Were 2023 Tech Talent Earnings on the Rise?

In 2023, the global tech industry witnessed a mixed landscape in terms of tech talent earnings. The year was marked by a robust demand for skilled technology professionals, which was reflected in the decrease in tech unemployment rates. However, this period also saw notable fluctuations in tech salaries, influenced by various economic factors and changes in work environments and policies​​​​.

A significant trend observed was the growing preference for remote work, with a substantial portion of the tech workforce opting for or continuing with remote work arrangements. This shift was not just a response to the pandemic but also indicative of the changing preferences and expectations of the tech workforce. The trend towards remote work had a notable impact on salary structures and the overall job market dynamics in the tech industry​​.

Overall, the tech industry's salary trends and job market conditions in 2023 highlighted its dynamic and adaptive nature. Despite the economic challenges and changing work paradigms, the tech sector continued to offer significant opportunities for growth and innovation, making it an attractive field for professionals worldwide.

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Key Findings

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Awareness of Global Pay Trends

How aware are you of the current global pay trends in the tech sector?

Awareness of global pay trends in the tech sector is crucial, especially in a rapidly evolving industry. The average tech salary in the United States rose to $111,348 in 2022, a 2.3% increase from the previous year​​​​. This growth is notable given the economic challenges facing many tech companies.

Globally, the median annual wage for tech workers in 2023 was $103,430, reflecting the industry's resilience and demand​​. Remote work has significantly influenced salary trends, with a 140% increase in remote workers since 2005, growing almost 10 times faster than the overall workforce​​.

However, a gender pay gap persists, with women in tech earning 81.1% of what male counterparts earn​​. Geographically, tech salaries vary, with the highest earnings reported in the US, Switzerland, and Australia​​. Company size also impacts pay, where larger firms often offer higher salaries, but smaller startups might provide lucrative equity options​​.

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Were there any significant changes in tech sector salaries over the past year?

In 2023, the tech sector experienced notable changes in salary trends across different regions. In the United States, tech salaries have seen the largest year-over-year decline in the past five years. Despite this decline, the demand for experienced talent remains strong, and engineering managers continue to command the highest salaries. Specialized skills in AI, security, data, and machine learning are particularly in demand​​​​.

Companies are adjusting their strategies in response to these trends. Some are focusing on lower cost-of-living markets and opening new offices for in-person collaboration, balancing against the trend of fully remote teams​​. This shift is affecting the distribution of remote work opportunities, with large and midsize companies reducing remote options for new positions, while smaller businesses are increasing them. Experienced candidates still show a preference for remote roles, reflecting the ongoing impact of remote work on the tech job market​​.

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Experience with Salary Negotiations

Have you negotiated your salary in the past year?

In 2023, the landscape of salary negotiation in the tech sector has been influenced by several key factors. According to a report from Janco Associates, IT professionals could expect raises of up to 8%, exceeding inflation. This projection was attributed to the ongoing shortage of qualified IT professionals, improved economic conditions, and inflation pressures​​​​. The increasing investment in IT, driven by the pandemic's impact on remote work and the rise in cyberattacks, also contributed to this trend​​.

However, the balance of power in compensation discussions has shifted somewhat in favor of employers, influenced by a tumultuous business environment and recent high-profile layoffs in the tech sector​​. Despite the addition of 190,000 IT positions over the past year, a significant gap remains between available positions and qualified workers, leading to salary compression where new hires often receive higher salaries than existing employees in the same roles​​.

Furthermore, trends in mid-sized enterprises differ from large enterprises. In mid-sized companies, attrition rates and salary levels are rising faster, highlighting a dynamic shift in the tech job market​​.

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What factors influenced salary negotiations the most?

In 2023, salary negotiations in the tech industry are influenced by various factors. Leverage is a key element, determined by the availability of alternative job offers and how they compare to the current offer​​. Researching market compensation rates is crucial, with platforms like Pave, Glassdoor, or Salary.com providing valuable data. In some regions like California and New York, compensation bands are required to be published with job postings, offering more transparency​​.

Creating a "thrill number," which is an ideal salary based on financial needs and market research, is a common strategy. This number is often set at 30% higher than the market rate​​. Moreover, having alternative job offers can significantly strengthen one's position in negotiations​​.

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Impact of Skill Development on Earnings

How has upskilling or reskilling impacted earnings in the tech sector?

