The single biggest expense when it comes to managing IT is IT labor costs. So, when the salaries of IT professionals start to increase it has positive and negative implications for managed service providers.
A 2018 IT Career Outlook survey published this week by Spiceworks finds that 32 percent of IT professionals say they plan to search for or take an IT job with a new employer in the next 12 months. The primary reasons cited for making that shift are a better salary (75 percent), a desire to advance their skills (70 percent), and wanting to work for a company that makes IT more of a priority (39 percent).
The survey also finds that 51 percent of IT professionals expect a raise from their current employer next year, and 21 percent also expect a promotion.
Overall, the results show millennials are paid a median income of $50,000 per year. In comparison, Gen X IT professionals are paid $65,000, and baby boomers are paid $70,000. Millennial IT professionals have an average of seven years of experience compared to 17 years among Gen X and 25 years among baby boomers. Not surprisingly, 63 percent of IT professionals feel underpaid, even though 70 percent of them say they are satisfied with their current jobs.
IT labor shortage
There’s often a direct correlation between what it costs to hire internal IT staff and a willingness to contract an MSP. Rightly or wrongly, many organizations decide they will get better IT service from someone on staff. But when IT labor costs start to increase, the ability to treat IT as an operational expense becomes more attractive.
In addition, the average organization struggles to find people that have the latest IT skills they need. MSPs face a similar challenge. When it comes to competing for IT labor, most MSPs have an advantage. Their business models allow them to defer the cost of IT labor across multiple customers.
Impact of automation
It’s unclear how long this labor shortage will last. Significant advances in IT automation employing everything from bots to machine learning algorithms are being made. Many of the manual tasks that IT staff are currently needed to complete will be automated. Peter Tsai, senior IT analyst for Spiceworks, says it’s too early to say what impact those advances will have on IT salaries because no one knows for sure how IT roles will evolve just yet. But, IT professionals that don’t advance their skills may find commanding a higher salary much more challenging.
IT, much like nature, abhors a vacuum. It’s only a matter of time before there’s more willingness to rely on IT automation to complete tasks that can’t be accomplished in a cost effective way. Obviously, rising IT labor costs will also affect the profitability of MSPs. But when it comes to automation, most MSPs tend to be much more advanced than the average IT organization.
In general, IT professionals are not alone in feeling that the economic recovery over the past few years has not lead to a commensurate rise in salaries. Given the current demand for IT professionals, though, they may be in a better position, at least for the short term, to do something about it.