The pandemic has fundamentally changed altered the dynamics in the local tech jobs market, creating unprecedented demand for tech talent in Australia.
According to data from Aon Insights, several forces are coalescing to create a talent squeeze — a burgeoning local start-up scene, the growth in digital transformation projects in many organisations, and the growing local footprint of international companies.
The pinch is seeing in-demand talent able to command substantial wage rises, and with borders only just re-opening for immigration, there’s no relief in the short term.
Start-ups on the talent hunt
Over the last two years, the local start-up scene has accelerated.
With businesses undertaking $25m Series B and $100-200m Series C rounds now becoming commonplace, and unicorns being minted on a regular basis, they’re shopping for talent.
“These organisations are investing a significant portion of this funding into engineering and product talent, and have an imperative to hire quickly to build out their product offering,” Aon noted.
With digital transformation impacting the industry, as business and organisations scramble to adapt to the new pandemic-driven digital reality, it’s also driving demand for skills.
Organisations across all industries are transforming digital processes in both back and front office functions, with many building customer-facing platforms “and now require product owners, data scientists and security professionals,” it noted.
International companies moving into Australia and scooping up talent as part of these expansion plans is also contributing to the unprecedented demand for ICT professionals.
"Recognising the outstanding quality of local talent, these global players are increasingly establishing research and development and product development capabilities in Australia, as opposed to simply running a local sales and service centre,” the group said.
Google’s recently announced Digital Future Initiative which will bring in $1 billion over five years for a local research hub, and forge partnerships with the CSIRO and academia, is expected to invest a significant portion the funds on new tech hires, Aon noted.
Paying a premium for new hires
With a million tech jobs expected by 2025, the situation could get a lot worse before it gets better.
Already the talent squeeze is seeing many organisations paying top dollar for new tech hires, according to Aon’s Radford Global Compensation Database, which includes data from more than 700 Australian organisations.
Pay is on average 8 per cent higher for people hired in the past 18 months compared to the overall rate, with some particularly hot roles in the market pushing this premium up as high as 15-20 per cent.
The in-demand roles include engineers as well as product owners, UI/UX roles, data science, cyber security and technical support – vital skills to spur local innovation and help drive GDP growth.
Salary budgets that have had low or no increases over the last few years is putting employees in the driver’s seat to take advantage of the talent shortage.
Aon data show that a mid‑career employee in an existing job earning 5 per cent below market, when moving to a new organisation at the current median rate for new hires, can find themselves with a $20,000‑$30,000 jump in salary.
When they move, however, the empty position must then be filled, while the organisation will need to pay the ‘new hire premium’ to attract talent, and the cycle of attrition and recruitment continues to ripple across the industry.
“It is no surprise that employees are seeing an opportunity in the current market to make up for lost time and get a meaningful, potentially life-changing salary increase by moving externally,” Aon said.