Talent is the most significant and valuable part of any organization. Everything that happens both in the market and the world impacts the relationship between a company and its specialists. The economic slowdown is no different as the IT sector faces rising costs, business stagnation, as well as completely new challenges such as the growth of AI technologies. How does IT Talent respond to these changes?
The rising cost of Talent and lack of new projects
One of the most important aspects of Talent in the area of costs, are the salaries of professionals working in IT services companies. As the Tech Talent Business Survey Report 2023 showed, 17% of respondents cited wage growth as one of this year’s biggest challenges. These concerns may be justified given the situation of previous years, when record forecasts and increases in wages were seen across the sector. In 2022, salaries rose 4% for the average IT worker, compared to 2.3% in the previous year. The Talent Alpha Survey data also confirmed this with more than half – 53% – of respondents stating that employees were asking for a raise every six months. This can be a troubling thought for companies which are having to face other challenges in the market. However, this situation maybe easing off with data presented by Digit News, suggesting that companies are not matching salary increases with the 10% inflation recorded in March 2023.
Despite the ever-increasing cost of talent, CEE professionals still remain competitive in wages compared to talent from the US. This should reassure companies who may have feared that there would be an equalization of salaries across the regions in the not so distant future.
“According to CodeSubmit, Qubit and Indeed, U.S. salaries were up to four times higher in certain roles when compared to the same specialization in CEE in 2022. However, our latest insights indicate that the pay gap between UK and CEE specialists’ wages has closed to 15% in the first quarter of 2023.‘’ – Talent Alpha, Tech Talent Business Survey Report 2023
The new meaning of the Talent Gap
One of the harder obstacles to overcome, especially for small and medium-sized IT service companies, may be the growing talent gap. For the past few years, it has been defined as a shortage of available technical talent, needed in numbers that could respond to customer needs. The gap had to be handled cleverly and competitive terms had to be preserved. This is also related to the previously mentioned salary increases for specialists.
Now its meaning is slightly changing, influenced mainly by the development of Artificial Intelligence. The gap itself can be puzzling with simultaneous layoffs along with other ways of dealing with the crisis taking place among IT professionals this year. According to the Gartner study, the demand for tech talent is greatly outstripping supply. This will continue, according to IT spending forecasts, until at least 2026. While there is still a shortage of specialists in the market, what is currently most needed are specialists with medium or senior qualifications. Companies, want to implement AI in their business in order to stay competitive on the market and respond to customers’ needs more efficiently.
Tech Talent in 2023 – in better shape than you think
The endless headlines about layoffs are true, but don’t present the whole picture which is more complicated. The demand for tech talent is still high, and according to the latest data by Indeed, tech workers themselves still had the power to make demands. They also found that 70% of tech workers had more than one offer on the table when they landed their current role, and that 67% of job seekers wanted to work for mature businesses rather than startups.
Tech workers also expect a high level of transparency, and lack of details can affect whether they apply for a role. According to Indeed, tech workers were most interested in job listings that gave detailed information about salary and benefits, with the top reason cited for not completing an application being insufficient information about compensation.
The other interesting area is how Talent acts towards a mandated return to the office, which has recently been implemented in many companies. Three recently issued reports — the Greenhouse Candidate Experience Report, the Federal Reserve’s Survey of Household Economics and Decisionmaking (SHED), and Unispace’s “Returning for Good” reportiv, shed some light on this issue.
Unispace found that 42% of companies that mandated office returns witnessed a higher level of employee attrition than they had anticipated, while 29% of companies enforcing office returns were struggling to attract candidates.
It is also very visible that the established status quo of a hybrid or remote worker will not be easily given up. Employees, having tasted flexible work benefits, will ”dig their heels in” to maintain their recently established flexible working model. The Greenhouse report revealed that 76% of employees were open to job hunting if their company rolled back flexible work policies. The focus on work-life balance as well as flexibility which the pandemic brought, looks set to be a global phenomenon for the long term.
For more insight on how SMEs around the world are facing this challenging situation, see the latest Tech Talent Business Survey Report 2023.