In-Depth

4th Annual RCP Salary Survey

Nowhere to Go but Up with 2010 Microsoft Partner Salaries

• By Michael Domingo
• June 01, 2010

Let's be up front: Microsoft partner salaries went down again this year. Average salary, $92,572, comes in at a bit more than 5 percent lower than last year's average take. Frankly, we expected it, with the recession continuing to impact every aspect of the global economy, IT included. From what we've been hearing in follow-up interviews with respondents, the perception is that there should've been more damage.

Despite all the compensation gloominess, we did see a few glimmers of hope hidden among the results of this year's Redmond Channel Partner Salary Survey. We'll get to those points of light later in this article, but let's first address what's perpetuating the general channel uneasiness.

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The business owners who responded to our survey acknowledged a commonly recurring strategy to deal with the recession: Assess the health of the business, scramble quickly for what little new business was to be had, fight to maintain projects and current clients, and slash where you can to keep profit above the waterline. For the most part, "where you can" often meant slashing salaries and assorted benefits.

That's the situation Ray Watters, owner of Level 2 Technology Consulting, a Registered Member in Chicago, Ill, providing IT services to the midmarket, found himself facing in the last 12 months. "The recession has sucked all the life out of my earning power," he says. "Without the business to justify it, I have not been able to give raises or bonuses. Even now, my clients are very reluctant to move on projects they know they need."

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"As an owner, we have all had to look at the level of cutbacks our customers are making," says David N., a senior network engineer with an independent software vendor (ISV) and Gold Certified Partner in the Midwest. "Knowing that they're needing to spend less time having us work on their projects and being aware that they're watching every dollar that goes out the door, [means] less projects, less new hardware, less of everything."

As clients, prospects and projects dried up, companies began wielding the ax on jobs and budgets, even whacking away at benefits. "Health insurance here is killing us," says David N. "Our costs are going up 30 percent a year and that takes a direct cut out of the bottom line for us. We've had to make the decision to either take the hit personally and forego a raise, or drop our health insurance."

Those factors are just a few among myriad others that companies have been using to justify the cuts we've seen in overall partner pay this year, down to the 5 percent average dip in salary (for a difference of $5,127) and the 1.2 percent dip in median salary ($81,000, or $1,000 less).

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Cautious Optimism
What's odd is that there seems to be some general optimism among respondents, as indicated by the collective prediction on raises and bonuses for the next year. There were 55 percent of respondents who expect to see an improvement in raises in the coming months, which betters the 2009 result by 11 percentage points. That puts Thad B., a quality assurance manager with a manufacturing company and Certified Partner in the Northwest, in good company along with them. He says that salaries at his company have stabilized, but he's eyeing an increase "due to the fact that part of our compensation is based on our company's performance through profit sharing. Right now we're experiencing growth due to a product line that's in high demand."

Survey respondents also believe for the most part that bonuses will keep up with raises. This year, the average bonus among respondents landed at $9,479, which was an increase of $1,013 (or 12 percent) over the year-ago figure. Dave L., a systems engineer with a Florida-based IT consulting firm (which is a Registered Member), says he got an "unexpected bonus" that hadn't happened in more than two years.

So, the optimism in both areas mirrors much of the mostly positive news on IT jobs and spending analyses from various external resources. But there's just enough superficial nervousness about the market that companies like the one that Derrek K. works for, a Gold Certified Partner Large Account Reseller (LAR), will continue to "err on the side of caution and merit increases will probably not happen again." Instead, companies like his will use monetary incentives to keep needed personnel happy and attract new ones.

The Company You Keep
From a salary perspective, not much has changed for partner compensation year over year. Those who say they work for a company that partners with Microsoft but doesn't formally belong to the Microsoft Partner Network once again topped this year's list. They squeezed out $100,297, which was just shy of a 4 percent increase over 2009. Gold Certified Partner respondents said they averaged about 2.8 percent better than 2009, at $96,545. Any positive gains in those two levels was weighed down by salaries at the Certified Partner level, which dropped 3.2 percent, and the Registered Member level, which fell half of 1 percent.

