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The following material summarizes the responses to the market trend questionnaire for the 2006 Edward Perlin Associates Information Technology Professional Salary Survey. It is aimed at providing updated information as well as identifying new or changing trends in information technology compensation.

2006 Salary Programs

Compensation programs for Information Technology Professionals closely paralleled the general programs already in effect. In the surveyed firms merit budgets ranged from 2.8% to 4.9%. The average reported information technology merit plan for this year was calculated at 3.5%. On average, companies allocated an additional 0.8% for promotional increases with a range of 0.5% to 2.0%.

2006 Salary Structure

In 2006, salary range increases for Information Technology Professionals paralleled the corporate structure changes. For 2006, salary structure increases averaged 2.3%, ranging from 0.0% to 8.1%. The majority of firms reported a January 1, effective date.

2006 Starting Salaries

The range of starting salaries for entry-level programmer/analyst positions reported is $30,000 - $70,000. In reviewing starting salary information for 2007, the average starting salary will increase significantly, by about 6.1%

Turnover rates reported ranged from 4.0% to 29.0% on an annualized basis, and are rising. The annualized average turnover rate for 2006 is projected to be 9.1%, compared to 6.6% in 2005. Turnover is expected to continue to slowly rise in 2007.

2007 Salary Program

The average projected information technology merit plan for 2007 is 3.7%, ranging from 3.0% to 5.3%.

Special Programs

Premium Pay

v The following technical skills are considered “hot skills” by several of the responding companies: C++, HTML, JAVA, Linux, Oracle, PowerBuilder, PeopleSoft, SAP, TCP/IP, Unix, Visual Basic, WEB. However, the number of responses indicating the average premium paid for individual skills was too small for meaningful average premiums to be calculated.

v Eleven companies pay the premium in base salary. None of the responding companies indicated they pay the premium in a bonus.

v Sixteen of the 21 companies reporting provide training in technical skills. Of these companies, 11 provide both internal and external training, while 4 provide training only externally, and 1 provide training only internally.

v Of those companies who provide training, 3 reported paying a premium prior to training, 1 during training, and 3 after training.

Retention

v Twenty-one of the responding companies do not have a plan to attract and retain programmers or other IT professionals with “hot” skills. Three companies do have a plan and 5 companies plan to develop a program.

Bonus/Incentive Programs

v Five of the twenty-five companies responding to this question provide special short/long term incentive programs (apart from the normal bonus/incentive and stock award plans) for IT positions. Examples include spot bonuses and long-term incentive programs for senior managers.

v Twenty-four companies indicated their special short/long term incentive programs are not skill based, while 1 company’s program is skilled based.

v A bonus/incentive for project completion is granted by eleven of the twenty-nine responding companies.

Benefits

v Twelve of the thirty companies indicated they offer special benefits for IT positions. Benefits include job sharing, compressed workweek, flexible hours and days, and telecommuting.

Recruiting

v Eight of the thirty companies responding indicated that they recruit for IT positions outside the United States. Of these, 4 said they rarely go outside the U.S., while the remaining 4 said they go outside the U.S. often.

E-Commerce

v Six of the twenty-two companies who responded indicated that they have a special unit responsible for e-commerce. Common elements of these units include Web content, Web strategy, self-service capabilities and business-to-business e-commerce applications. Positions include Systems Architecture, Database Analysts, Web Designers and Web Developers.

v Three of the twenty-one companies reported that their e-commerce projects require special skills beyond those available in their IT organization. Required skills include EDI, JAVA, HTML, Photoshop, Web development, and C++.

v Four of twenty-two companies are currently engaged in business-to-business e-commerce. The types of business include: pharmaceutical, financial services, mutual funds, business telecommunications, information services and insurance.

v Only two of the twenty-two companies develop and sell products used in business-to-business e-commerce. These are insurance coverage and products, including professional liability, excess casualty, and workers’ compensation

Offshore Services

v Systems Development – Twenty-nine companies responded. Eight indicated that they perform systems development offshore. One company reported a savings of approximately 1.0%–10.0%, and one company reported a savings of 10.0% – 20.0%. Four of the 20 companies that do not currently perform systems development offshore plan to do so in the future. One of these companies anticipates assigning 5% of its budget to this area.