Upskilling and reskilling have become increasingly crucial in the tech sector, significantly impacting earnings and career progression. According to the World Economic Forum's Future of Jobs Report 2023, six out of 10 workers will require upskilling or reskilling by 2027, yet only half are expected to have access to the necessary resources​​. This need is driven by the rapid obsolescence of technical skills; the average half-life of a skill in tech is now under 5 years, and for some areas, it can be as little as 2.5 years​​.

The skills gap is a growing concern, with 40% of business leaders reporting that it has worsened in the past year. As a result, there's a trend towards hiring based on skills rather than traditional qualifications, as evidenced by a 21% increase in LinkedIn job postings seeking specific skills over formal qualifications​​​​.

Companies adopting a skills-first approach are finding success; Deloitte reports that such companies are 107% more likely to effectively match talent to current business needs and 98% more likely to retain top performers​​.

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What specific skills have contributed most to salary increases?

In 2023, certain tech skills have significantly contributed to salary increases due to high demand and scarcity. Hired’s 2023 State of Tech Salaries report identifies AI as a key area driving salary growth. The demand for AI professionals has seen a 21% year-over-year increase, with companies paying premiums to secure skilled professionals in this space​​. In fact, 59% of employers surveyed believe that employees skilled in AI are more valuable​​.

Emerging technology skills, particularly AI, are increasingly sought after, with 23% of all tech job postings in August 2023 including positions requiring these skills. Within this category, 37% of job descriptions listed a preference for AI skills​​. Python, Java, and AWS are the top three skills requested by employers for engineering roles showing significant growth in demand from 2022 to mid-2023​​.

The report also highlights that hard-to-find skills lead to higher pay, with 76% of surveyed companies indicating they offer more for niche skill sets. Additionally, years of experience with a specific skill was a significant factor, with 57% response rate​​. The average total annual compensation for AI roles rose by 16% from 2022 to 2023, further underscoring the lucrative nature of these skills​​.

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Role of Location in Salary Trends

How does current location affect earnings in the tech sector?

Your current location significantly affects your earnings in the tech sector. A comprehensive overview of global tech salaries in 2023 reveals notable disparities across different countries and regions. For instance, Switzerland leads with an average salary of $133,326 across all tech roles. The USA and Australia follow closely, offering average salaries of $114,772 and $102,423, respectively. In contrast, countries like Italy, Netherlands, Spain, Belgium, and France are on the lower end of the spectrum, offering less than $50,000 on average​​.

The tech industry is experiencing a global increase in salaries, particularly for professionals with over three years of experience. However, local salaries for junior-level candidates are not rising as rapidly, indicating salary pressures and a preference for more experienced talent​​. Additionally, remote work continues to reshape salary structures. In 2022, remote roles paid $3,000 more on average globally compared to local salaries, with the average remote salary reaching $162,950. This shift highlights the growing preference for remote work and its impact on compensation trends​​.

Moreover, when considering the cost of living, the actual value of these salaries can vary significantly. For instance, the highest earning power in terms of cost of living adjusted salaries was in Atlanta. An average tech salary of $176,000 in San Francisco would be equivalent to making $223,729 in Atlanta in 2022, demonstrating how location and living expenses play a crucial role in the real value of tech salaries​​.

These findings underscore the importance of location in determining tech sector earnings. While tech salaries are generally on the rise globally, the specific location, cost of living, and the trend towards remote work significantly influence the actual earnings and benefits in the tech industry.

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Have you considered relocating for better pay in the tech industry?

Relocating for better pay in the tech industry is a decision influenced by various factors, including role, location, and work model. In North America, tech roles like Technology Management and IT Sales and Marketing offer average annual salaries of $174,181 and $156,471, respectively. Cloud Computing and Cyber Security roles also command high salaries, averaging around $144,533 and $132,163​​.

Location-wise, average annual tech salaries vary significantly across the U.S. For instance, tech professionals in Washington earn an average of $124,000, while those in California earn $122,200. Salaries in other states like New York and Massachusetts are also above $100,000​​.

The field of cloud computing, in particular, shows a high salary trend, with an average salary of around $182,000 in 2022, marking a 4.3% increase from the previous year. Interestingly, hybrid workers in this field tend to have the highest average salary, while fully remote workers have slightly lower salaries, and in-office workers have the lowest​​.

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Perceptions of Fair Compensation

Do you feel you are fairly compensated for your role in the tech industry?

Job satisfaction in the tech industry often hinges on several factors, including compensation, work-life balance, job security, and career advancement opportunities. Fair compensation is a critical factor, and the North America IT Salary Survey 2023 highlights that median salaries for IT professionals in large enterprises are over $102,000, with a 5.61% increase in salaries for IT professionals in the past four quarters​​.