We once again asked for salary based on type of organization, and this time we saw some wild swings for some of the top earners. Hosting services providers topped last year's list ($115,553), but this year that segment took the steepest dive at more than 23 percentage points, or a difference of $26,815. For perspective, that's at least $2,000 a month, which is about a typical mortgage payment for a four-bedroom house in the United States. Another big loser were systems integrators, down 13 percent (or $13,953) from last year's $110,558.

The biggest gainer here was the reseller, making nearly 16 percent more than last year. In dollars, $72,066 means we're talking a salary that's averaging about $10,000 more. An also-ran was the "Other" category, of which respondents can claim just more than 13 percent, or $9,649. These categories still have room to catch up to the overall average despite their big gains.

Looking at how respondents were paid based on one's role in the company, shows that all categories went up except for those who work full time for a company in the Microsoft Partner Network -- 2 percent less pay than last year. Somewhat interesting is that salaries for those who work part time for a partner company have gone up almost 22 percent, and are almost at parity with their full-time colleagues, at the $88K mark.

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Moving to earnings by job title, we see salaries from the top of the corporate ladder, with CEOs banking the highest pay, but not based on percentages (only a 6 percent increase this year). Rather, it's business owners who've shot up greater than 23 percent. It's a good thing, too, as last year business owners only reported a measly $69,803, which indicates that most of them were saving for that rainy day or putting revenues back into their businesses. Managers got burned this time out, falling more than 10 percent from 2009, as did Sales/Marketing, with a 7 percent drop. Both segments seemed prone to the effects of the recession.

Except for the Windows 7 effect, Microsoft hasn't had a stellar year. The salaries of Microsoft partners, likewise, were impacted. Salaries for those working with companies selling Microsoft Dynamics products went down a precipitous 14 percent, while those who sold other infrastructure-related products saw modest gains of 3 percent. Smart partners seemed prepared and looked elsewhere for revenue, and that's reflected in the 18 percent increase in salaries for those working for companies selling products or services outside the Microsoft ecosystem. With Windows 7 and a slew of new infrastructure-related offerings being released this year, we expect salaries to improve.

Trying to figure out how the numbers shake out with tenure is easy, until we're thrown off by some oddity. Those with the longest tenure often report making the highest salaries, and those with the greatest number of years, 25-30, claim to have increased their pay by 16 percent. So, this year is no exception -- the anomaly being the 10-14 year segment, which had a slight dip of nearly 2 percent. Also losing -- and losing big time -- are those in the 2- and 3-year segments, with 14 percent and 9 percent lost, respectively. What that tells us is that those who were hired two or three years ago likely had been paid well at the beginning of their careers, but were hit hard as companies made recessionary moves by cutting salaries or laying off short-tenured staffers, or, worse, doing both.

In the online PDF download (see "More Salary Data" for details), we also show salary results based on company size and revenue. What we gleaned of interest in Average Salary by Company Size is that small to midsize companies (50 to 99 employees, in this case), made enormous gains in salary, from $84,267 in 2009 to $122,357 in 2010. That's 45 percent over last year. On the north side of the 500-employee threshold is a mixed bag, with those in the 500-999 employee segment hurting the most with a drop of 18 percent.

May You Live in Interesting Times
We've seen salaries this year take a hit, but we've also seen some Microsoft partners respond to the recession in ways that have helped to maintain corporate morale, mainly by offering financial incentives to employees when a partner is able to show bottom-line results.

Even with the hit, those working at Microsoft partner companies enjoy salaries and benefits that are higher than most professions. But it's not money that keeps people working; it's the challenge of working at something they enjoy. With new technology coming from Microsoft and companies, and with the prospect of projects being revived as budget purse strings get loosened, the outlook for partners may appear to be even more exciting to the survivors during this very difficult year.

Times for Microsoft partners can only get more interesting.