Susan Rousseau (South Africa) - Salary Increases in the South African IT Industry - What are Companies Paying IT Staff in 2012?

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• Posted by Susan Rousseau

• Company Insource.ICT

• on June 08 2012

Lee Iacocca said… ‘In the end, all business operations can be reduced to three words: people, product and profits. Unless you’ve got a good team, you can’t do much with the other two.’

Remuneration is the key to creating – and retaining – a ‘good team’… Get it right – and you’ve taken the first step towards ensuring the happiness, motivation and general well-being of your IT team – and the value of their contribution to your company’s competitiveness. Get it wrong – at the wrong moment in time – and you may struggle to secure the talent needed to ensure business stability and success. For this reason, the foundation of a good retention strategy should always be a focus on competitive remuneration.

Salary increases play a major role in ‘competitive remuneration’. With this in mind, what are the expected average increases in IT salaries for 2012?

As a start, it’s important to differentiate between ‘formal’ and ‘informal’ increases. 
‘Formal’ increases refer to increases, usually based at least partly upon performance or on fixed criteria, that are offered to all employees at a set time in the year.
‘Informal’ increases are those earned either through job change or through payment of a ‘scarce skill’ premium.

Firstly, ‘formal’ increases have been under pressure in recent years. Over the past 3 years – since the economic crisis began in 2008 – average ‘formal’ annual increases in cost to company package have fluctuated between 7% and 8%.

According to PE Corporate Services’ Annual IT Salary Survey, in 2011, the average annual increase on cost to company package was 7.3%. This is projected to be down further at only 7.1% in 2012.

Research conducted by Mercer found that companies intended to ‘segment’ pay increases, giving larger increases to ‘rainmaker staff to kick start recovery plans’. They predict an annual average salary increase of 7.5% for South Africa in 2012.

‘Informal’ increases are on the rise again – particularly in high demand or ‘scarce skill’ areas.

Insource.ICT’s research indicates that, in 2012, Programmers can expect ‘informal’ increases of up to 16%, while Business Analysts should earn between 9% and 15% more than last year. An increase of 8% is expected for high end Network Infrastructure skills.

Regardless of predicted increase levels, smart companies continue to offer competitive salaries to indispensable people, using both formal and informal increases to ensure that key people are well rewarded. As a result, they may find themselves in a stronger position to retain staff as economic recovery broadens.

By Susan Rousseau, Client Development Manager, Insource.ICT