How to stay ahead of the talent conundrum in the tech sector 

Around the globe, and across all industries, there is an increasing skills shortage leaving many openings left unfilled and organizations unable to perform at their best.^[1] The International Labour Organization’s^[2] 2024 report World Employment and Social Outlook found that, “77% of employers report difficulties in hiring candidates with the right skill set.”

The US Chamber of Commerce calls the recent changes in employment “The great reshuffle”, citing around 130 million workers quitting their jobs between 2021 and 2023. In a recent report they produced on labor shortages they stated, “The industries with lower-than-average unemployment rates have fewer experienced candidates to choose from when filling their job openings. This situation leads to heightened competition among businesses in these industries as they vie for the limited pool of available talent.”^[3]

The race to embrace AI, in both workflow and in enhancing the capabilities of the workforce, has inevitably led to a surge in demand for individuals with skill sets to create, implement and utilize the nascent technology. This increase in demand for a finite resource, the workers with the requisite skill set, has manifested in salaries that companies are struggling to match.

This trend was highlighted in Mercer’s 2024 Global Talent Trends^[4] report with 46% of tech sector executives acknowledging their concerns about the lack of the workforce capabilities available to them. This is coupled with 46% saying that failure to adopt AI was one of the main risks to business success.

Race for tech talent becoming sprint for critical skills

46% of tech sector executives concerned about lack of workforce capabilities

Talent with the desirable skill set, once largely used to be restricted to the tech sector, but as an increasing number of organizations look to embrace AI or bulk up their cybersecurity defenses competition for those workers is heating up. Despite a round of substantial layoffs in the global tech sector the voluntary employee turnover remains high for both software and IT workers, as shown in Figure 2.

Technology skills shortages are ranked the second biggest people risks in the UK and fourth globally.^[5] As innovation is driven by talent, if you are unable to attract or retain employees with the right skill set you will inevitably fail to meet your potential for growth and possibly fall behind your competitors as AI is adopted across industries.

Comptryx is Mercer’s proprietary workforce metrics and remuneration benchmarking platform for the technology industry. It has all of the data required to maintain a competitive advantage in the market. The information is compiled from more than [NW1] 700 technology organizations and provides data from over 120 countries [NW2]. The published data is updated on a quarterly basis to ensure that your decisions are supported by the latest industry insights.

As well as access to the Comptryx data, our consultants are on hand to help you make sense of it all, helping you to create strategies that will deliver the best possible business outcomes.

Figure 3a and 3b shows data from Comptryx’s Q3 2024 update and highlights how base wage and wage inflation differs between selected markets across Eastern and Western Europe. We can see that base salaries for professional level workers in the research and design function of technology businesses are higher in Western Europe, wage inflation in Eastern Europe is significantly higher. This is due to the emergence of technology in Eastern European and the higher demand for talent. It is worth highlighting here that current pay in Romania is already on par with the Spanish and Swedish markets, how long will it be before the rest of the region follows suit? With current wage inflation between 25% and 41% it may not be long.

Compensation isn’t all about base pay, there are many ways to incentivize potential employees to join your organization and retain the talented staff you have. We understand what employees in the technology sector value and can help you craft a package to meet those demands.

Our data, insights and strategic advice can help you formulate a plan to take you from where you are currently to where you’d like to be. Do you want to know what others are offering, and more importantly, if it is working? We can give you the data you need to make informed decisions around additional benefits, the four-day work week, working from home to hybrid working models and more.