Is Software Engineer Demand Peaking?
How to compete with the rising demand and cost of hiring software developers
Sep 7, 2023
Over the past few years, we have seen a rising demand for premium software engineering talent.
What brought about this shift in demand?
Emerging and complex technologies, including access to ChatGPT, increased the type of data and machine learning applications created. It enabled executives to invest in enhancing their offering for various uses cases including customer insights and analytics, unique and more customizable offerings, and deeper insights and learning over time.
Technical talent knowledge scarcity. As these solutions began to scale, the pool of technical leaders capable of understanding and implementing MLL and AI applications shrank or demanded greater pay.
Increased funding and cash flow in tech startups. VCs invested 3X the capital than the prior year, bringing upon a hiring frenzy for these VC-backed companies. In 2021, 62% of respondents in a survey by PagerDuty, said finding the right person for the job was difficult.
The Great Resignation or the Great Negotiation. During this time, engineers changed jobs at an all time high. Because of the pandemic, there was an emergence of engineers looking for new opportunities purely because they could “just ask for more money”. Employers were stuck navigating negotiation packages with both prospective and current employees.
Increasing benefits. Due to Covid, companies had to increase their flexibility, offer remote work, were increasingly scrutinized for lack of benefits,
Software architects, CTOs, CIOs, and hands-on technical architects saw the greatest increase in salary by approx. 8.4%.
How did salaries change?
With the increased demand for these Architects and A-Players, – let’s take a look at the data for emerging technologies like Artificial Intelligence.
Companies in the United States are paying a much higher salary for this type of hire with a median of $270K for an engineer with the skills and aptitude needed to be successful. Considering Netflix pays $700K, companies that are looking to innovate and grow their product rapidly in the space are left behind.
Entry AI Engineers make an average of 8.13% more than their non-AI counterparts in the same company and same level.
So, how do companies handle this?
Typically you find that organizations attempt to outsource or offshore their development teams in the hopes of offsetting costs. While this can be an effective solution for some, it can also bring issues of communication, expectations, varying quality, code understanding, and maintenance.
Most organizations don't have the money to compete in the full-time engineer talent pool with VC-backed tech companies and large corporations with deep wallets. If you can't negotiate on salary, you should negotiate on time. A growing number of tech workers are being hired fractionally for specific projects or to augment existing staff for quick on-demand scaling.
The key is to find the "Michael Jordan's" of the tech world. Fraction can help you find software engineers and top talent to augment your dev teams, or take your projects to the next level with vigorously vetted senior staff from top US companies.