The Australian tech sector is experiencing a “rebalancing” following the rapid growth experienced during the pandemic.
New statistics show a slight decline in employee growth and median hourly rates in the Australian tech sector, while specialised contractors are still able to demand a premium daily rate, representing a “correction” from highly inflated pandemic figures.
The tech sector enjoyed significant growth during the COVID-19 pandemic, with people around the world turning to digital tools to communicate for work and in their personal lives.
Local tech firms greatly expanded their workforces to meet this new demand, but with much of the world now returning to normal, the sector is now “correcting” itself and shrinking back to size.
Two new reports on workforce size and pay rates have shown this “rebalancing” taking place, with marginal decreases in the number of people employed in the sector and in rates of pay; and rises for some contractor work and stagnation for others.
HR software company Employment Hero’s latest SME Index, an accumulative dataset of more than 140,000 small and medium-sized businesses and 1.4 million employees, found that the science, information and communication technology sector saw a month-on-month decline in average employee growth and median hourly rates.
There was a 0.1 per cent monthly decline in average employee growth in the sector, while the median hourly rate dropped by 1.8 per cent, while all other key sectors enjoyed a slight increase.
The tech sector still has by far the highest median hourly rate of $57.08 compared to other sectors in Australia.
Despite the slight decline, the median hourly rate for the tech sector is well above the next highest sector, which is healthcare and community services at $42.47.
Across last year, the tech sector also had the smallest annual change in median hourly rate of just 2.5 per cent.
This represents the sector coming back down to earth following its expansion due to the pandemic, Employment Hero co-founder and CEO Ben Thompson said.
“The SME Index this month shows stagnating growth for the science, information and communication technology sector,” Thompson said.
“While the growth data is telling, it is not a huge cause for concern. Following a period of unsustainable growth marked by sky-high valuations and salaries, it appears the industry is undergoing a correction.”
Over the last year, the science, information and communication technology sector has grown by 3.6 per cent in terms of employees, while healthcare and community services has grown by just under 9 per cent.
The report found that the median monthly hours worked in the tech sector is 164.7, and this figure has remained steady across the last 12 months. This is below construction and trade services, which was 173.7 hours, and manufacturing, transport and logistics, which was 171.4.
Contractors in the money
The Hays IT Contractors Rate Guide, which looks at the typical daily rates for more than 60 contractor job titles in 12 locations across Australia and New Zealand, found large discrepancies between what some contractors can charge compared to others.
The report found that contractors working in in-demand roles can demand a premium rate, while pay for other roles has stagnated.
Over the past year, typical rates of pay for penetration testers have increased by 12 per cent, test and QA managers have enjoyed an increase of 7 per cent while software developers have seen rates go up by 6 per cent.
Despite these rises, pay rates for many other contractor roles have remained flat, leading to a slight drop when the Consumer Price Index is considered.
Recruiter Hays’s ANZ Technology Solutions managing director Adam Shapley said the local tech sector is undergoing a “workforce adjustment”.
“Major players reduced global workforces after making a land grab for skills during the pandemic, hoping that consumers’ digital behaviours would remain entrenched when lockdowns ended,” Shapley said.
“Once it became apparent that these behaviours weren’t as sticky as hoped, they right-sized their workforces.”
Some of the largest tech companies in the world have been forced to shed large amounts of their workforce after expanding rapidly during the pandemic.
Earlier this year, Meta revealed plans to lay off 10,000 staff from across the business, after previously shedding 11,000 jobs last year.
Meta CEO Mark Zuckerberg labelled 2023 as the “year of efficiency”.
At the start of the year, Microsoft announced it was cutting 10,000 jobs after the uptick from COVID-19 was turned on its head. Amazon has also cut 18,000 jobs, and Twitter slashed 4,000 roles after new CEO Elon Musk took the reins.
Locally, tech giant Xero revealed it would be cutting 800 staff, equating to about 15 per cent of the organisation. This came after Xero went on a hiring blitz during the pandemic. The cuts brought its workforce back to its size in September 2021.