Resource Center IT Salary Trends CIOs Need to Know in 2023

IT Salary Trends CIOs Need to Know in 2023

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25 Year Anniversary

4 IT salary trends CIOs need to know in 2022The impact of COVID-19 on the tech labor force can’t be overstated. Already experiencing a 70% talent gap by the end of 2020, the IT job market experienced growth unlike any other industry in 2021 – driving record average salary increases of 9.5% across major tech hubs and 6.2% overall, according to Motion Recruitment’s 2022 Tech Salary Guide.


And as unparalleled demand and competition for tech talent continue in 2023 – and the nation’s severe IT labor shortage shows no sign of abating - companies are scrambling for innovative solutions to building affordable, high-quality tech teams.

Organizations expect to rely heavily on digital infrastructure in 2023, as automation, cloud computing, and other software become even more essential to business operations. But in the post-pandemic era, North American tech talent is aware they have the upper hand – and how much compensation and perks they can demand from their companies.

Understanding the IT salary trends shaping today’s IT labor market helps CIOs think strategically about the future of their departments. Here are tech talent trends to watch in 2023 – and the best solution for recruiting and retaining the high-quality resources you need to drive innovation, digital transformation, and growth for your business.

IT talent costs surge amidst ‘exceptionally strong’ job growth

With accelerated tech adoption and expansion, nearly 70% of enterprises planned to hire IT talent in 2021, according to the Tech Salary Guide. But the guide also predicted the labor shortage would force half to hire a developer mismatched to the skill set they want.

Only 40% of organizations were able to hire the tech talent they needed in 2020, the guide reports.

The tech unemployment rate dropped to 1.7% in January 2022, even as the national number ticked up to 4%. The U.S. tech sector reported 4.79 million jobs in 2021, exceeding its all-time peak of 4.76 million before the pandemic in March 2020, according to the Tech Salary Guide.

That momentum continues in 2023, with CompTIA reporting “an exceptionally strong start to the year for tech employment” and 178,000 new jobs in January.

Not surprisingly, 96% of tech leaders say that finding strong job candidates is challenging, according to the Robert Half 2022 Salary Guide. Desirable talent on and off the market is bombarded by potential employers, fielding multiple job offers with high salaries from the start – especially if they boast specialized skills.

With such high demand, companies are also finding that basing salary on location instead of market value can cause them to lose out on top talent - despite a 357% increase in remote IT roles after COVID, the Tech Salary Guide cautioned.

Surging tech labor costs could not come at a worse time for companies looking to fast-track digital transformation. With a firm understanding of their value, Robert Half reports that even existing IT staff are demanding more compensation, with 46% planning to ask for a raise this year.

More than 30% would consider walking without one.

In a telling reflection of the market, Amazon recently announced plans to more than double its maximum base pay from $160,000 to $350,000 for tech employees as part of an effort to recruit top talent and retain existing staff.

 How employees feel about their current IT salarySource: Robert Half Salary Guide

Tech turnover reaches an all-time high

Turnover is another serious issue – reaching 13.5% for tech roles, the highest of any industry, the Tech Salary Guide reports. With so much opportunity on the market, a record 4.5 million Americans quit their jobs in November amidst what’s been dubbed “The Great Resignation.”

Another 72% of tech professionals are considering leaving their jobs this year, the guide states. Burnout is also driving IT’s all-time turnover high, as workers take on more to compensate for the labor shortage.

Already concerning before the pandemic, Robert Half reports that 80% of IT teams are experiencing higher turnover. And as salaries skyrocket, IT leaders who lose employees are spending a whopping 50-250% more to replace them, the Tech Salary Guide reports.

As small and large companies alike aggressively compete for limited IT talent, sign-on bonuses are being offered nearly 5x more, according to the Tech Salary Guide. Nearly 70% of HR leaders say they have increased the number of in-house staff eligible for cash bonuses as well.

Other new perks designed to win the war for IT talent drive costs even higher, including work and schedule flexibility, additional or unlimited time off, cash incentives, and new benefits that address well-being, dependent care, and more.

