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Sun 1 Apr 2007 04:31 PM

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What are you worth?

Compensation is one of the most important issues for any executive, but one of the hardest issues to address. ACN lifts the lid on CIO salary packages, and asks if the region's enterprises may be heading for a long-terms skills fall.

Salary is a sensitive issue for anyone - except film stars, for whom it becomes something of a status symbol. But for mere mortals, having a full and frank discussion about compensation is not an easy task; very few people will willingly disclose their pay package in a public forum, unless forced to by disclosure laws.

In the Middle East, the topic is even more complicated - and sensitive - thanks to the tendency of employers to set wages on nationality, not skill or experience. Aside from anything else, the political implications of this practice can get very involved.

And while salary is almost always one of the most important issues to people on a personal level, in the Middle Eastern IT industry it becomes a more critical issue. Enterprises are growing on the back of the current economic boom across much of the region, fuelling their demand for skilled professionals.

At the same time, some IT workers are complaining that the wages offered here in the Middle East are not competitive when set against salaries from the US and Europe. The cumulative effect of both of these trends is to drain the region of its best IT workers, while the demand for them continues to increase.

This problem is acute at the lower end of the scale, but it also affects top IT executives as well. For enterprises, recruiting and retaining effective IT managers is critical for the smooth running of the IT department. For senior IT managers themselves, the issues around receiving a competitive compensation package require no explanation.

To get to the bottom of this issue,

conducted its own straw poll of CIOs and senior IT managers in the Middle East. Many declined to respond to our requests for information on their salary levels, but a few felt able to share their views, and give an idea of their salary ranges - albeit anonymously.

First of all, then, how much does a CIO or equivalent earn in the Middle East? With a comparison figure for the US of up to US$175,000 a year (including bonuses, etc) for the most senior IT officer in a large enterprise, it seems that regional CIOs are not too far off the mark of their transatlantic colleagues, albeit with some help from the lack of personal taxes in much of the Gulf.

One IT manager gave his annual base salary as $136,000, while another estimated the range for Middle Eastern CIOs at $65,000 to $114,000 a year, depending on the size of the company. "My salary is competitive for what I could earn elsewhere but I benefit a great deal from it being tax free," comments one IT manager, based in Dubai.

But in terms of the total package on offer, the same executive was less satisfied: "The housing supplement (of $15,000 a year) is mediocre for the rising rent costs in Dubai. The health and life insurance are standards I always receive in my work; I am less satisfied that is does not cover my family. The bonus structure is rather ineffective as the company keeps changing courses and is not adjusting the bonus and thus achieving the bonus I expected may not be possible."

He suggests that Middle Eastern enterprises fall behind in the total package stakes when compared to American organisations, for example, by not offering additional perks such as gym memberships or tickets to sporting events.

Our respondents singled out the UAE as suffering acutely from relatively poor packages - exacerbated by the rising cost of living and the smaller market compared to countries such as Saudi Arabia. One IT manager suggested that IT professionals could see a 20%-30% premium on their salary for working in KSA, and similar margins for other Gulf states.

"IT professionals are opting to go to Saudi, Oman, Kuwait or Qatar where the saving potential is much better when compared to UAE," says our correspondent. One problem he describes comes from new IT service providers entering the market and offering enterprises low prices just to win the business.

"Unfortunately this hit is going on to the supplier's employee pay package. In effect, the supplier's order book is big, but its margins are small and ultimately the salaries it pays are small: it is a complete cascade effect," he explains.

On a domestic front in the UAE, then, cost of living and increased competition are both working to erode IT sector salaries from both directions. For markets such as Saudi Arabia, this is not likely to become an issue for some time to come - no one disputes the growth potential of the Kingdom. But for smaller Gulf states, particularly places such as Bahrain and Qatar where economic growth is high, and cost-of-living concerns are already emerging, this erosion may soon become reality.

The other side of the equation is in terms of workers coming from overseas into the Middle East - the normal method of recruitment for many firms. Here there are mixed opinions on the effect of expatriate workers coming in.

"With India being the most favourable place to recruit high-profile IT experts, these days it has become very difficult as the pay packets in India have gone up like mad," says one IT manager. "The Indian economy is booming every year by almost 10%; IT sector in India is at high demand.

"On the other hand, since there is always a spill over from each country, people are desperate to look for an overseas job and they don't mind coming for a much lower salary. So, the market is a mix," he concludes.

Another IT manager echoes this view of the effect workers from the subcontinent are having: "I do believe the market is too low paid because of the influx of Indians and Pakistanis who are qualified and prepared to work for far less than their actual market value."

But while it may be attractive for enterprises to recruit the cheapest workers possible for a particular position, this may be only a short-term gain. As one of our correspondents explains, the overall effect is to make it much harder to retain able IT professionals, at every level.

"The low prices in most of the IT sector also make it very difficult to recruit and keep good talent," he says. "The IT sector at least will eventually have to reconsider its budget in order to offer better salaries."

He acknowledges the flip-side of the equation of expat workers - that jobs outside of their home countries give them much better employment options than would otherwise be possible, but says there are still systemic problems with the situation.

"For some, such as myself, the opportunities in this country far exceed those of their native countries, not only salary wise but career growth wise," says our correspondent. "There is an alarming gap between some jobs. For example, my number two guy only earns one-fifth of my salary. And from what I hear a lot of IT staff complain that their growth is stifled by ineffective management."

The picture emerging from this snapshot is mixed. On the one hand, CIOs themselves seem to do reasonably well on pure salary terms compared to their colleagues elsewhere in the world - although cost of living and poor benefits packages may stifle this somewhat.

On the other hand, staff at levels below the CIO - all levels - are losing out compared to their peers elsewhere. While this is not a problem for CIOs in terms of their own packages, poorly-paid junior positions will not attract the necessary talent - and certainly will not encourage able workers to stay. This has the potential to hamper IT departmental efficiency, and severely restrict the pipeline for future senior positions.

"The salaries are quite competitive for this country but very uncompetitive compared to other countries and, in my opinion, they are not sufficiently high in light if the high cost of living in Dubai," one of our IT managers says.

But at the same time he sees the situation - in his company at least - as changing for the better: "The addition of the housing allowance that we are introducing is alleviating the burden of rent and as such may actually make us more competitive at least in the standard of life our employees can now maintain. Certainly the kind of work we have our IT team do and the promotion of exploring new technologies and the possibility of attending educational courses/workshops makes our company, from what I hear, far better to work for than most others in the country."

These observations come only from a few individuals who have commented on the situation. The next step comes when more IT managers are able to share their views - and salary levels - with their peers; this will give much more insight into the overall picture across the region - and reveal whether CIOs are being paid a fair whack.

What are your views on the compensation issue? Do you feel IT managers in the region are keeping pace with their colleagues elsewhere? Are the salary estimates in this article accurate? If you would like to comment, write to us:


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