Tech workers winded?

Does less flexible pay raise prices?

The tech workforce may be disappointed, but companies in the industry are facing pressure on margins, and their exits are closing in. Due to the upheaval following the pandemic, workers are getting higher-than-usual hikes and promotions. However, IT companies have warned of a headwind ahead—high inflation and a slowdown in the US. As sectors such as startups and other internet companies slow down on recruitment due to financial constraints, companies are taking a calculated risk, knowing that the middle and top ranks will have fewer exits.

What are the salary costs of IT companies?

About 60-70% of high tech firms’ expenses go to salaries, followed by infrastructure and travel expenses. This year, companies have released hikes and promotions, but the variable payment directly related to the business every quarter has had an impact. Companies can adjust that rate because holding back hikes and promotions leads to more exits, and variable pay could change if business improves over the next few quarters. Recruiters point out that tech companies don’t deny walkouts, but a delay or 70% layoff isn’t a complete wash.

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What is driving the increase in labor costs in the technology sector?

IT hiring has increased dramatically as businesses rush to digitize their processes. Tech companies have seen record highs, and 60-70% salary increases have become common. Companies have been forced to release higher-than-normal hikes to retain workers, impacting margins. Over the years, thousands of graduates have been unionized, raising their wages and raising their costs.

Why are career choices down?

Prospective workers are now left with a few choices among the startups, technology services and Internet sectors. The startup segment is steadily stagnating as funding from global private equity and venture capital firms dries up. In the past, a tech worker could choose between a typical IT company and a startup with lots of stock and bonuses. For the specialist, the path to global technology companies such as Microsoft, Apple, Google has become more difficult as they are also in a precarious employment situation.

Could Tech Wages Fall Next?

Hiring frenzy may increase over the next couple of quarters, but those in specialist roles will always be in demand and can command higher salaries. IT companies have also saved on infrastructure costs while working in-house. Travel has not yet reached pre-pandemic levels among office visitors. So companies may still have some headroom for wage increases. However, rookies and those on the bench may have reason to worry if big deals don’t materialize in the next two quarters.

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