Tech jobs are changing. But don't expect a boom in IT salaries just yet

Digital skills have seen increased demand in 2021, yet IT salaries have remained relatively stable. Instead, employers are looking to diversify their compensation packages to keep tech workers sweet in a competitive jobs market.
Written by Owen Hughes, Senior Editor

Employers are looking beyond pay when it comes to employee compensation.

Image: Getty / 10'000 Hours

Businesses have been forced to adopt new ways of working over the past 18 months, as the pandemic scrambled many of their pre-pandemic investment plans. As a result, employers have had to completely rethink where their tech dollars should be directed in the coming months and years.

The pandemic has also posed new questions around hiring and personnel. Tech and IT workers have seen their salaries hold steady, or in some cases increase, over the past year, reflecting the value that organizations have placed on those who have played a role in propping up IT systems and rolling out new digital services.

Yet while demand for tech workers and digital skills is on the rise, there is so far little indication of a forthcoming salary boom for digital professionals. "We're seeing clients offer what they would usually offer for IT resource in terms of salaries," says Freddie Short, director of IT recruitment firm, Randstad Technologies.

"However, we are also seeing more companies wanting to hire IT staff, so budgets are being set aside for IT resource."

According to a survey of 6,000 technology leaders by Harvey Nash in July 2021, only four in 10 tech and IT workers saw their salaries increase over the past year, even as bosses faced a growing skills shortage.

Similarly, Robert Half's 2021 UK Salary Guide found that tech salaries had remained stable in 2021, with the exception of marginal increases in the fintech and public sector. More than half of CIOs surveyed by the recruiter said they planned to keep salaries the same over the next 12 months.    

Adrian Clamp, head of digital transformation at KPMG UK, says that while workforce features on employers' investment agendas, it isn't necessarily a priority when it comes to budgetary planning.

"Yes, we're seeing an investment in people, the workforce and supply chain as well, but they're a little bit lower down the list -- there's really this gravitation towards growth revenue and efficiency," Clamp tells ZDNet.

Looking beyond pay

While companies may not be planning large wage incentives for staff, Robert Half found that many were readdressing the benefits packages they offer, with the inclusion of perks such as flexible hours, remote-working options and allowances for home office equipment.

Clamp suggests that this focus on the employee experience, rather than substantial pay increases, is what's likely to shape compensation packages in the months ahead. "We think it's part of the employee proposition, and part of the experience that is now pretty common among larger employers, and perhaps smaller ones too -- giving people fulfilment of their work," he says.

Meerah Rajavel, CIO at Citrix, agrees. "When it comes to attracting and retaining talent, companies need to look beyond pay," Rajavel tells ZDNet.

"Benefits programs should focus on total rewards that support employees in a holistic way, providing not only for their financial security, but their physical, intellectual, social, and environmental well-being."

Rajavel points out that pay has always been at a premium in the tech space, but adds that the speed at which the market is currently moving is putting pressure on companies to up the ante. While salaries could increase, these are likely to be in increments, rather than leaps and bounds. 

"Much like the bidding wars we're seeing in real estate, candidates are receiving offers from multiple companies -- and they are incrementally higher," she says. 

Employers are also likely to be paying even more close attention to what rival firms are offering as hiring managers feel the squeeze of a more combative hiring market.

"Sometimes it's more about the job opportunity than splitting hairs over salary in this field," says Kira Meinzer, chief people officer at HR firm Envoy Global. 

"However, we still have to be mindful of any salary increases in the market to remain competitive and reasonable."

Remote working en masse has left many employers pondering how they can reconfigure their workforces for a new era of distributed collaboration and non-traditional working patterns.

If remote working is set to continue as forecasts -- and many companies themselves -- suggest, it could bring changes in how employers calculate salaries for those workers who opt not to work in offices.

SEE: Need developers, project managers or CIOs? Watch out, because the rules of tech hiring are changing

Google, for example, has already indicated that employees who choose to go fully remote -- that is, permanently work from home or any other location other than the tech firm's own offices -- are likely to see their salaries adjusted to reflect the location they are doing the bulk of their working from.

This sort of wage adjustment for remote workers cast further uncertainty over how salaries for tech workers might move in the coming months, specifically for those who choose to work remotely. "That dialogue is in the face of this counter-pressure around wage inflation," says Clamp.

"My guess is the inflationary pressures are probably winning. I think that the level of [demand for] hot skills means that salaries are staying the same, or going up."

Short advises caution to employers considering a model similar to Google. "There is no question that employers who chose to pay remote workers less risk losing talent; it is absolutely 100% the case."

Uncharted waters

Following a period of such deep economic uncertainty, those tasked with planning budgets for the coming year are in a challenging position. Nobody could have foreseen the events of 2020; likewise, the recession caused by the pandemic can't be compared to those that came before it. With digital transformation ramping up, and swathes of the workforce potentially going remote, many employers will be navigating uncharted territory.

Still, Short says it's likely that employers are thinking about how they can budget for the increased demand for tech skills, as well as the training and reskilling many businesses will need to level up their workforce as digitisation takes hold. "If not, they'll need to scope out the market salaries and ensure their budgets align to avoid making recruitment a hard task," he says.

Short also believes the smartest employers will consider making more use of contractors and temporary staff, rather than focusing solely on permanent hires. "While the costs aren't all that different, casting the net wider can ensure faster hiring and a better candidate that really fits the bill," he adds.

SEE: The CIO's new challenge: Making the case for the next big thing

Meinzer says employers should stay in close contact with HR, and the market data that HR has access to, to ensure that they are not simply hiring replacement or new staff "for the sake of fitting into a budget".

"Additionally, there needs to be some 'padding' built into a budget to allow for the fact that, sometimes, a slight increase to salary is due, when hiring the same position in the future," she adds.

"It's about paying what the role is worth, not only being mindful of what a budget can afford, otherwise [employers] are going to potentially have a retention issue."

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