IT budgets may be flat or falling, but worldwide IT salaries are still holding up, according to a new report by the Meta Group. The company’s 2003 IT Staffing and Compensation Guide found that, on average, base IT salaries will rise 5% this year, although a few job categories requiring ‘hot skills’, such as computer system architects, senior web developers and senior network designers, are set to see increases of 8%-10%.

The proportion of the overall IT budget eaten up salaries is also rising. According to Meta, three-fifths of IT managers said that staff salaries account for between one-quarter and one-half of their total IT budgets, up from two-fifths last year. Moreover, more than one-quarter of respondents said that they expect an increase in the IT compensation budget this year, compared to just over one-fifth last year.

“There is little question that IT budgets will continue to decline slightly or remain flat this year,” says Maria Schafer, program director of Meta Group’s Human Capital Management Service and author of its annual IT Staffing and Compensation Guide. “What is most interesting is the fact that, despite this, we expect IT compensation to actually rise, in some cases at the expense of non-IT employees.”

Three-quarters of the companies responding to the survey said that they pay IT employees higher salaries than their non-technical counterparts, compared to 67% last year. According to Schafer, the reason is that companies still need to retain key IT staff.

The top method of employee retention is still monetary reward or cash bonuses. According to the survey, more than half of respondents are still offering IT employees an annual year-end bonus and, more incredibly, some 44% of respondents said that they are also offering sign-on bonuses in order to attract higher level IT employees.

Companies in the East of England, and particularly those in Cambridge, have to pay more for IT contractors than anywhere else in the country, including London. According to a survey by the Association of Technology Staffing Companies (ATSCo), IT professionals in and around the Cambridge area command £40 per hour on average, compared to £39 in London and £35 on average for the UK as a whole.

According to Ann Swain, CEO of ATSCo, large staff layoffs in the City have depressed rates in London, while the diversity of Cambridge’s high-tech sector, and its onus towards long-term research and development, has made it less immune to the general economic downturn. The cheapest IT contractors in the country can be found in the West Midlands, where rates are just £30 per hour on average.

	Hourly contract rate of IT professionals by region Source: ATSCO