Gap among industries in average salary for senior IT is considerable

The IT Salary Survey 2012 shows big disparities among industries in the average salary for senior IT. In 2012, that doesn't seem to matter so much.

Does it matter to which industry senior IT leaders take their talents? Yes and no, according to TechTarget's IT...

Salary Survey 2012. Measured by dollars, the answer is an unambiguous "heck, yes!"

The average salary of survey respondents in senior IT roles, including CIO, chief technology officer (CTO) and IT positions reporting to the C-suite, differed by as much as 80% by industry. Average salaries for senior IT ranged from $146,000 in the manufacturing (IT-related) industry to a low of $80,991 in the education industry. The data is based on responses from 778 senior IT leaders working in 22 industries.

Salaries by industry

Salaries by industry

The linkages among industries that pay well and those that don't will take some teasing out. (Why, for example, are the automotive and energy industries, which increasingly require sophisticated IT skills, at the bottom of the pack?) The senior IT pay-by-industry pecking order, however, does reveal a clear trend when the average salary data from 1,499 general IT staff people is also considered. The disparity in pay between senior and junior people is much more pronounced in the highest-paying industries. The haves not only have more than their peers, but they also have much more than junior folks in their own industries.

General IT people employed by industries ranking in the top one-third in senior IT pay (see below), earn on average only 74% of what their senior IT peers make per year. The biggest gap is in top-ranked IT-related manufacturing, where the rank and file makes only 68% of what senior IT is paid:

  • Manufacturing (IT-related)
  • Financial
  • Computer and data processing/consulting
  • Research and development
  • Telecommunications/communications carrier
  • Business services/consulting
  • Entertainment

In contrast, general IT staff people working in the second tier of industries (below) earn 85% of what their bosses make.

  • Technology service provider (ISP/application service provider/manufacturing service provider)
  • Legal/insurance/real estate
  • Media/marketing/advertising
  • Manufacturing (non-IT)
  • Value-added reseller/value-added distribution/systems and network integrator
  • IT-related services
  • Aerospace/defense

The bottom one-third of industries (below) boasts the smallest gap between the upper echelon and the rank and file, with general IT staff making 94% of what their superiors earn.

Average salary and the Easterlin Paradox

Given the significant salary gap between high- and low-paying industries for senior IT leaders, one might expect these professionals to be jockeying to land jobs in sectors that pay the highest average salaries -- or at least be unhappy that industry limits how much money they can make. This, however, proved decidedly not the case for the senior IT survey respondents we checked in with. Instead, they are more likely to embody the Easterlin Paradox, which argues that once people attain a certain level of economic stability in their own domain (the original data looked at countries), money no longer matters quite as much and instead is trumped by factors such as quality of life, stability and job satisfaction.

I've done the risk vs. rewards, and right now I like stability.

Tom Stockton,
systems engineer, Virginia Western Community College

Job satisfaction is the main reason Tim Stockton plans to stay put. A systems engineer who reports to the CIO at Virginia Western Community College in Roanoke, he is measured on his ability on systems uptime and innovation. A recent effort is his work on the school's move away from computer labs to a virtualized infrastructure that offers students anywhere, anytime access from their own devices.

Stockton said he could earn more (his salary is in the $70,000 range) at a four-year institution but finds the environment at his two-year college less bureaucratic. "Four-year institutions tend to be more compartmentalized, and IT departments compete for resources," he said. A private industry would also pay him more, he added, but in a down economy where companies get downsized or bought, he prefers the stability of an institution (one of the largest community colleges in the state) that "isn't going anywhere," he said. The likelihood of a college closing is small. "I've done the risk vs. rewards, and right now I like stability."

Jeff Swiney, director of IS and distribution at a small, fast-growing women's apparel chain and about 15 years older than Stockton, also is not driven by money. He actually took a "significant cut in pay" to work in a business that is not only taps his expertise in both IT and logistics but also is located in his beloved Tennessee, where he has family and grandchildren. In fact, his pay is under the retail industry's average salary of $92,000 in the TechTarget survey, but he stands to make considerably more if the company goes public. "The quality of life made up for the pay," he said.

