A recent study by fintech startup Carta found that salaries for employees of tech startups around Seattle have now reached levels of those in San Francisco, and are considered particularly high.
“With remote work now a part of everyday life, founders are faced with an important decision: should they adapt remuneration to the company’s location?” Carta asks for report. And the answer is clear: “The vast majority (84 percent) of companies take the company’s location into account when deciding on compensation packages.” In 2019, about 35 percent of new employees were located in a state other than the company’s headquarters. According to Carta, this number will increase to 62 percent by 2022.
Startups with lower market valuations are more likely to adjust compensation based on location. According to Carta, nearly a quarter of companies valued at more than $500 million choose to pay their employees the same, regardless of their current location. “In Carta’s database of venture-funded startups, we are seeing average compensation in many US cities moving toward San Francisco’s compensation rates,” said Peter Walker, Carta’s director of insights and report author.
Because the research focuses on startups, it’s less surprising that salaries are more uniform nationally, according to Amy Stewart, senior content marketing manager at PayScale, a provider of cloud compensation management software. “Tech startups are smaller and more agile, and there’s a lot of incentive for them to find ways to cut costs and attract top talent,” Stewart said. IT professionals in particular will be attracted by the ability to work flexibly and from home.
In its 2021 State of Remote Work report, Payscale found that an average of 43 percent of employees expect employers to offer flexible, remote work once the pandemic ends. “That number rises to 75 percent among marketing and advertising professionals and to about 71 percent among IT professionals,” Stewart said.
PayScale research also found that fully remote workers earn more than office workers and formerly have higher job satisfaction and retention rates than non-remote employees. Earlier this year, another PayScale survey found that 73 percent of companies feared remote work would make it harder to compete for talent. However, these fears did not come true, as in a second survey conducted in June, only 47 per cent of the companies surveyed had complained of difficulties in recruitment.
The Carta study recognizes that the number of companies offering the same pay for some roles (mainly engineering) regardless of location is still small. However, firms that align salaries geographically often do so “as a perk to retain employees who can work from less expensive locations or as a strategy to attract new hires,” Carta said. Told.
Tony Guadagni, senior principal of human resources at market research firm Gartner, notes that the trend towards flexible working has increased the number of companies recruiting talent based on their skills, compared to proximity to an office location. As part of this trend, Guadagni observed that national wage parity is well underway, but slow. “There will be an equalization of pay, at least from now on. But I don’t expect there to be a completely national or one market value for all jobs, regardless of geography.”
According to Guadagni, the fact is that the IT job market is most in demand and employers are ready to hire employees from distant regions and pay them average wages. However: “Finding the right total compensation offering in a new market can be a difficult process,” explains the Gartner HR expert. (h)
- Who earns how much in IT?
For the current assessment, Compensation Partner’s remuneration experts examined 12,225 IT data records from a total of 19 IT specialist functions and 12 IT management functions.
- IT Consulting
Specialists in consultation, analysis and conception receive an annual gross income of approximately 75,700 euros.
- IT security
With a gross of about 69,900 euros per year, IT security specialists are among the best paid IT specialists.
- software development
Developers earn an average of 68,487 euros in the mobile sector and 66,061 euros in the backend.
- SAP and Frontend Development
SAP developers are around 60,000 euros and front end software developers are less than 57,300 euros.
- IT Project Management,…
… SAP Consultants and Scrum Masters are better paid: the annual salary here is somewhere between 64,000 and 63,000 Euros.
- IT Officer…
… traditionally receive higher salaries in the six-figure range. Even in small companies with less than 100 employees, executives earn around 103,500 euros.
- In corporations…
… With over 1,000 employees, IT managers earn a salary of approximately 142,900 Euros.
- role of education
Employees with apprenticeships receive around EUR 51,300, with a bachelor’s degree 54,800 EUR, with a master’s degree 69,300 EUR and with a doctorate it is around EUR 81,800.
- role of work experience
Young professionals in IT earn a starting salary of around EUR 51,500 in the first two years. With 3 to 5 years of experience, they get around 54,300 Euros. Anyone working in the IT industry for more than 13 years receives an annual gross salary of 66,100 Euros.
- Philip Birbach, Managing Director of Compensation Partners
“The year 2021 will also continue to be shaped by the Corona crisis for IT workers. Nevertheless, competition will result in slightly positive wage growth, which we expect to see a wage increase of around 1.8 percent.”
This article is based on contributions from Computerworld, our US partner publication.