Research reveals regional wages for IT staff closing pay gap on London

IT staff in the UK regions are rapidly closing the pay gap on the highest earning IT professionals in London, as organisations continue to relocate IT departments to lower cost locations outside the capital, reveals ReThink Recruitment, the IT staffing company.

Salaries for IT professionals in the regions are now 82% of London, up from 79% last year. Meanwhile, the pay gap between the regions and London in all occupations closed by just 1% in 2006, and is still a hefty 72%.

According to data supplied exclusively to ReThink Recruitment from E-Skills, IT professionals in the UK regions now earn 34,736 per annum, compared to 42,588 per annum for London. Salaries for all UK employees is 20,852, compared to 28,808 in London[1]

ReThink Recruitment points out that the UK IT sector is expanding up to three times faster in the regions than in London. For example, the professional and financial services sector in Manchester, which is a significant user of IT skills, has seen job numbers increase 23.3% since 2000, from 176,800 to 218,000, and its value to the economy grow from 3.5bn in 1998 to 8.4bn in 2005.[2]

Jon Butterfield, Managing Director, ReThink Recruitment, explains: ìThe two-tier market for IT jobs, which mirrored the traditional North-South divide, is fast disappearing. For the most in-demand IT skills pay differences between London and regional hubs like Manchester are negligible.î

ìThe North is benefiting from rapid growth in back office and retail financial services jobs, and is becoming a choice outsourcing destination for organisations relocating non-core functions to lower-cost areas, but who want to retain a presence in the UK.î

He adds: ìSkills shortages are an important factor driving wage rises for IT professionals in the UK regions, where growth of high tech industries is far outstripping supply of skills. Employers are offering big incentives to draw IT staff away from the South East, which tends to be a magnet for technology professionals.î

ReThink Recruitment points out that London is still monopolising the top paying IT jobs closer to the front office in areas like hedge funds, management consultancy and the Lloydís insurance and re-insurance market.

North-South divide forecast to narrow further

According to ReThink Recruitment, as more financial services companies and Government departments beef-up their presence in the North, the pay divide with London should narrow further.

The Bank of New York and Royal Bank of Scotland are rapidly expanding their operations in Manchester, while the BBC is relocating five of its major departments to the city, following other public sector bodies in leaving the capital.

ìThe cost of doing business in the capital is high and technology-utilising companies, who are not constrained by location, are asking whether they really need to be there,î Jon Butterfield says.

ReThink Recruitment says that the Lyons Review, which recommended that the Government relocate central government offices outside London, should ensure that Manchester continues to benefit from this trend in the future.

South West benefiting from roll-out of Windows Vista

IT salaries in the South West are 70% of London (29,692 per annum compared to 42,588 per annum). The average pay for all employees in the South West is 68% of London (19,500 compared to 28,808).

Figures obtained by ReThink Recruitment from the Office for National Statistics show that annual turnover in the IT sector in the South West has grown 75% since 1998, twice as fast as London, from 1.6bn to 2.8bn. London grew by 30%, from 8.3bn to 10.5bn, over the same period.

According to ReThink Recruitment, the South West is the most important centre in Europe for semiconductor design and is a major hi tech hub for wireless technology and software development.

Iain Blair, Director, ReThink Recruitment, Bristol office, says: ìHardware and software vendors are the lynchpin of the IT sector in the South West and are in the process of upgrading products to coincide with the launch of Windows Vista, which is generating significant demand for IT skills.î