses and fringe benefits. Additionally, the mean compensation (which includes bonuses) for all IT executive positions surveyed was $142,914 (a decrease of 1.20%) in large enterprises, and $126,021 (a 4.57% decrease) in mid-sized enterprises.

But despite this aucity of IT positions, there are a few jobs currently in demand. Both large and mid-size enterprises continue to focus on line operations and mandated regulatory requirements such as Sarbanes-Oxley, HIPAA and PCI. That said, the hiring demand is down for IT executives (especially in mid-sized enterprises), while proven CIOs are in high demand in large enterprises.

Exclusive content only available on InsuranceNetworking.com

Register or login for access to this item and much more

All Digital Insurance content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access