v Systems Maintenance – Of the 28 companies responding, 3 perform systems maintenance offshore and have assigned 11.3% of their staff and 7.6% of their budget to this area. One of these companies has seen savings in the range of 10.0% – 20.0%. Another company has enjoyed savings of more than 20.0%.

v Computer Operations – Only 2 of the 27 companies who responded currently perform computer operations offshore. They have assigned 12.3% of their staff and 4.8% of their budget to this area. One company indicated a savings of 1.0% - 10.0%.

v Help Desk – Three of the 28 companies responding indicate that they perform help desk offshore. Two of these companies reported a savings of 1.0% - 10.0%.

v Managers of Offshore Teams/Projects – Only one of the 10 responding companies indicated it pays domestic managers of offshore teams/projects differently than domestic managers of domestic teams/projects.

v Offshore Operations Management Summary – Eight companies stated that they do not recommend moving operations offshore. Some of the reasons include, no benefit to the company, and inefficiencies in communications over time zones. For those companies who do have operations offshore, 4 of them do not recommend moving operations back on-shore, while 1 does.

2007 EPA Salary Survey Outlook

The combined effects of an unsettled world-wide economy and the accelerating rate of baby-boomer retirements is adding up to growing competition for experienced IT professionals and executives. Because IT is a vital requirement for all organizations, its responsibilities have become institutional in nature. To assure continuity of operations IT organizations require a wealth of resources and at the core of these are experienced IT professionals. Acquiring new staff members and retaining current staff professionals has always been challenging, and these challenges are intensifying. Aware of these staff needs, companies across the nation continue to compete for technical staff members from a pool of applicants that has remained relatively static for the last few years.

Companies have sought to lower costs by going offshore. With each passing day this alternative to domestic operations appears less attractive. The movement of jobs offshore has reduced the number of students going into computer science, which, in turn, has diminished flow of recent graduates into entry-level jobs. We have seen this trend before, and we expect this trend to continue for several years because of the long lead-time to increase the number of computer science graduates, even with more students in computer science program.

More information is available about computer-related jobs that are being performed offshore. What was seen as an answer to rising staff expenses is now being viewed in the light of years of experience. In many cases, the benefits of offshore operations are simply not to be found. Some jobs are being repatriated, others are being radically restructured in the light of actual results, not all of which have been acceptable.

Finally, companies which have delayed installing new systems during the last several years of economic uncertainty find themselves under increasing pressure to seriously invest in new IT infrastructure. All of these trends heighten the competition for experienced IT staff. This competition has increased staff turnover and related challenges for IT executives and their colleagues in HR.

Now entering our 28^th year in the IT salary survey business, Edward Perlin Associates has helped its clients weather economic storms in the past, and provides planning assistance to many of its clients every day. In some respects, as one of our clients put it, “our challenges have remained the same, only more so.” In short, the need for reliable IT salary information is unabated and we look forward to meeting this vital information need for you in the challenging days to come.

Merit 30 3.5% 2.8% - 4.9% 27 3.7% 3.0% - 5.3%

Promotion 9 0.8% 0.5% - 2.0% 9 0.8% 0.5% - 2.0%

Other 8 0.5% 0.0% - 1.0% 8 0.5% 0.0% - 1.0%

Professional 19 8.4% 1.8% - 20.0% 7.5% 0.0% - 25.0%

Mid Management 22 16.1% 2.6% - 40.0% 15.0% 0.0% - 30.0%

Sr. Management 21 28.6% 2.5% - 70.0% 30.0% 0.0% -100.0%

Min/Midpoint/Max 18 2.3% 0.0% - 8.1% 18 2.9% 0.0% - 5.8%

Entry/Trainee 19 $52.3K $30.0K - $70.0K 14 $55.5K $40.0K-$75.0K

% Change 6.1%

Annual Rate 17 9.1% 4.0% - 29.0% Turnover anticipated to increase