Shortage of skilled workers: Wages in the IT industry are rising rapidly

The IT industry is currently suffering from a severe shortage of skilled workers. This is resulting in unprecedented demand for IT specialists in Germany and the rest of the world. Naturally, this is associated with rising salaries. In this context, the U.S. labor market in particular is also having an impact on wage increases in this country.

USA goes on the hunt for IT professionals

In the course of digitalization, IT specialists are becoming increasingly sought after. Regardless of whether companies or government agencies. Meanwhile, the experts are needed in almost every field. But unfortunately, the gigantic demand seems to be met only by a meager pool of IT specialists. This is not just a German problem, but a global one, which is also a major challenge in the USA, for example. There, it is primarily the big tech companies such as Meta, Google and Amazon that are desperately seeking junior staff for their IT departments. Since this is only possible to a limited extent in their own country, they are now putting out feelers beyond the borders of the USA.

Recently, Germany in particular has become an attractive source for qualified IT employees. One reason for this is the low salaries that companies and public authorities sometimes pay their IT specialists in this country. Accordingly, it has never been easier for tech companies from the land of unlimited opportunity to lure employees to their own companies with an attractive salary. Accordingly, German companies now have to counteract this, which is reflected in rising wages. After all, it is important to avoid a veritable exodus of qualified IT professionals, which would further exacerbate the shortage.

Germany can’t keep up with US salaries

One example of the vigorously beating advertising drums is Microsoft. The hardware and software giant from the U.S. has announced that it wants to pay employees in the IT industry a much higher salary than has been the case so far. What Microsoft is currently planning, the online giant Amazon has already put into practice. The online marketplace has unceremoniously increased the salary for IT specialists to 330,000 euros per year. Before that, it was just 150,000 euros, which still sounds extremely good by German standards. It’s no different for other Silicon Valley companies. With an average salary for software developers of 85,000 euros, how will Germany keep up?

Working for companies in the US is straightforward

The corona pandemic has highlighted the benefits of working from home. Gigantic opportunities for companies have grown out of the realization that employees can do great work from home. After all, it eliminated for U.S. companies the usual problems associated with recruiting a foreign workforce. In addition to a work permit, they usually also need a residence, which is anything but easy, especially in coveted Silicon Valley. US companies are now also taking advantage of this.

Some of them hire German specialists without further ado, who in turn then work from Germany for the company located in the USA. The Internet makes it possible. Of course, this also lowers the inhibition threshold for many German IT specialists to work for a U.S. company. After all, it is less complicated for families in particular if the place of residence remains the same and, in return, even the salary increases. Germany simply has to catch up here in order to remain attractive.

Will IT experts soon only be working for tech corporations?

A look at the statistics makes it clear that there is no alternative to a wage increase sooner or later. For example, the market has already seen a salary increase of well over 50 percent in the last six years. And this process is unstoppable. Year after year, companies around the world increase salaries in order to be attractive to young recruits. Sooner or later, however, there will be great dangers in this. After all, it is naturally easier for large companies to pay appropriate salaries than for small firms. This threatens the very existence of medium-sized IT companies in particular.

Conversely, more and more executives from U.S. tech companies want to work in Germany. This is due not least to the rapidly rising costs of everyday life in Silicon Valley and the metropolitan areas around it. Naturally, IT professionals who want to take on a managerial role in German companies also demand a correspondingly high salary. If this wage spiral does not slowly normalize, some IT companies in Germany will sooner or later face collapse. But not only that. This development could also stand in the way of important innovations. After all, young startups cannot afford such high IT salaries to realize their ideas.