Even the hiring process has become more difficult, as in-demand candidates consider multiple rounds a red flag, the Tech Salary Guide reports.

Need IT talent in these in-demand areas? Expect to pay top dollar

So, what IT roles can hire managers expect to experience the stiffest competition for talent?

Hiring is strong in digital transformation areas like cloud services, automation, AI, and machine learning. Interpersonal skills that can help organizations successfully transition to a more automated workplace make candidates even more desirable.

Cybersecurity and data privacy expertise are in high demand, as enterprises aggressively seek professionals to protect company and customer data amidst surging cyber-risks.

Organizations looking to hire software and application developers can also expect an extremely competitive market. In addition, demand is surging for candidates with business intelligence and data analysis skills as companies expand the use of technologies like AI to automate processes, evaluate past trends, and make informed decisions.

The rise of the hybrid workforce is driving demand for professionals skilled in virtual team activities and collaboration tools. Companies are also looking for DevOps engineers to help provision and manage IT infrastructure and architecture.

Help desk and user support expertise is another growth area. Companies need quality support professionals who can assist remote workers and customers.

 Hottest jobs in tech - 2022Source: Robert Half Salary Guide

Organizations looking to hire these roles can expect to pay top dollar. For instance, Robert Half reports that the average security analyst salary earns $143,250 in 2022 but top candidates can command as high as $162,500. The average salary for a cloud/network architect is $153,750, but more than $180,000 is not unusual.

And while a software engineer can expect an average of $124,500, some earn as much as $147,250. Those numbers also go up or down depending on location: for instance, salaries for tech employees in Manhattan are typically 40.5% higher.

As demand increases for certain skill sets, some specialties are also seeing larger pay hikes than others:

Fastest growing IT salary trendsSource: Dice 2021 Tech Job Report from Motion Recruitment Salary Guide

Nearshore outsourcing: the solution for high-quality, affordable IT talent

Gartner asserts that the IT labor shortage stands as the biggest adoption barrier to 64% of emerging technologies. As organizations struggle to find resources and mitigate out-of-control labor costs, recruiting and retaining talent is becoming less transactional – and more about finding a strategic approach to alleviate the gap.

Nearly 50% of IT leaders have turned to outsourcing as a reliable, cost-effective, one-stop means of accessing quality tech talent.

Natives SP DevOps

Top nearshore locations like Costa Rica and Colombia have invested heavily into becoming technology hubs and developing tech talent. For instance, with two of the most prominent tech universities in the region, Costa Rican nearshore providers benefit from a constant flow of skilled IT graduates with cutting-edge expertise that expands the country’s digital labor force by 17% annually.

Costa Rica is so proficient in tech it’s been recognized as the Silicon Valley of Latin America. More than 350 multinational organizations maintain operations in the country, including tech giants like AWS and Microsoft.

Tapping into this highly proficient IT talent pool enables enterprises to achieve significant cost savings without sacrificing quality, delivering an average of 30-50% labor arbitrage compared to IT resources in the U.S.

Nearshoring to Latin America also resolves many pain points in Asian-based offshore solutions that undercut the speed, synergies, and responsiveness essential to IT. That includes the difficulty of doing business across faraway time zones, language and cultural barriers, and a more competitive labor market with high turnover.

Outsourcing to a reputable nearshore IT provider holds the key to winning the tech talent war – delivering skilled professionals ready to serve customers, support a remote workforce, and enable ever-evolving technology operations.

3/17/22 5:00 PM

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Alvaro Prieto

Written by

Alvaro Prieto

Alvaro is one of Auxis’ founders and leads our IT Services Practice, including both Infrastructure Transformation and Application Integration & Development. He brings over 25 years of technology and business experience, helping CIOs across multiple industries achieve Peak Performance in their IT operations through the design and implementation of agile operating models, processes and technologies. Some of his specialties include IT Service Management (Service Catalogs, ITIL, SLAs, Financial Management), Cloud and Data Center Transformation, large Software Implementations, among many others.

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