Interesting AFR article. A positive for labour inflation in ASX-leading tech firms. Unsurprising.
Reporter
Oct 9, 2022 – 2.14pm
The tech market correction is finally filtering through to the talent market, as the country’s largest listed tech companies say it is easier to find and retain staff now than three months ago.
According to a survey of seven CEOs of the country’s largest listed tech companies by The Australian Financial Review, the shift has been driven by widespread layoffs and hiring freezes among start-ups, and even multinational tech companies, with employees increasingly more attracted to profitable companies perceived as stable.
Richard White says WiseTech’s stability and profitability has helped it attract talent in what was a difficult market. Janie Barrett
The CEOs also tipped further easing of talent market conditions in 2023.
Talent is not only becoming easier to find and hold on to, but wage growth is coming back in line with historical standards, the CEOs say, after a year of eye-watering salary bumps to attract and retain staff in a tight market.
Speaking to The Australian Financial Review, WiseTech CEO Richard White said there had long been a war for talent, but it hit a new height in 2021 when COVID-19 lockdowns ended, but borders remained closed. Since mid-year, he said the market had noticeably shifted.
“There was a very noticeable increase in our inbound job applications leading up to our full-year results in August, which were very strong, and [there’s been] another step up since then. We believe the job market has turned, and high value tech talent is reassessing the risk of being in a start-up or a cash burn business,” he said.
“[There has been] a wave of layoffs with notable start-ups closing, high cash-burn businesses failing to achieve funding rounds, and many IPOs suspended or abandoned. As additional funding has been pulled, investors have demanded their investments conserve cash and show a clear and timely path to profit.
“Our rate of hiring has increased over the last six months with a 20 per cent net increase in additions in January-June 2022, compared to the six months prior, and this has accelerated further in the last two months to a much higher run rate.”
The CEOs of Nearmap, Pro Medicus, TechnologyOne, Hansen Technologies, Praemium and Whispir were also interviewed. Xero and Altium declined to participate.
Of the seven CEOs surveyed, all expected talent market conditions to improve in 2023, and all but one had noticed an easing in the last three to six months.
The CEOs were, however, split on the trajectory of wages, with several saying they would still need to keep pace with inflation at least.
Like Mr White, Hansen Technologies CEO Andrew Hansen said the “pendulum has swung” in the last few months.
“There is a clear reduction in churn rates as talent look to a more stable environment during times of uncertainty,” Mr Hansen said.
“We are definitely seeing a return to a more normal IT world where availability and wages are falling back in line with the longer term averages.
“With the tech correction and a focus on stable, cash-generative IT companies, at Hansen we’re seeing attrition reduce significantly and inbound interest rising, as talent are looking for security during this time of uncertainty.”
Highlighting the depth of the talent shortage earlier this year, in February there were reports of employers needing to offer software engineers and developers pay rises of $30,000 to $100,000 to retain them.
Wage inflation was tipped by analysts to negatively affect the bottom line of tech companies, resulting in a possible slowdown in product development or smaller sales and marketing teams.
The average salary of software developers who specialised in Salesforce or Microsoft Dynamics was up 51 per cent, according to recruitment firm Talent. Even for senior developers skilled in common software programming language Java, salaries had leapt 47 per cent to an average of $205,000.
“Wages pressure and recruitment problems from 12 months ago were driven by a tight talent market due to border closures and easing of lockdowns,” Mr White said.
“This pressure was an unnatural and short-lived effect ... Whilst wages for talented staff have increased, the increases are much more sensible now that the economics are different and borders are open.”
CEOs interviewed said software engineers and developers were still tough to find, as were people experienced in artificial intelligence and machine learning, cyber security and systems architects.
Pro Medicus CEO Sam Hupert said despite it being a “touch easier” to hire people, there were still no easy-to-fill roles.
Whispir CEO Jeromy Wells said the company had this year increased salaries for hard-to-fill positions by an average of 13 per cent, while across the company wage costs were up an average of 3 per cent, including the compulsory superannuation increase.
“We have needed to increase budgets for some open roles and in some instances reduce the number of planned hires to stay within departmental budget envelopes so that the overall spend remains within budget,” he said.
Mr Wells said the communications tech company expected to grow its workforce by 12 per cent in 2023, equating to 30 new hires, but the company was also focused on retaining existing staff.
“We are starting to see some levelling out in recent months in part due to a change in mood resulting from major tech players shedding staff, rising interest rates and inflation concerns,” he said.
“At the same time the number of open roles we are recruiting for has reduced as we get to a comfortable, steady state in terms of our global headcount.
“With effective government policies that put more emphasis on bringing skilled migrant workers into Australia, we would hope to see additional capacity become available and wage inflation slowing.”
At Praemium, wage costs have ballooned by 5 per cent. CEO Anthony Wamsteker was the only leader to say hiring conditions had worsened compared to six months ago, but he was still optimistic about 2023.
“Applicant numbers continue to decline and are currently at the lowest they have been in 12 months,” he said.
“With the borders now open and many planning a return or relocation to Australia, we expect some easing of staff shortages over the next year or so. We will, however, continue to invest in graduates given the value they create within our business.”
More tech workers have now been laid off globally in the last six months than in the early months of the COVID-19 pandemic, according to data collated by layoffs.fyi. Locally, companies such as Eucalyptus, Linktree, Mr Yum, Brighte and 5B Solar have all made redundancies, while others like Yabonza and Send have collapsed.
Aerial imaging software company Nearmap, which is subject to a takeover bid by US private equity fund Thoma Bravo, has 20 roles open and CEO Rob Newman plans to recruit another 50 people in 2023 – something he expects to be able to do more easily next year.
“I would expect a continued easing for the availability of talent as the impact of broader economy impacts the tech sector,” he said. “[But] wages will need to track inflation.”
WiseTech also expects to boost its headcount in 2023 by 20 per cent to 30 per cent, mainly in Sydney.
TechnolgyOne has 100 open roles, and plans to promote 10 per cent of its workforce in the next year.
“All tech companies are chasing experienced system architects and developers. This is the space most competition exists, with experienced developers commanding up to a 10 per cent new hire premium,” TechnologyOne CEO Ed Chung said.
“Just as the mindset of companies has changed, so too has that of employees. With increases to cost of living, rates rises and rising inflation, more people are keen to settle down and have a stable job. Wage remains a large part of the equation, but job stability is key and is leading to less movement.”