Thursday, October 4, 2007

Tech grads get higher salary offers, but existing workers may face job perils

Computer science graduates and other students leaving college with IT skills appear to be in demand: Starting salary offers are up, according to a recent report, and university officials say that IT recruiters are crowding campuses.

But if you're a high-tech worker in the middle of your career, the job outlook may be less certain, as cutbacks continue at some of the top IT vendors.

Recruiters "are on college campuses constantly looking for people," said Emanuel Contomanolis, associate vice president of co-op and career services at the Rochester Institute of Technology (RIT) in New York. And it isn't just vendors doing the recruiting, he said, pointing to increasing interest in tech grads among companies in certain vertical industries.

For instance, Contomanolis said that financial services firms, which typically had been focusing their college hiring efforts on students with financial-related degrees, are now aggressively hiring graduates with IT skills. That's because the companies have realized that technology capabilities "are going to be critical to how they differentiate themselves in the market," he added.

The heightened interest is borne out by survey data collected by the National Association of Colleges and Employers (NACE), which last month said that computer science graduates have been offered an average salary of $53,051 this year, up 4.5% from last year's level. Contomanolis is present-elect of Bethlehem, Pa.-based NACE, which also said that this year's graduates with management information systems degrees have received an average starting salary offer of $47,407, up 4.7% year to year.

The salaries being offered to computer science graduates from the class of 2007 are the highest reported to NACE in the past seven years. The next-highest salary level was recorded in 2001, when graduates were offered an average of $52,473. The low point was in 2003, when the average salary offer dropped to $47,109, according to NACE.

The fact that recruiters now have a smaller pool of computer science students to choose from may be contributing to the increased salary offers. For instance, according to the Computing Research Association (CRA), the 170 institutions in North America that grant computer science degrees up to the Ph.D. level reported a total of 10,206 bachelor's-degree graduates for the academic year that ended in the spring of 2006 -- the most recent one for which data is available. That was down by nearly one-third from the level at the start of this decade, when there were more than 14,000 graduates annually.

"The drop isn't over yet," said Jay Vegso, a CRA staff member who authored a report on the number of graduates for the Washington-based group. Vegso also looks at enrollment trend data, and he said he expects the decline in computer science graduates to continue for another two years -- or perhaps stabilize at best.

The most-cited reason for the decline is the dot-com bust; the students who graduated last spring would have enrolled when the high-tech downturn was at about its worst point. But the movement of tech jobs to lower-wage countries, is also seen as a factor.

At Michigan State University, a career day this week was filled with IT recruiters, said Kelly Bishop, executive director of career services at the East Lansing-based school. The interest being shown by recruiters is higher than it was in previous years, he said. Companies that had been holding off from hiring new employees are now moving to do so, according to Bishop.

He said he thinks that a major reason for the increased interest is the looming retirements of baby boomers. But although Bishop sees more urgency on the part of employers to find new workers, he said that companies "are going to a lot of lengths to identify a relatively short list of people they consider are going to make a difference in their organization."

Prospective employers "are all eager to talk to you, but it's still going to be tough to get a job," Bishop said. "They are being incredibly selective."

For many established workers, the picture is less pretty than it is for new graduates. For instance, Electronic Data Systems Corp. said in a filing to the U.S. Securities and Exchange Commission last month that it was offering an early retirement program to about 12,000 of its 50,000 U.S. workers (download PDF).

Sun Microsystems Inc. said this week that it plans to cut 1,500 employees as part of a workforce reduction program announced in early August. And Intel Corp. recently confirmed that its IT staff is being cut by as much as 10% after an anonymous blogger described the layoff process in detail.

Those actions indicate that "midcareer workers better beware," said Ron Hira, an assistant professor of public policy at RIT and author of the book Outsourcing America (American Management Association, 2005).

"The same firms that are laying off thousands are clamoring that they need more foreign workers," Hira said. "One interpretation of this phenomenon is that companies have no interest in retraining or retaining incumbent workers to fill those positions."

On Monday, the U.S. government began issuing about 85,000 H-1B visas for its new fiscal year -- a total that is well short of what the high-tech industry says it needs for workers from overseas. Industry efforts to raise the annual H-1B cap have faltered as part of broader immigration-reform legislation, but proponents are still pushing Congress for an increase.

"Until we are emphatically told 'No' by the House and Senate leadership, we continue to make the case," said Robert Hoffman, vice president of government and public affairs at Oracle Corp. and co-chair of Compete America, a Washington-based lobbying group.

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