Talent is now a hyper competitive market and technology salaries reflect this

Technology salaries are surging, but it's a mistake to think it's just about the money. People are rational actors who respond to incentives so it is little wonder that candidates in hyper-competitive technology and digital labour market are behaving rationally and looking holistically at opportunities.

Many see it as an opportunity to accelerate their career development and reward levels. We are seeing salary uplifts of between 20 per cent – 30 per cent and upwards in these demand tech and digital skill job families. Although not commonplace, we have also seen relatively early-career technologists in areas like development and cloud being offered 50 per cent increases and sign ons.

• Subscribe to Digital Nation Australia's twice-weekly newsletter

The demand for technology talent is as hot as we have ever seen it, with little prospect of a change in the near future.

For most businesses, jumping in with both feet into the pay war is not realistic, sensible, or sustainable. Organisations will need to align their benchmarks to ensure they are in the right ballpark to compete in the market for talent, but unless they want to, and can afford to adjust their existing teams' rewards, we need to be more creative in our technology and digital talent retention strategies.

Racing to offer inflated sign-ons, and offering excessive salaries to buy-in talent only solves for the immediate fix of securing new talent, it is likely to also have a disruptive and damaging impact on the existing tech employees. With businesses having spent so much time on building up their teams skills and capability and engagement, the last thing anyone wants is one in, one out.

Creating reward disparity in a team can be dangerous, and we are all grappling with the right thing to do, but there are ways to mitigate risk. Business leaders need to focus on strengths and what they can control.

We know candidates in technology gravitate to interesting work, new technologies, skill development, so make sure you control what you can with these elements. We also really need to focus on truly investing in our people and making sure we have strong leaders to engage our people. Many of our clients are experiencing stronger retention through offering internal and externally accredited training and reskilling.

How did we get here?

Over the past decade the gap between skills we need in Australia, and what is available has widened. Our heavy reliance on immigrants with technology skills didn’t necessarily solve our talent problem, but our global, diverse technology workforce enabled us to seriously compete in the global technology ecosystem.

By the end of 2019 the demand for tech skills was already challenging and highly competitive, more and more jobs were demanding technology and digital skills from the candidate.

Then Covid arrived and Australia was caught in a double bind. Digitalisation — and therefore the demand for skills — dramatically accelerated at the very moment the borders closed and our traditional solution to the skills crunch was no longer viable.

And everyone in the world was affected the same way at the same time, so even sourcing remote capabilities was compromised.

While we have moved on from the acute phase of the crisis we still need to deal with the longer term issues in changes to consumer behaviour, through to new ways of remote hybrid working, decision rights and process evolution and the uptake of digital tools, and overall candidate/employee experience.

The challenges will be familiar to anyone looking for staff;

• Companies are still facing unprecedented demand for technology and digital skills in an already hyper competitive talent marketplace.
• Candidates understand they have many options, and are not engaging actively in the job marketplace, and they are also seeking security, interesting work, skill development, flexibility, and great leadership/culture, in addition to better incomes.
• Business is still feeling the loss of existing global talent who needed to go back home during C-19, and from closed borders and visa changes which prevented people from being able to fly in and join our tech workforce from abroad and moreover.
• And Australia has a temporary branding issue with global talent given our highly publicised and extended lockdowns.

Little wonder then that in such a perfect talent storm, salaries and contract rates in the technology and digital space have skyrocketed to unprecedented levels.  

Critical Gaps

We have a critical skill demand across all areas of technology related to platform engineering and related skills. Shortages for cloud, dev ops, data and software engineering capabilities are acute, and there are far too many jobs to fill for the available talent in the country.

The competition is fierce and with so many organisations continuing to drive their transformation efforts, optimise their cloud investments and make commercial sense of their data ecosystems, it is hardly surprising that this demand is so fierce.

No sector is without significant challenge. There are significant peaks of hiring activity in sectors like industrial and financial services.

But just when you think you see a trend another sector takes off. There is less emphasis put on what sector a tech or digital candidate works in, and more on their skills and potential capability development. The only possible exceptions to this are in healthcare and pharma.

Reskilling

Skills are important, but with a lack of available talent in the market, reskilling is a big part of any organisational strategy and talent agenda. Behavioural-based hiring has become more widely adopted and accepted approach to talent acquisition. If you take smart, curious people and give them access to the right tools, people, projects, and training, they can learn and thrive in most areas of technology. 

Outlook

We will see pay continue to increase for at least another twelve months, while the situation may harmonise somewhat, the reality is we are likely to have a demand for skills and therefore some high wage pressure for years to come. The market shows no signs of slowing down and although we should see a return to more global citizens and a mobile workforce, we need to be cognizant that we already had significant challenges pre-pandemic.

Australia’s technology market has a heavy reliance on international talent that has significantly helped us address our country's skills and capability gap in tech. The good news is that the Australian government have added further IT occupations to their Priority Migrations Skilled Occupation List. However not only are candidates globally feeling a bit risk-averse and seeking some security and predictability, but they have also seen our highly publicised and extended lockdowns and they are more hesitant than in pre-COVID times. As a country, we now have a serious rebranding/marketing exercise to do, we need to elevate Australia as an attractive place for immigrants to consider as a place of opportunity.

How can you respond?

Candidate experience is key and all businesses need to be thoughtful in curating an engaging, streamlined interview process. We need to skill our line managers to sell the organisation, what is on offer and the journey candidates can be a part of. And if we manage to secure the talent, our employee experience must match what we promised through the interview process. We can’t hire smart people and expect them to work to outdated processes or not give them access to the right tools.

Looking abroad for global talent looking to relocate and engaging with returning antipodeans is a sensible part of any talent build-out strategy here in Australia. However, the game has changed and a well thought out offering and EVP is table stakes for any hiring activities.

Many companies will leverage global talent from various tech hubs across the globe. Again this is a smart part of many strategic hiring programs, but think hard about how to support these team members in working different timezones, staying connected and engaged and if they do decide to move to Australia, how this will work.

Ensuring you have a clear sense of how you will support global talent or talent prepared to relocate is critical.

Bridget Gray is vice president, Asia Pacific Technology, Korn Ferry,