In Demand: IT Consultants

Kirby Payne, president of HVS/ American Hospitality Management Company in Tiverton, Rhode Island, a hotel management and consulting firm, went looking for a new host company for its servers and intranet in 2005. After two to three months of searching, his firm signed a deal.

“Our price on that doubled,” Payne says, over the “super deal” the firm had negotiated with a different host company three to four years earlier.

Payne’s firm isn’t alone. Around the country, companies are paying significantly more for information technology (IT) consulting than they were five years ago. Jaime Engel, president of JDB Associates in Maple Grove, a company that provides some of the IT support for HVS/American Hospitality, says that in 2001, a programmer doing technical work might have been paid between $60 and $70 an hour, with project managers getting more—perhaps between $90 and $115 an hour. Now, he says, technical work pays between $100 and $105, with project managers getting between $125 and $150.

Price increases are generally smaller for basic services, such as reconfiguring a system or performing standard maintenance. Increases are bigger for consultants with high-end expertise who have a great deal of experience in specific industries, or who specialize in newer technology or services that are in-demand. For instance, consultants with experience in system security are getting 30 percent more in hourly wages than they did five years ago, says Keith Norbie, director of the storage division at Plymouth-based Nexus Information Systems, a supplier of IT services for business infrastructure.

Businesses with a large number of regulatory concerns are paying more for IT consultants, too. Medical companies are spending more money to ensure patient privacy, and accounting firms are paying more to comply with new laws. “With the regulatory concerns comes a lot of specialization costs,” Norbie says. “Securities Exchange Commission rules specifically require seven years of e-mail retention. That automatically creates a cost.”

Fewer Consultants, More Demand

Recent economic history is largely to blame for the price hike. In the late 1990s, there was a strong demand for IT consultants. But after the economic downturn that followed September 11, 2001, companies started to postpone IT projects in an effort to save money. 

“Companies spent a lot on Y2K, and then the economy had a dip and companies stopped doing projects they didn’t actually have to do to keep the company running,” says Molly Kridel, president of Ambient Consulting, LLC, an IT development and management consulting firm in Minneapolis.

That weakened the demand for IT consultants and as a result many of them left the profession. Now that economic times are better, companies are again pursuing IT projects—but there are fewer IT consultants available to help them, and even fewer highly skilled, experienced consultants. “Stars can pretty much go wherever they want in a market like this,” says Rick Kuula, president of Stillwater-based Solutia Consulting, Inc., a business and information systems consulting firm. “It’s too many jobs chasing too few resources.”

To get those stars, companies that place IT consultants are paying hourly workers 25 to 30 percent more than they commanded five years ago. Salaried workers might get 15 to 20 percent more than in 2001, Kuula says, with wages going from about $75,000 to $90,000 a year in 2001 to about $90,000 to $110,000 a year currently for a knowledgeable software developer with ten to fifteen years of experience.