Just a week after Gartner predicted the demise of the IT department, the Meta Group is forecasting huge pay increases for sysadmins.

An improving economy and heightened demand for technology workers will drive 10 percent to 15 percent salary increases all the way up to 2007, according to the research company.

The predictions seem to fly in the face of conventional wisdom following more than three years of a weak IT job market, a rise in companies using of low-cost off-shore labour and marginal pay increases for full-time domestic IT workers.

But recruiters say there's plenty of evidence to support the predictions for hefty salary increases, including a relatively low unemployment rate for US high-tech workers and a shortage of new workers entering the market.

However, a half-dozen IT managers interviewed this week said they don't expect IT staffers to receive increases of more than three to five percent for at least the next year. "I just don't see a 15 percent increase over the next two years, the market doesn't warrant this," said Rick Peltz, CIO at Marcus & Millichap Real Estate Investment Brokerage.

Peltz is looking to fill three IT positions and has been screening resumes on Monster.com rather than advertising for the posts. "If anything, there's an abundance of over-qualified workers applying for this position," said Peltz, who anticipates providing his 15-person staff with three percent cost-of-living increases in 2005 "and maybe a little bit more for merit".

"I do expect salaries to grow over the next several years, but I expect the growth rates to be much more modest," said Bill McQuiston, CIO at Truman Medical Centers. As the economy heats up and companies begin to invest more heavily in IT, he said, "we are going to see another shortage of technical people".

That fits in with the perspective of several recruiters. Scot Melland, president of Dice, a Web-based IT job board, said technical job postings on his site are up more than 90 percent from September 2003 to September 2004. With fewer computer science graduates coming out of colleges, as well as stricter post-9/11 security restrictions on student visa programs for foreign-born students, "it's quite possible we could have a skills shortage in the coming years," he said.

Maria Schafer, author of the Meta Group report, said seasoned IT professionals with coveted database, networking, security, architecture and project management skills are already commanding 10 percent to 12 percent annual pay increases. The report is based on a survey of 650 companies that was completed in late May.

"I hear from people all the time who say, 'I don't know how you can be saying this - I've been looking for a job for 19 months', and I empathize with those people," Schafer said. But as the economy improves and companies invest more in IT, demand for senior specialists will rise, she said. "As baby boomers retire, the demand for replacements is never-ending," said Mark Anderson, president of ExecuNet, a job placement service.

Even in the currently stable, if lackluster, IT job market, "it's still hard to find good, skilled technical workers," said Mark Robinson, chief operating officer at WorkforceLogic. "As the market recovers, the demand will increase for labour and companies will be looking under rocks and stones like they were a few years ago to find the best people."