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Salaries in tech have been moving forward at pace. Candidates are asking for quite significant uplifts to move and in many cases they are getting them, but can this trend continue on the upward trajectory or will salaries in tech eventually hit a ceiling?
It’s a supply and demand situation at present, quite simply the available jobs outweigh the available talent pool. There are a number of factors influencing this, for one technology companies and functions are growing, the market has recovered much quicker than anticipated, and on top of this we have very little tech talent migrating to Australia at present.
What we are currently seeing in the market.
Daily rates have moved forward, in some cases there has been a correction back to pre-COVID rates, and in many other areas, where the talent pool is particularly tight, we are seeing increases. There was also a trend away from daily rates during the height of the pandemic in Australia as the contract jobs simply weren’t available in the same numbers, many contractors were stood down, and these contractors jumped into permanent and fixed term contract roles. A lot of these candidates have now re-entered the daily rate contracting market, which has also meant staff turnover for fixed term and permanent positions in the companies that snapped these contractors up for a ‘bargain’ at the time. This was always going to be a risk for these companies as the market recovered.
We are also seeing some candidates move away from permanent roles to explore more financially lucrative daily rate contracts. Permanent salaries are very good at present but the premium for taking a daily rate contract is significant and proving hard to ignore for some. The market is that buoyant that candidates that traditionally only explore permanent opportunities are prepared to take a level of risk to enter, what would typically be perceived as a less secure job and enter the contracting market. The rates available and volume of roles in the market has essentially increased the attractiveness and reduced the risk for candidates.
There is a trend towards organisations looking to hire tech talent for contract positions on fixed term contracts. Organisations seem to be looking to do this as a way of engaging contractors without having to pay the premium associated with daily rate contractors. These roles are proving tough to fill at present as, whilst there are some additional benefits received such as annual leave, the appetite to take on these roles is limited with neither the premium in pay-rate or the security of a permanent role on the table. For roles that are very skill short, I would be very cautious around deploying this as a hiring strategy as the candidate pool will likely be very slim. If possible, I would recommend opening this type of position as both a daily rate contract and fixed term contract. If you can secure a candidate on a fixed term contract, fantastic, but if not you will be in a better position to fill the role with the best available talent.
What will this mean for the future of the technology market?
It's tough to say whether or not this level of wage growth in tech will continue and if so for how long. This is a unique time, but we have seen similar situations post major events, such as the GFC, which we did see level out. This situation is much more unique however, especially with limited skilled migration. There are a number of risks here, candidates can potentially price themselves outside the market for roles in the future, unless they are able to adjust should the market adjust, and in many cases, companies that have paid a premium expect to see a proportional increase in value delivered by the employee. This can work, but there is a risk that new starters are set-up for failure, so tread with caution if you are looking for a significant uplift in salary or paying a premium for talent.
What can organisations do to attract the best talent and stay competitive?
Whilst salary / rate is important to candidates and attracting talent, there are other levers that companies can pull to attract top talent. Invest in building and maintaining a strong employer brand for example. If your organisation is a great place to work, that goes a long way and is something that you should actively promote. Look at benefits outside of salary, benefits that are more sustainable than continually providing significant salary bumps, and that add value to employees’ overall package. Examples include enhanced leave, allowances for professional development, enhanced parental leave, salary packaging, financial support around health and wellbeing, etc.
Flexibility is another big consideration at the moment. Working from home, at least in part, is close to considered a given now, so if you aren’t offering this option, you will miss out on and lose talent. Flexibility is different to every individual as well, if the approach your organisation has to flexibility is genuinely flexible, and tailored to the individual, you are in a great position to promote this as a benefit.
I also encourage organisations to really consider what they are doing with respect to candidate experience. You need to move quite quickly, keep the process ticking along and communicate at every stage. The old saying 'no news is, good news' does not fly in this situation, keep your candidates up to date. Candidate management and engagement is really important, through the entire process. This includes all interviewers. Coach your managers around how to interview and engage candidates. You can learn a lot about a candidate, their technical skills, interpersonal fit, etc. in an engaging conversation, and leave them feeling much more positive about your organisation. Look at how your organisation interviews, the candidate is essentially interviewing you too, so a positive and accurate impression is very important!
Finally, make sure that you are looking after your current employees really well. Finding new talent is important and essential but retaining your talent must be the priority. Your top talent does have options, if your organisation is a great place to work, your talent is looked after, feels valued and is engaged, you are going to make it tough for them to leave.
If you would like to find out more about the Technology market, please contact the team here, for a confidential chat.
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