In addition to monetary compensation, job satisfaction in tech also involves non-monetary aspects like work flexibility, company culture, and opportunities for skill development and career progression. The shift towards remote work and flexible working arrangements has also played a significant role in shaping job satisfaction levels in recent years.

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What factors should be considered when determining fair compensation in tech roles?

Determining fair compensation in tech roles in 2023 involves a comprehensive approach that goes beyond traditional metrics like base salaries and bonuses. The modern work environment, influenced by remote work and the gig economy, requires a broader view of compensation, including both monetary and non-monetary aspects​​.

Monetary Rewards: These include base salaries, bonuses, and incentives, and stock options. Performance-based compensation metrics, which quantify and reward achievements and contributions, are increasingly important. They include individual performance metrics like KPIs, personal development goals, as well as team and company performance metrics such as team goals, revenue growth, and customer success metrics​​.

Non-Monetary Rewards: Benefits like health insurance, retirement plans, vacation days, flexible work arrangements, professional development opportunities, and work-life balance are key components. The well-being of employees is also a crucial factor, encompassing physical, mental, and emotional health metrics, such as healthcare utilization, stress levels, and work-life balance metrics​​.

Diversity, Equity, and Inclusion (DEI) Metrics: These involve ensuring equitable treatment and representation across various groups within an organization. Metrics include pay equity, resource allocation, employee engagement, and retention rates, which are essential for creating a fair and inclusive workplace​​.

Future-Forward Metrics: Utilizing technology, such as predictive analytics and AI-driven analytics, for personalized compensation packages and adjusting variable compensation elements based on real-time performance indicators are becoming increasingly relevant​​.

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Differences in Pay by Industry Segment

Have you noticed differences in pay trends between different segments of the tech industry (e.g., software development, IT support, data science)?

Pay trends in different segments of the tech industry, such as software development, IT support, and data science, show notable variations. In software development, the salaries differ based on specialization. For instance, front-end developers have a median yearly salary of $107,454, with a range from $87,045 to $140,000. Back-end developers earn a median of $118,501, ranging from $96,637 to $155,000. Full-stack developers have a median salary of $105,000, and mobile developers earn around $117,915 on average. Specializations like Python and React developers see median salaries of $123,148 and $121,129, respectively​​​​​​​​​​​​​​​​.

In IT support, the median salaries for professionals in large enterprises are over $102,000, with an average increase of 5.61% in the past year. The total mean compensation for all IT professionals rose from $95,845 to $101,323, indicating a general upward trend in salaries across the IT support sector​​.

Data science, on the other hand, shows some of the highest salaries in the tech industry. According to Glassdoor, the average base pay for data scientists in the U.S. is $146,422 a year, while PayScale reports a slightly lower average of $98,951. These figures vary with experience, with entry-level data scientists earning around $87,000, and those with 5-9 years of experience making around $113,000 on average. Senior data scientists can expect salaries over $135,000 annually​​​​​​.

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Which tech industry segments appear to have the highest earning potential currently?

The highest earning segments in the tech industry for 2023 vary, with some roles standing out for their particularly high salaries.

In IT management, roles like CEO, CIO, CTO, VP, and Director have an average salary of $164,814. Solutions architects earn an average of $155,934, while principal software engineers make around $153,288. Systems architects and cybersecurity engineers/architects have average salaries of $151,364 and $145,512, respectively. Other high-paying roles include cloud architects/engineers, program analysts/managers, product managers, DevOps engineers, and MIS managers, with salaries ranging from approximately $132,094 to $145,416​​.

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Influence of Company Size and Type on Salaries

How do you perceive the impact of company size (startups vs. large corporations) on tech salaries?

The impact of company size on tech salaries varies notably between startups and large corporations. Startups, especially in their early stages, typically offer lower salaries compared to the market average. However, this is not a uniform rule. Late-stage startups, which are more established, may offer higher compensation. For instance, developers at late-stage startups in the U.S. earn approximately 11.5% more than those at public companies. In Spain, this difference is even more pronounced, with a 14.3% higher salary in late-stage startups compared to larger firms​​.

Factors such as company funding and location also play significant roles. Well-funded startups are more likely to offer higher salaries than those with limited funding or those still bootstrapping. Additionally, company size impacts the overall compensation package. While smaller startups might have lower budgets for salaries, they often compensate with other benefits like equity or flexibility. This is particularly true in high-cost areas like Silicon Valley and New York City, where companies, regardless of their size, tend to offer higher salaries to account for the cost of living​​.

