Relocation narrows IT pay gap

The disparity between workers in London and regions is shrinking

The gap between regional wages for IT staff and those of London IT workers has narrowed by three per cent, according to research published last week.

The closing IT pay gap is attributable to firms relocating IT departments to lower-cost locations outside the capital, says IT staffing company ReThink Recruitment.

As a result, the IT sector is expanding up to three times faster outside of London. Salaries for IT professionals in the regions are now 82 per cent of those in London, up from 79 per cent last year, with IT staff in the regions earning an average of £34,736 per annum, compared with £42,588 per annum in London.

‘The two-tier market for IT jobs, which mirrored the traditional north-south divide, is fast disappearing,’ said Jon Butterfield, managing director at ReThink Recruitment.

‘For in-demand IT skills pay differences between London and regional hubs such as Manchester are negligible,’ he said.

Butterfield says the North is a popular location for firms relocating none-core functions, such as back-office and retail financial services jobs, to lower-cost areas.

However, Philip Virgo, strategic adviser to the Institute for the Management of Information Systems, says headline figures about pay gaps can be misleading.

‘The apparent narrowing of the pay gap could be explained by the fact that public sector recruitment was maintained over the period and many companies are rebuilding IT departments outside London, while there was a sharp drop in recruitment by London-based software and services suppliers,’ he said.

‘However, the narrowing gap is not part of a long-term trend and within the private sector pay is stagnant or falling across most of the industry, with the exception of financial services.’

Virgo says there are exceptions where private sector salaries are rising in the regions.

‘Hubs such as Leeds, Edinburgh, Bristol and Cambridge are having to compete with London for staff, and salaries are rising. But the skills required are world-class specialist skills in multi-media and high-level systems engineering, which are not advertised, nor part of mainstream IT recruitment,’ he said.

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