Already on top, with nowhere to grow

"Jim," a senior software architect at a large IT services provider on the East Coast, who needed to remain anonymous to discuss salary details, is in the top echelon of pay. An experienced IT professional in his mid-40s with a master's degree in electronics and telecommunications, he earns $220,000 in salary and earned a $6,000 bonus in 2011. For him, career development must focus on parameters other than just pay.

Jim joined his company in 2007 through an acquisition, and considers himself fortunate to have made the leap at the cusp of a recession that put many startups out of business. The last time he worked at a large company was during the dot-com bust, also by way of an acquisition made just before the economy went sour. "Large companies weather the storm better," he said. As a senior professional in the provider's research and development arm, Jim is measured on his ability to innovate, work creatively and bring projects to completion. He is open to making a move and is often contacted by recruiters, but he's finding that his salary is pricing him out of contention.

More from the IT Salary Survey

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Information technology costs must consider the human factor

"They'll say, 'Oh, that is out of our range,'" he said, adding that this past downturn has been hard for IT professionals at the upper end of the scale. "Companies are not investing in expensive senior people." People like him used to be able to demand signing bonuses and were offered lucrative stock options. "You might still get those perks when you come aboard, especially in an acquisition, but once you're there, for sure they dry up," he said.

For all these reasons, Jim's employment is dictated by three questions: Is the division he's in growing, and can he grow with it? What other divisions in the company offer opportunities to grow? If advancement isn't possible, is it prudent to go to another startup? Some of his friends in Silicon Valley are making the leap now, but his sense is that the tech economy on the East Coast is not robust enough to warrant a move.

The big question going forward is whether the pay disparity between industries and the pay disparities between IT leaders and IT staff people remain stable. If IT folks in an industry are focused on how they are doing relative to others in the same industry, according to current trends in TechTarget's IT Salary Survey 2012, these disparities are likely to be with us for some time.

Let us know what you think about the story; email Linda Tucci, News Director.

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Do you think your industry pays its IT execs a fair average salary?
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Fair is going to have different connotations in different markets. What's fair in Topeka is going to feel radically different to what would/should be fair in Manhattan or San Francisco. Better yet, if you can work for Manhattan wages and still live and  work in Topeka, wow!!!

Having said that, the wage disparity between industries is real, and in general, the more of a "fan crush" atmosphere that surrounds it, the less likely you will be paid what you would hope to be, because they know they have an oversupply of over-eager people wanting to be part of that world (think music, movies, video games, entertainment in general). Now compare those to things like banking, law, engineering, geology, chemical engineering, etc. The real money is in the boring places, and if you are OK with that, you can earn very good money. It may not be the most exciting dinner time conversation, but you'll be able to pay your bills a lot more effectively ;).
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I feel it depends. I would like to bring in "location strategy" point here. When giant organisations set-up their offices in emerging markets like India or other Developed countries, they are likely to pay first few batches of hiring a little higher pay than market rates (to attract talent) when things come down to "settled" level for their establishments, they start playing the "as per market rates" card. So, as far it's about being "fair", I have always felt that it's fair for the employer and less towards employees. 
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If IT Execs are being oaid more than other execs they are being paid too much. IT skills should be expected rather than an exception in this day and age.
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I would be curious to know whether those voting no to a fair salary think the IT execs are being paid too little or too much.
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Higher education is a difficult "industry" to get a fair wage. Compensation is not based on skill, ability, productivity. It is based on time in service and which department you serve.
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Stable environment, no real pressure
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Fairness depends on what the capabilities and responsibilities are ... high pay cannot ensure they are taking the responsibilities or generate more revenue ...
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Yes, but not the non executive employees.
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not in in higher ed!
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not every IT company paid fair salary for IT professionals.
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I'm in education, so everyone's salary is low.
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Salary is pretty much of "close to heart" topic for most of us ;-). I doubt if there is "fair" and "strictly" followed way when it comes to decide upon salaries for senior individuals. In last 7 years in IT, I have learned that salaries is less related to your performance and abilities and more related to your "relationship" with person who decides your pay. I have seen some worthy senior individuals getting paid very less wherein their good for nothing counterparts take hefty salary/bonuses at home. 
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For Lalhit: The dynamic you describe points up how much managers can make or break a career. Software tracking programs that measure what employees are doing minute by minute make me uneasy, but that objective Big Brother-ism seems preferable to the tyranny of a biased manager.
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