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Are IT Salaries about to jump?

Finding good IT technicians is getting harder, and companies may have to start paying more to get and keep consultants, according to a study of IT salaries by Computer Economics, Inc., a research firm based in Irvine, Calif.

The company’s 2007 IT Salary Report found that half of companies surveyed will increase their IT staff by 5% or more in the next year. Factor in that fewer college students are studying to be IT consultants, and consulting firms could find it harder to fill their payrolls, according to Mark McManus, vice president of IT research at Computer Economics.

But the pinch could actually be good news for managed service providers (MSPs) for two reasons, he said. First, end-user companies that aren’t able to get in-house IT help will have to outsource. Perhaps more importantly, the remote nature of MSPs’ business model will attract the growing number of former consultants who are looking to cut back on travel.

“What we’re really seeing is that the majority of IT workers are really wanting to go with large companies. [They’ll] have a stable environment, and they can work in a location that’s desirable and not do a lot of traveling,” McManus said.

So far, IT salaries have not skyrocketed. After several years of fairly stagnant pay rates, salary increases started accelerating in 2005, according to the report. They have now reached an average of 3.8%, although that is still below the average increase of 4.2% for all professions as reported by the U.S. Bureau of Labor Statistics in 2006, according to the Computer Economics report.

That rate is also before inflation, which the Bureau of Labor Statistics reported at about 3.26% from 2005 to 2006. But McManus said he expects worker shortages in IT will cause a “jump” in salaries this year, sparking a bidding war for companies trying to get the best employees.

“I think in the short run it’ll hurt [MSPs], and in the long run it’ll work out to be more of an advantage” as the MSP model becomes more widely adopted, McManus said.

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