Globalisation of tech salaries: Double-edged sword or opportunity for all?

Friday, 25 November 2022 08:00
Globalisation of tech salaries: Double-edged sword or opportunity for all?

From left to right: Ashish Choudhary, CEO, SixthUp; Jaco van der Merwe, CEO, DVT; Thomas Fowler, CTO, CloudSmiths; Jacques Fouché, CEO, Inspired Testing.

The globalisation of tech salaries is changing the face of tech talent acquisition and how tech companies do business. A growing shortage of skilled workers and the rise of remote working are driving this phenomenon. At the same time, companies are no longer restricted to sourcing tech talent locally, which allows them to access a previously unexplored pool of talent. This brings with it a host of challenges and opportunities.  

Global software and technology group Dynamic Technologies operates in the tech space across Africa, the UK, Europe and the USA, and its group companies have in-depth insights into the rise and effect of tech salary globalisation. With offices and resources across 10 countries servicing multiple markets and industries, Thomas Fowler, CTO of CloudSmiths; Jaco van der Merwe, CEO of DVT; Jacques Fouché, CEO of Inspired Testing; and Ashish Choudhary, CEO of SixthUp, are uniquely placed to provide nuanced and perceptive understanding of this shapeshifting trend from an international perspective.

Equalising of tech salaries

There has always been a significant difference between the salaries of software engineers and tech workers in larger markets like the US West Coast and London, and those in emerging markets like South Africa and Eastern Europe. However, this wage gap has begun to close over the past two years as remote work allows tech talent from emerging markets to be employed by organisations based in established and traditionally more “expensive” markets.

CloudSmiths' Fowler says: “We are now able to employ people from regions we have never considered before. We’re seeing employees from places such as Kenya, Mauritius, Eastern Europe, Portugal, Spain and the United Kingdom. This is because our input cost (salaries) has normalised.” He adds: “I believe when we look back, this will be considered a good thing for both CloudSmiths and our people, as it allows us to build our global workforce, provides our business and our clients with a wider talent pool and ensures we become more culturally diversified.”

South African tech talent is benefiting from this shift. As Fowler explains: “Local tech workers have always been desirable team members globally and this is only going to increase. With skills, a hard work ethic and favourable time zone alignment to the UK and Western Europe, having a South African offshore team is going to be more beneficial than ever.”

Choudhary, CEO of SixthUp, based in San Francisco on the US west coast, takes the view that this is a time of opportunity for employers as well as employees. He says: “Globalisation is causing a reassessment of compensation practices and is exerting pressure on bottom lines for organisations worldwide.”

Responding to and staying ahead of the same phenomenon, Inspired Testing has taken a multi-pronged approach to sourcing and retaining tech talent, considering not only new markets, but also parallel or complementary job fields for recruitment. Fouché says: “Several consulting houses have responded to skills and price point challenges by pointing us to the repurposing of adjacent job clusters, where talent can be diverted into the technology stream for absorption into this career track.”

Challenges of globalisation

As an international firm, DVT is experiencing salary globalisation from various perspectives. While tech workers across Africa, especially those with relevant skills and experience and with a good command of the English language, are increasingly sought after by their clients in Europe, this brings its own set of potential obstacles. DVT's Van der Merwe says: “It is important that remote workers are based in countries where there is political stability, access to good internet and reliable power (or access to backup power). However, this means that tech skills in countries in Africa with a good level of English, such as South Africa, Kenya, Uganda, Ghana, Nigeria and Zimbabwe, will increase faster than global averages, making those skills less affordable for companies that operate only in their local market.” This makes tech salary globalisation a double-edged sword in these instances and, says Van der Merwe, “the reason DVT has shifted to a global model where our clients and delivery staff are based across both Africa and Europe”.

For Choudhary, rather than viewing the globalisation of tech salaries as a challenge, SixthUp has seized on the global labour shortage as an opportunity to expand its employment brand into other markets such as South Africa. He says: “Remote technologies bring greater flexibility that allow our employees to work wherever, whenever.”

Increased salaries mean increased expectations: are you getting what you pay for?

“At a macro level, considering that working remotely has now been entrenched in many companies, the location of a tech worker is insignificant in determining salary,” explains Van der Merwe. “Skill and experience level, language, culture fit and time zone are all far more important. Companies now pay remote tech workers what they can afford for a particular skill based on business value add.”

For Fowler, there is a tangible benefit to these increased salaries for employers. He says: “We can expect more from our people. We are able to say to our team that we are happy to pay an increased wage, but we want them to deliver a higher quality product as a result. And our team has responded by doing just that.”

At Inspired Testing, the focus is on creating a balance between remuneration, expectation, skill and experience. “Most organisations can and will pay top-dollar for tech skills, it is neither a challenge nor a commercial issue for most of them to secure the budget and make it happen if they really want the skills,” explains Fouché. “The problem, though, is do they get what they pay for? We are certainly experiencing a price war that fuels rapid career moves. These moves are happening at an unhealthy pace and to the detriment of entry-level to early mid-level career entrants.

“An unintended consequence of globalised talent for our market in particular is that we are now dealing with the unreasonable salary expectations of a talent pool that is not yet at the right global skills level. They are lacking in experience and the required exposure that can only be built over time.

“We are experiencing a hiring spree by big SA corporates offering astonishing salaries to entry-level to early mid-level career entrants. This practice is, unfortunately, the negative side of the globalisation of tech salaries and one that often backfires on the employee as they run into performance issues, may find themselves in a career trap (not being able to move), or they enter a cycle of continued stressful overselling their skills, leading to mental health challenges.”

For Van der Merwe and the DVT team, it’s a challenging situation to be in. The post-pandemic world, coupled with the current global economic situation, exacerbates the already challenging search for tech talent. “It is not just the war for talent anymore, it is now the war for affordable talent.”

Change brings opportunity

Across the board, these CEOs all agree that the globalisation of tech salaries is a positive. Despite some short-term pricing issues and perhaps some pressure on locally based companies, they believe the situation will stabilise in the near future. At CloudSmiths, Fowler is pleased to note their people can compete on a global stage no matter where they are based. He says: “As software, data and cloud engineers, we can make a healthy living for ourselves, being well remunerated for our excellent work and compete with our peers in more established markets. In the end, it will mean more opportunities, not less.”

“At Inspired Testing,” says Fouché, “we try and live up to our purpose of 'making way for potential' and invest heavily in the upskilling and development of our employees, be it through bricks-and-mortar training or, more recently, through short-term international attachments for high-performing individuals.

“We take both a local and international view on compensation and we are certainly competitive, but we believe in development first and reward will follow. We are of the opinion that many talented tech people are still motivated by gaining experience at a steady pace with above-average, consistent increases, to create a sustainable career with a fast but manageable learning curve.” 

Editorial contacts
Linda Wilkins Wilkins Ross Communications
Karen Heydenrych DVT
Patrick Eriksen Head of Marketing CloudSmiths
Shilpa Tandon Head of Marketing SixthUp
Karin van Blerk Marketing Manager Inspired Testing