In summary, while large corporations generally provide more stable and higher salaries, startups, particularly in their later stages or with substantial funding, can offer competitive or even higher salaries. The compensation in startups is often complemented with benefits like equity and flexible work arrangements, which can be attractive to many tech professionals.

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Working for a multinational corporation versus a local company affects tech salaries?

Working for a multinational corporation (MNC) versus a local company can significantly influence tech salaries, and recent trends and statistics highlight this. In 2022, remote roles started paying $3,000 more on average compared to the previous year. Additionally, in 15 out of 17 surveyed markets, remote salaries were higher than the average local pay, marking an increase from 13 markets in the previous year​​. This indicates a growing trend where tech professionals in remote roles for MNCs are increasingly earning more than those in local companies.

In the United States, local salaries for tech roles are substantial, with the average salary for engineering management roles being around $196,000. However, for remote roles in the same field, the average salary is slightly higher at $198,000, indicating that remote roles in multinational settings might offer marginally higher compensation compared to local roles in the tech industry​​. Additionally, the cost of living significantly affects tech salaries. For instance, an average tech salary of $176,000 in the San Francisco Bay Area is equivalent to making $223,729 in Atlanta, considering the cost of living differences. In contrast, the same salary in New York, which has the highest cost of living in the U.S., is akin to earning $153,000​​.

Overall salary trends in the tech industry also reveal that a majority of tech professionals, around 60.9%, experienced a salary increase between 2021 and 2022. Only 7.5% of tech professionals saw a decrease in their salaries during this period. This general upward trend in tech salaries is a positive indicator for professionals in the industry, regardless of whether they work for a multinational or a local company​​.

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Gender and Diversity in Pay Equity

How do you perceive the state of pay equity across genders and diverse groups in the tech sector?

Gender and diversity in pay equity remain critical issues in today's workforce, with recent statistics shedding light on the persistent wage gaps across different demographics. In 2022, women in the United States earned on average 82% of what men earned. This gender pay gap has shown little change over the past two decades; in 2002, women earned 80% as much as men​​. By 2023, the uncontrolled gender pay gap (not adjusted for job type, seniority, etc.) shows women earning $0.83 for every dollar earned by men, a slight improvement from the previous year​​.

The wage gap is not uniform across all demographics. In 2023, the ratios for Hispanic and Black women were slightly higher at 85.8% and 90.7%, respectively, compared to their male counterparts. However, Asian women have the lowest figure, earning 79.2% of what Asian men earn. This highlights the multifaceted nature of the wage gap, influenced by both gender and racial/ethnic disparities​​.

The Department of Labor in the U.S. has recognized these inequities, particularly the systemic inequality faced by women, especially those of color. Initiatives and new analyses aim to address and reduce these gender and racial wage gaps. Establishing Access and Opportunity Committees and other stakeholder groups to monitor and support diversity and equity goals is part of these efforts​​.

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What steps do you think should be to address pay disparities in the tech industry?

Addressing pay disparities in the tech industry requires a comprehensive approach, combining policy, corporate responsibility, and awareness initiatives. The 2023 State of Wage Inequality in Tech report by Hired reveals significant gaps: Hispanic men, Black men, Hispanic women, and Black women earn $0.97, $0.93, $0.92, and $0.90, respectively, for every dollar earned by their white male counterparts. Conversely, Asian women and white women have seen improvements, with their earnings rising from $0.97 to $0.99 and $0.94 to $0.95, respectively, compared to white men​​.

One crucial step is addressing the expectation gap, particularly as it widens with experience. For instance, while women with 2-4 years of experience have no significant wage gap, this gap increases to $0.97 for every $1 earned by white male counterparts for those with 6-10 years of experience​​. This suggests the need for mentorship and career development programs, especially for mid-career women, to ensure they have the skills and confidence to negotiate equitable compensation.

Another vital factor is the lack of adequate resources and knowledge for women in salary negotiations. Only 25% of women feel they have sufficient knowledge and resources to request compensation in line with their market, role, and experience, compared to 39% of men​​. To bridge this gap, companies should provide salary negotiation training and transparent salary bands to ensure all employees are equipped with the necessary information to advocate for fair pay.

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Future Salary Trends and Expectations

What are the expectations for tech sector salary trends in the next few years?

