Just a few years ago, there was a major disparity between the average pay rate for IT professionals in the U.S. and other parts of the world, such as India. This economic environment made it possible for many companies to outsource their tech projects to overseas companies for a price that was significantly less than what they would pay local talent.
But recent months have seen a significant shift, as developers and IT professionals in India and other regions of the world have started earning a wage that’s comparable to their North American developer and IT expert counterparts. As a result, the tech industry has seen a major jump in competitiveness and overall demand.
[bctt tweet=”According to U.S. News, the software development field will see 19 percent growth – that’s 135,500 new jobs – by 2024.” username=”iTechUS”]
According to U.S. News, the software development field will see 19 percent growth – that’s 135,500 new jobs – by 2024. That’s just in the United States; hundreds of thousands of additional positions will be added globally in the coming decade. What’s more, the tech industry has very rapid turnover, with many developers and IT managers staying on board with a company for just a year or two.
The result is a hyper-competitive tech sector that has left many company leaders wondering whether they’re offering fair, competitive pay for IT professionals and developers. As in most fields, you get what you pay for. If you’re offering a less-than-competitive pay rate, there is a good chance that you won’t get job candidates as experienced and skilled as you would with a higher wage.
[bctt tweet=”A lower-than-average pay rate can actually cost far more than you save.” username=”iTechUS”]
A lower-than-average pay rate can actually cost far more than you save. This can have a fairly significant impact on your bottom line, especially when you consider that underpaid talent is less likely to stay with your company over the long term. According to DevSkiller, the cost of recruitment for a single position can top $31,000, and lost productivity over the course of the 43 days (on average) that it takes to find a new tech professional can easily surpass $33,000.
How Do I Know if I’m Offering Competitive Pay for IT Professionals and Developers?
[bctt tweet=”It’s crucial that you compare your pay rate to the rate for similar positions, which require a similar skill set and experience level.” username=”iTechUS”]
Research is essential if you’re attempting to determine what figure constitutes a competitive pay rate. It’s crucial that you compare your pay rate to the rate for similar positions, which require a similar skill set and experience level.
Location also plays a major role in determining what constitutes a competitive pay rate. Therefore, you’ll need to investigate this issue on a regional level too. The cost of hiring an IT professional in City A may be significantly less than what you would expect to pay in City B, which may have a much higher cost of living.
You can also gain some great insight from the prospective candidates. Your employment application should include a line for “desired salary.” This gives you a feel for what the talent believes would be a fair pay rate. Of course, there will be some variation depending upon experience and skill set, but enquiring about desired salary can generate some very useful data.
Pay Rates for Permanent vs Temporary IT Staff
As you research tech industry pay rates in your region, you’ll need to be certain that you’re examining the same type of position in terms of the timeframe. It’s unwise to compare pay rates for a permanent position to a temporary position, as there are some significant variables, including:
- The cost of accommodations for temporary talent;
- The cost of travel for temporary staff;
- The cost of health insurance for permanent staff;
- The cost of paid vacations and paid sick days for long-term employees; and
- The cost of the company’s 401K contributions for permanent talent.
There are some very different considerations when comparing the going rate for temporary versus permanent IT staff and developers. It’s important that you acknowledge this differential when evaluating pay rate.
Your comparison should also account for onsite staff versus remote staff. Workers who are expected to work onsite tend to earn a bit more due to the time and cost associated with commuting, whereas remote talent can be happy earning a bit less since they don’t incur costs associated with a commute.
Accounting for Other Variables When Hiring IT Staff
Many companies believe they’re offering a competitive pay rate for IT staff and developers, but in reality, they’re on the low end of the wage spectrum. How could this happen? Well, it’s actually a bit more common than you may realize.
As iTech CEO Kishore Khandavalli explains, many companies turn to recruiters and IT staffing firms when hiring tech talent, but they can end up in a situation where they fail to appreciate the real cost of hiring a developer or IT expert.
“The company may be paying $100 per hour and they may assume that the talent is receiving $75 per hour. but it’s possible that the recruiting company could take a larger-than-expected piece of the pie. So the talent may only be receiving $40 per hour, which is far less competitive. For this reason, it’s critical that you, as a company, ask questions and determine precisely how much the talent is receiving,” Khandavalli explained.
Ensuring that your company offers a competitive pay rate to IT staff and developers can actually lead to significant savings in the long term, as you’ll see greater productivity, improved tech team morale and a higher quality of work. Finding the right team members can be a challenge, but that’s where iTech can assist, as we specialize in helping companies find IT staff who will mesh well with your company and meet your needs.