The start of 2023 was clouded by fears of inflation and a possible recession, the lingering effects of the pandemic, and the rise and fall of crypto – most of which contributed to hiring slowdowns or layoffs by several tech companies. Despite this, the tech job market remains strong, with salaries on the rise and tech unemployment rates at near record lows – with some sectors reaching 0%, according to Motion Recruitment’s 2023 Tech Salary Guide.
With a staggering 49% increase in tech job postings in the first seven months of 2022 and the number of unfilled tech positions growing, companies are setting aside more budget for hiring developers. The demand for tech talent remains unchanged from the past few years and is proving to be resilient to larger market conditions, making companies scramble for innovative solutions to build affordable, high-quality tech teams.
In the current climate of uncertainty, organizations are expected to rely heavily on digital infrastructure – such as automation, AI, and industry cloud platforms (that combine SaaS, PaaS and IaaS). These will become core to optimizing operations, scaling productivity, and accelerating customer engagement and opportunities. However, 97% of IT leaders agree that it will take longer than expected for digital transformation because of the widespread staff shortages in the tech industry.
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.
1. Tech jobs and salaries continue upward trend despite uncertainties
The tech industry remains a job candidate's market, with tech job salaries increasing 6.7% in the first half of 2022, a bigger jump than a year ago. Some occupations have seen salaries go up by as much as 30% year over year, according to the Tech Salary guide.
This trend is expected to stay in 2023, with over a quarter of employers wanting to hire up to 50 tech roles, and 35% seeking more than 50 developers. Supply, however, rose only 2.5% in 2022, below the estimated 4%.
This trend has been in the making for the last couple of years. The rapid adoption of remote work during the pandemic and booming e-commerce accelerated the need for digital transformation, spurring tech companies to ramp up hiring. Amazon, Shopify, and Tesla all doubled their employee headcount between January 2020 and December 2021, and several employers boosted the salary and benefits on offer to attract talent. The ‘Great Resignation,’ which started in 2021 and continued into 2022, also contributed to the scarcity of tech talent.
Market conditions have gone the opposite way since, and tech companies have been forced to slowdown hiring or announce massive layoffs. However, CIOs still need to fill roles in areas such as cybersecurity, cloud platforms, analytics/business intelligence/data science, and project management to meet 2023 objectives.
In key function areas like data science, software engineering, and security, talent supply remains as tight or tighter than before, according to Gartner. As a result, starting salaries continue trending upward, sharply so for some positions. 58% of tech managers are adding premiums of 5-10% to starting salaries for in-demand jobs such as software development and process automation, according to Robert Half’s 2023 salary guide.
2. Tech turnover remains high
With such high demand and low supply, companies are struggling to get talent not only to interview with them, but to start a job, the Tech Salary guide reported. A job seeker, on average, had more than four interview requests in the first half of 2022, and only 70% of technical offers were accepted by candidates.
Given this environment, it comes as no surprise that the ‘Great Resignation’ continues – tech workers across North America continue to move to new positions and companies. The normalizing of remote work and virtualization of the interview process have also contributed to this trend, as it is now easier to attend interviews without having to take leave or raise suspicion with current managers.
72% of tech workers said they have considered changing jobs, and 52% admitted considering quitting at least once per month. Higher compensation, along with lack of work-life balance, came up as the topmost reasons for moving to a new position. Predictably then, a flexible work schedule was the perk most candidates were willing to trade a higher salary for, unlike in 2021, when stock and equity was the only benefit job seekers were willing to consider.
Despite economic red flags and normalization of the job market, expectations from tech workers remain high. More than half of them believe that candidates hold more power. About 90% of tech candidates say they would either start looking for a new job or try to negotiate other benefits if denied a raise.
3. Growing demand for emerging technology workers
While recession fears are forcing companies to re-think their strategies and re-evaluate their cost structure, it is also leading them to accelerate adoption of technologies which are expected to be strategic and fundamental to growth when the market turns again. These include emerging technologies such as AI and machine learning and the metaverse. Emerging tech job postings rose 209% from 2016 to 2021, according to the Tech Salary guide.
Cloud computing continues to be a major focus in hiring, as remote work has cemented its place in the new business environment amid continuing aftershocks of COVID-19. Worldwide, spending on public cloud services by consumers is projected to reach almost $600 billion in 2023. Furthermore, it is estimated that enterprise IT spending on public cloud computing will surpass spending on traditional IT by 2025. This is creating large scale demand for cloud professionals as well as generating opportunities in allied areas.
For instance, with the large-scale migration to cloud, there are companies new to the space that might not be spending their money as efficiently as possible, with as much as 32% of cloud spending estimated to be going waste. Businesses can build out FinOps (Financial and Operations) teams to ensure that cloud decisions are data-driven to keep costs down.
Also, as growing adoption of cloud computing makes information easier to communicate, it also adds points of failure and security concerns. This is one of the many trends making cybersecurity a highly sought-after capability for employers and tech professionals to acquire.
Companies are also having trouble filling strategic roles such as help desk personnel, project managers who know agile methodology, and technical developers. Even with the hiring slowdown, companies are setting aside more budget for hiring developers, signaling the continuing demand and resilience of tech talent needs.
4. Nearshore outsourcing: the solution for high-quality, affordable IT talent
As businesses strive to balance the challenge of increasing unpredictability and growing labor costs, they will need to, as Microsoft CEO Satya Nadella said when announcing layoffs, “do more with less.” This will involve improving their employee experience, re-thinking hiring strategies, and more importantly, finding a strategic approach to alleviate the talent gap.
More than 80% of respondents in Everest Group’s 2023 Key Issues survey said they are looking at outsourcing as a reliable, cost-effective, one-stop means of accessing quality tech talent. They also expect their investments in IT services and BPO outsourcing to stay the same or increase in 2023 over 2022.
Top nearshore locations like Costa Rica and Colombia have invested heavily into becoming technology hubs and developing tech talent. The high literacy rate, large talent pool, and strong investment and innovation ecosystem have made both countries strong contenders for the title of Silicon Valley of Latin America. Several tech giants and global brands such as Microsoft, Apple, Johnson & Johnson, and Amazon have built a large presence in these countries.
U.S. businesses can realize the value of scalable, nearshore development teams with up to 70% labor arbitrage compared to onshore teams.
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.