The expectations for tech sector salary trends in the next few years are shaped by a combination of market demands, technological advancements, and the evolving priorities of tech professionals. In 2024, tech salaries have seen a modest increase of about 2% following the significant growth in 2022. This stabilization reflects a more normalized pace in the tech industry after a period of rapid growth. Despite this modest increase, top candidates in the tech sector remain in high demand​​.

The technology job market continues to outpace the supply of tech talent. Even amidst layoff announcements at the beginning of 2023, the tech sector maintained a steady employment market, with an unemployment rate around 2%, significantly lower than the national average. This persistent demand for tech talent suggests that competition for skilled professionals will continue to be a major factor influencing salary trends​​.

Compensation remains a top priority for technologists. In 2023, 56% of tech workers indicated that salary is the most important factor in a job offer, though job security and benefits are also key considerations. This indicates a growing emphasis on overall compensation packages, including benefits and job stability, beyond just the base salary. As the growth in the tech industry stabilizes, the focus may shift from solely salary increases to more comprehensive compensation packages that include benefits and job security​​.

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How will emerging technologies impact tech salaries in the future?

Emerging technologies, particularly artificial intelligence (AI), are expected to significantly influence tech salaries in the future. By 2025, the market value of AI is projected to reach $60 billion, reflecting the growing importance and integration of AI in various sectors​​. Currently, 35% of companies are using AI, with an additional 42% exploring its implementation. This widespread adoption, driven by 91.5% of leading businesses investing in AI, is expected to enhance customer satisfaction by 25% in organizations using AI​​.

The commitment to AI and machine learning is further emphasized by 63% of companies planning to either increase or maintain their spending in these areas in 2023. The primary drivers behind these investments include changes in business strategy, cloud migration, modernization, and adapting to cost pressures and inflation​​. Furthermore, AI technology is anticipated to create more jobs than it replaces, with an expected 12 million additional jobs created by AI innovations​​. The demand for AI specialists is also projected to rise significantly, with a need for 97 million AI industry professionals by 2025​​.

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Role of Remote Work in Salary Trends

How has the shift towards remote work affected salaries in the tech sector?

The shift towards remote work has significantly impacted salaries in the tech sector. Remote work in the tech industry has seen dramatic growth, with the number of remote workers increasing by 140% since 2005. This trend has accelerated the globalization of the workforce, as companies are more open to hiring remote workers from a global talent pool​​​​. In 2022, the "Computer & IT" category was the leading career category for fully remote jobs, with fully remote listings growing by 24% year-over-year​​.

Salaries for remote tech jobs vary widely. For example, technical support engineers in the U.S. have a national average salary of $67,326, while application developers earn an average of $80,761 annually. Software engineer positions, another popular remote role, have an average annual salary of $113,660​​. Interestingly, web developers in the U.S. have a particularly high chance of working remotely, with nearly 37% of positions advertised as such. Furthermore, web developers can earn 31% more than the industry average by working in a remote role, indicating a potential salary premium for remote positions in certain tech specializations​​.

Remote work trends suggest a shift in the tech industry's salary structure. With 33% of all new job postings in November advertised as remote, including 19% for hybrid roles and 14% for fully remote positions, the demand for remote work is evident. Managers are willing to pay workers 14% higher salaries on average to be in-office four days a week, but working remotely often leads to more job satisfaction for employees, even if it means working longer hours​​​​.

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Will remote work continue to influence tech salaries in the coming years?

The shift towards remote work is expected to continue influencing tech salaries in the coming years. Before the pandemic, there was a 7% salary growth among average tech workers, with project managers, software engineers, and data scientists being among the top earners. The pandemic accelerated the trend towards remote work, increasing the demand for technologies that support remote working, such as 5G networks and remote communication tools​​.

However, the move to remote work also brings changes in cost structures for both employers and employees. Employers need to invest in remote work tools for communication and data gathering, while employees face increased expenses for utilities and home office setups. This has led to a preference among many workers for a hybrid model, with some opting for reduced salaries in exchange for the flexibility and reduced living costs associated with remote work. Notably, tech companies in Silicon Valley that have embraced permanent remote work are considering localized compensation, which could mean up to an 18% salary cut for employees​​.

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Methodology

ClanX conducted a survey in January 2024 with 480 participants working in tech across various positions. The distribution across different types of organizations is as follows:

The survey included 20 multiple-choice questions and additional subjective questions to gain a deeper understanding of the respondents' perspectives.

This distribution maintains a greater representation from growth-stage startups and small businesses, with the total number of participants set at 480.