The coronavirus has blindsided many of us. It paralyzed nations, put hundreds of thousands of people out of jobs and claimed many lives. To this day, as global efforts increase to combat the virus, there is still no certainty as to when the pandemic will end. As we continue to accept and try to bring some normalcy back to our lives, a lot has changed. But, it is human nature – we adapt to survive.
All industries were affected, especially travel and hospitality. To cope with the growing threat to the economy, employees were furloughed. Some of these companies include Airbnb implementing a 25% cut to their workforce, American Airlines with a 20% reduction and Hilton Hotels with 22% of its workers furloughed. Other industries were also affected like Chevron, the number one oil company in the United States, cutting 15% of its workforce, and HSBC, Europe’s leading bank, cutting 15%.
Tech at a glance
According to Hired, a hiring platform for tech talents, there was a 7% salary growth among average tech workers before the pandemic with salaries in New York averaging at US$143,000 (HK$1.1million) annually and Los Angeles at US$137,000 (HK$1.06 million). The top earners in tech were project managers earning US$154,000 (HK$1.19 million) per annum, software engineers at US$146,000 (HK$1.13 million), and data scientists at US$139,000 (HK$1.07 million).
Although not as severely as in the travel and hospitality industries, COVID-19 has a significant impact on the technology industry. It has amplified the demand for remote working, and rapid measures were taken to de-risk the end-to-end value chain. Many of the tech organizations are seeking products and services of companies with remote working technologies to increase their remote-working capabilities. As the technological paradigm shifts, there is also a need for speedy access to data and information. These have increased demand for the deployment of 5G networks and the adoption of 5G equipment.
Remote work and tech
As of July, some sectors reduced their job posts during COVID-19. Data science and IT management are among the highest at 37%. This has resulted in the rise of job seekers with job postings receiving 68% more than the average clicks per post. The influx of job seekers can also be attributed to most companies adopting remote work setups.
Remote work is not a new concept, especially among freelancers. European companies are among the top companies that implement the remote-work setup, followed by Canada and the US. On average, before COVID-19, a remote worker earned from US$10-17 (HK$77-132) an hour depending on the industry. The top industries for remote workers are Legal (US$28/hour), IT & Programming (US$21/hour), Engineering & Manufacturing (US$21/hour), and Design & Multimedia (US$20/hour).
Catch-22 – remote work salary
With the work-from-home transition taking place, an employer would be spending less on office rent, utilities and benefits from increased productivity among employees. “Companies will soon find that the large costs attached to their physical office space can be drastically reduced, without nearly so much loss of efficiency as they once would have thought,” says President and founder of Signum University, Corey Olsen.
“Establishing a more permanent shift to remote or hybrid operations is very likely to be the new cost efficiency that will provide smart companies with a competitive edge that other companies will find themselves needing to emulate.”
However, employers now have to spend on remote-work tools for communication and data gathering. While for employees, this would mean flexible hours, more time with their families and reduced expenses in transportation, it also means increased expenses for utilities (electricity and Wi-Fi), setting up their own home offices and massive invasion of homes by their work. Most workers prefer “at least once a week” office schedule, and nearly one-third of employees preferred a reduced salary rate. For the latter group, they would potentially move to areas with a lower cost of living if remote work becomes permanent.
Some firms in Silicon Valley have contemplated moving out of the popular tech hub. Among the tech giants that have implemented work from home permanently are Twitter, Facebook and VMWare. As these firms offload their expenses to their talents, compensation will be localized. This localized pay would mean as much as an 18% cut on employees’ salaries.
What the future holds for tech salaries
Jim Sullivan, President and CEO of JCSI, thinks employee salaries will certainly be affected in the long run. “Employee salaries could go a few different ways as remote working increases in the tech industry,” Sullivan explains. “Ultimately, it will depend on the company and the type of employees they need – highly trained & specialized professionals, or less experienced, cheaper employees.”
“As a whole, I think salaries will be negatively affected as companies rebound from the loss of income (which could take years) and look to improve their bottom line,” he adds. “Companies will hire cheaper employees now that they have a larger talent pool to choose from and will ask more of them.”
Overall, it is still a debate on what the pandemic means for tech talents’ salaries. There’s no easy answer as there are tons of factors to consider – whether tech talents prefer it is still half and half. Remote work may not be the right fit for everyone. However, many would agree that job security is a priority, and a lot of employees are willing to cover the expenses brought on by the work-from-home setup rather than lose their jobs. After all, it is a small price to pay in an economy on the verge of collapse.
This story was written by Artur Meyster. Artur is is the CTO of Career Karma, an online marketplace that matches career switchers with coding bootcamps. He is also the host of the Breaking Into Startups podcast, which features people with non-traditional backgrounds who broke into tech.
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