Offshoring reduces graduate IT pay

by Editor 5/27/2008 3:31:00 PM

The trend of exporting entry-level IT jobs has reduced the real wages of these positions. This, in turn, demotivates people from pursuing a career in computing.

IT staffing association ATSCo (Association of Technology Staffing Companies) says that the process of offshoring graduate-level IT jobs has the effect of “removing the bottom rung from the career ladder.”

In the last five years, first-line support staff’s wages have stayed at £18,000 and second line staff's has been slow to rise, at only 0.8 percent annually in the UK.

IT managers’ wages rose by 20.5 percent in the same period. Project managers now earn £45,000. Five years ago, average pay totalled £37,500.

ATSCo chief executive Ann Swain says:

“This means that, after inflation, real pay has actually decreased, as technical support centres have moved from the UK to lower wage centres such as India. The shortage now is of candidates with a few years’ experience looking for second and third jobs. But how do you get that experience if entry level jobs are being sent offshore?” adding:

“Concerns over quality of service and data security in outsourced operations are constantly being voiced. However, these concerns haven’t yet prompted organizations to bring their IT support roles back onshore en masse.”

India and other offshore locations, on the other hand, usually lose out to the UK when it comes to higher value IT work.

SkillsMarket CEO Rick Bacon says:

“Whilst entry-level IT positions may be moving offshore, sophisticated project management jobs remain firmly rooted on UK soil. Senior level IT professionals need to remain in the UK so that they are close to their clients. These managerial positions are as much business focused as they are focused on technology… We’re seeing increasing competition for these positions and it’s crucial that people looking to secure or switch jobs in this area are recording and communicating their full range of skills to potential employers.”

Indian wages, analysts predict, will rise 14 percent in 2008. Once they are closer to those of UK IT staff, this will bring about a turning point in the UK’s offshore relationship.

“As the gap converges, it will make less and less economic sense to outsource support functions to India,” concludes Swain.

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