What’s Happening to Salaries in the Irish Tech Market?

Posted on: 17th August 2021
by Michael Lantry
IT Jobs and Recruitment Insights

This is an interesting question. As tech recruiters (in GemPool), we spend all day talking to candidates and companies about salaries, and there is definitely a lot of movement in salary levels and expectations. Scientifically put, it's all gone a bit nuts. There are some really bizarre perspectives towards basic salaries right now. Much more so than pre-covid, when it was more predictable. But why is this? 

In this blog I will propose three reasons why the market has seen so much flux. This analysis is based on what we are hearing from the market, in Ireland, and revolves predominantly around technical skill sets in software engineering roles up to management level. So this relates to mid level, senior level, and lead level software engineers. 

1. Gap between FDI companies vs. indigenous companies

   
   Ireland has done an amazing job of attracting companies to Ireland to set up offices and build teams. This is fantastic and accounts for a large percentage of jobs across the IT sector. This investment in the Irish market has created jobs, provided trickle down demand for products and services in other sectors, increased diversity in Ireland and helped the country economically. So overall, it's been an incredible success story. 
    

   How has this impacted the salary offered?

   This huge success  has also created a disparity between the market level for salaries, and what they will pay. Not every company is doing this but there are a cohort who are offering significantly higher salaries than market norms. 

   In the short term, this allows them to hoover up the tech talent. This drives down the average length of tenure for tech professionals as people jump from one large tech employer to the next. The salaries can often be 30-40% above market levels. 

   For example, a Senior Java Developer with about 7-10 years experience would expect to get 75-80k on basic salary in Dublin. However, there are employers who will pay up to 110-120k basic for the same skillset. 
    

   Where does this get tricky? 

   Looking at the long term view, this cannot be a good thing. If an employer pays above market salaries, they risk the chance of maintaining staff members who only aim to just achieve what is expected of them and risk the chance of attracting talent who are more innovative in nature. This will in turn drive down the quality of the products being built and can be toxic to culture. Also, you risk only attracting candidates who are in it for the salary and benefits, rather than buying into the company, its product and mission.

   Offering these crazy salaries will help companies deliver on their growth plans in the short term, but is this sustainable long term? For the candidate, it means that they think they should be getting a salary way above what they probably should. You could argue that market salaries should not dictate what an employer pays and this should be value driven. Too often the urgency for growth outweighs getting value for money. 

   For indigenous companies, it's incredibly hard to compete. The salaries (and benefits) that they are competing against make it very difficult to attract and retain talent. For a small to medium sized business, this makes doing business very difficult. This is probably why we have seen many tech companies set up development teams outside of Ireland in places like Madrid and Lisbon. They simply cannot afford to offer way over market salaries. 

   However, while working in the Irish tech market there are still a number of tactics to adopt in order to attract talent. It’s about finding the right idea and voice and reaching out to the market at the right time. 

   This disparity has always been present in the Irish tech industry, but the gap is getting wider and wider. 
    

2. It's a candidate driven market

   
   The tech market, globally, has a major talent shortage. This was the case pre-covid, and has come roaring back over the last 6-8 months. It's an extremely competitive market where an active candidate (someone who is actively looking for a new role) will generally have multiple opportunities on the go. 

   This is great for candidates. They can choose the best fit for them and the right move for their career. It will also naturally force employers to really focus on becoming better and more attractive employers, which can only be positive. 

    

   What impact does this have on salaries?

   How this then translates into trends with salaries is that it can start a bidding war for talent. We have seen candidates talk to us and they are looking for x amount as salary. 

   After market research and thorough consultation, we present them at an optimum amount based on their experience. But due to the scarcity and fierce competition, we have seen that within a week the same candidate can be offered a higher rate at a different job or can be counter-offered at their own company. It's just pure market drivers that cause this inflation, rather than any tangible reason. 

   For employers, they need the talent to deliver on their development roadmaps, so the temptation is to go for the higher salary. I would urge against playing the inflation game.
    

3. Engineers getting paid more than their managers

   
   Lately what we have personally noticed is that in some cases Lead Engineers, and even Senior Software Engineers, can be getting paid more than the Software Development Manager. This sounds counterintuitive for sure, but it happens.

   Typically the more senior you go, the higher the salary. But now, engineers sometimes need to take a pay cut to move into the management role. The only scenario where this has always been the case and accepted was sales roles. 

   A sales person could have a huge year and make really strong commission and earn more than their manager, or CEO even. But now we see engineers getting higher basics than managers. This has to be a supply and demand issue and steps from my second point above. 

   It means that some companies value the individual contributor more than the person managing them, which doesn't make a whole lot of sense. I should point out, this is not the norm in the market, but it happens, like I said, it's all a bit nuts.

As recruiters working with candidates and clients in this market right now, our role is to represent a candidate at a salary that they will accept if offered. Otherwise we are just wasting everyone's time. However, if we are truly consultative recruiters, then we should also be advising and coaching candidates and clients on what a realistic salary should be in each case, and the reasons for this. Navigating the market now, with all the craziness, has made these conversations more and more unpredictable. 

Hopefully I have helped shed some light on how the tech market in Ireland is acting right now. If you want to discuss salaries in this market, please get in touch on info@gempool.ie. If you want to read more information about the market, why not check out our IT insights page.