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Wage inflation in technology is putting pressure on companies

Wage inflation in the technology sector is accelerating, forcing companies to increase compensation for key positions by 20% or more as they fight for a limited number of workers skilled in areas such as cloud computing and data science.

There is no single source of data on all technology jobs, but a number of market analysts and executives are clear that the demand for labor in the technology sector is growing. During the first quarter, U.S. employers posted 1.1 million technology jobs, up 43 percent from a year earlier, according to information technology trading group CompTIA.

Since the pandemic began, the demand for workers to perform these jobs has grown, forcing companies to turn to remote work and other digital initiatives. Inflation at a maximum of 40 years and the war in Ukraine, which disrupts technical and outsourcing centers in Europe, are also pushing for increased compensation for technicians.

The most sought-after technology roles include cloud computing architects, data scientists and developers, and machine learning experts. Mondo recruitment company, Addison Group, said that at the top of the compensation range, cloud architects between 2020 and this year increased the average salary by 25%, while the average salary of software engineers increased by 11% over the same period .

The rising cost of hiring and retaining the best technical talent creates challenges for information directors and other technical leaders and has even attracted the attention of CEOs.

“It’s stunning,” said Michael Burns, co-founder and CEO of iDEAL Semiconductor Devices and managing director of venture and private equity at Murray Hill Group. Mr Burns said wage increases in the technology sector could reach 20%, and in hot markets such as Austin, Texas, they could reach 30%.

According to Scott Spradley, executive vice president and chief technology officer and automation at Tyson Foods, CIOs and other technical executives are under pressure to persuade board members to approve higher costs for technical salaries that may exceed other workers’ salaries. places. Inc.

Given the busy labor market, the cost of securing and maintaining IT operations is rising, and the cost of investing in innovation is growing even faster, he said.

Wage pressures are also being felt in Europe, according to Vinita Jaina, founder and CEO of Egnyte Inc. The file-sharing company employs 250 people in Poland, where the average wage growth is 50%, and some workers have doubled their salaries in the past. year, according to Mr. Jaina. “And they were not low-paid people,” he said.

Wage growth is not limited to veteran technologists. Jai Bhagat, software engineer at HashiCorp,

The San Francisco-based enterprise software company said some hiring managers in the technology industry are offering recent graduates compensation packages in the six-figure range, compared to starting salaries of $ 70,000 to $ 85,000 a few years ago.

A small increase in technological compensation, although becoming more common, is not universal. AT&T Inc.

A spokesman said in an email that the salary increase in the organization of technology services of the company averaged 5% this year. Cisco systems Inc.

The email says the average salary for software engineers in the U.S. rose from 5% to 10% last year.

Write Suman Bhattacharyya at Suman.Bhattacharyya@wsj.com

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Wage inflation in technology is putting pressure on companies

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