Employee pay is important to employees and organizations alike. Organizations rely on compensation programs to support many objectives, including the attraction and retention of key talent. For most organizations, attracting and retaining digital talent continues to be challenging and a differentiated approach to rewards is often required.
As the demand for specialized digital skills continues to rise, many organizations are exploring lower-cost locations to find the talent they need. This strategy not only helps manage recruitment expenses but also taps into a diverse pool of skilled professionals. Countries with emerging tech hubs, such as India, Brazil and some countries in Europe, are becoming popular destinations for sourcing talent in fields like AI, machine learning, cybersecurity and cloud computing. These locations offer a combination of high-quality education systems, growing tech ecosystems, and competitive labor costs. This makes them good choices for companies looking for these very popular skills.
Organizations have realized that differentiating their reward programs is critical. Almost half (47%) of companies offer differentiated rewards, benefits and/or talent programs specifically to their digital talent globally, according to WTW’s Digital Transformation Practices Survey.
We can’t ignore that most often, differentiation comes in monetary forms like: higher base pay, cash bonuses and long-term incentive awards. However, there are other nonmonetary programs that are seen as effective at attracting and retaining digital talent. Unsurprisingly, the findings show that organizations are willing to adopt a more flexible approach to remote working/working from home. Additionally, enhanced learning and development programs, as well as dedicated career progression models, are crucial. Both play a significant role, given the increasing demand to re-skill or up-skill employees in the digital era.
| Reward programs | Percentage |
|---|---|
| Enhanced levels of base pay | 45% |
| Enhanced or more flexible approach to remote working / working from home | 38% |
| Enhanced learning and development opportunities | 29% |
| Cash retention bonuses | 26% |
| Enhanced long-term incentive awards | 21% |
| Dedicated talent programs | 20% |
| Dedicated career progression models | 18% |
| Dedicated recognition programs | 16% |
| Different benefits | 7% |
| Different performance management approach | 6% |
As competition for digital talent intensifies, companies are offering significant pay premiums to attract top talent. This figure shows the premiums as a percentage of base salary in different countries. Hiring bonuses range from 10% to 20% of base salary (except North America being slightly more conservative) and skill premiums range from 10% to 15%, with slightly higher rates in China and the U.K. where these premiums can go up to 20%.
| Location | Skills premiums | Hiring bonus |
|---|---|---|
| Brazil | 10%-15% | 10%-15% |
| Canada | 10%-15% | 5%-10% |
| China | 10%-20% | 10%-20% |
| France | 10%-15% | 10%-20% |
| Germany | 10%-15% | 10%-20% |
| India | 10%-15% | 10%-15% |
| Mexico | 10%-15% | 10%-20% |
| Spain | 10%-15% | 10%-20% |
| United Kingdom | 10%-20% | 10%-20% |
| United States | 10%-15% | 5%-15% |
Traditional market benchmarking focuses on job-specific compensation data. However, for digital roles, hard-to-find skills are becoming crucial in determining pay levels. Digital skills have seen a significant increase in market value recently. For a detailed benchmark, it’s essential to analyze data per skill and job. SkillsVue, a WTW proprietary technology, provides insights into how skills impact pay and their market prevalence.
Changing labor market and economic conditions, as well as recent developments in technology have increased the pressure on organizations to attract and retain talent with critical skills for successful digital enablement and transformation. Below are the top three job disciplines struggling to attract and retain digital talent globally over the past year:
| Location | Leading job disciplines | ||
|---|---|---|---|
| Brazil | 1. Artificial intelligence and machine learning | 2. Digital strategy | 3. Data science and business intelligence |
| Canada | 1. Autonomous vehicles | 2. Artificial intelligence and machine learning | 3. Cybersecurity |
| China | 1. Artificial intelligence and machine learning | 2. Digital strategy | 3. Data science and business intelligence |
| France | 1. Artificial intelligence and machine learning | 2. Cybersecurity | 3. Cloud computing |
| Germany | 1. Artificial intelligence and machine learning | 2. Cybersecurity | 3. Cloud computing |
| India | 1. Artificial intelligence and machine learning | 2. Data science and business intelligence | 3. Cybersecurity |
| Mexico | 1. Artificial intelligence and machine learning | 2. Cybersecurity | 3. Cloud computing |
| Spain | 1. Artificial intelligence and machine learning | 2. Cybersecurity | 3. Cloud computing |
| United Kingdom | 1. Artificial intelligence and machine learning | 2. Cybersecurity | 3. Augmented reality and virtual reality |
| United States | 1. Artificial intelligence and machine learning | 2. Cloud computing | 3. Augmented reality and virtual reality |
AI and machine learning are unsurprisingly leading this trend. These technologies have become a crucial skill for business operations and digital transformation, making experts in these fields very valuable and high in demand.
Cybersecurity is also becoming more important due to the rise in digital threats. Recent IT outages around the world highlight the need for strong cybersecurity measures. As businesses use digital technology, protecting data and ensuring smooth operations is more important than ever, increasing the demand for cybersecurity experts.
Other important areas facing talent shortages include cloud computing, data science, business intelligence, augmented reality and autonomous vehicles. These fields are key to future technology and innovation, each offering opportunities and challenges.
In the next year, 56% of companies expect their total number of digital workers to either increase or significantly increase (down from 74% in 2023). Only 1% of companies expect a decrease.
As remote work becomes more prevalent, it’s also seen by many employers around the world as a key and important factor to attract and retain digital talent with the right skills. Expectations about work models have changed a lot since the pandemic. However, the landscape of remote working for digital talent varies across regions.
| Responses | Global | Asia Pacific | Europe, Middle East and Africa | Latin America | North America |
|---|---|---|---|---|---|
| No, they are fully remote | 40% | 34% | 39% | 34% | 59% |
| Yes, about once every month | 3% | 4% | 0% | 4% | 5% |
| Yes, about twice every month | 11% | 12% | 11% | 16% | 6% |
| Yes, about once a week | 13% | 9% | 18% | 9% | 11% |
| Yes, about twice a week | 20% | 22% | 19% | 30% | 11% |
| Yes, more than twice a week | 13% | 19% | 13% | 7% | 6% |
Globally, 40% of digital employees enjoy the flexibility of being fully remote, with North America leading at 59%. However, some regions still require occasional office visits. For example, in Latin America, 30% of employees are expected to be in the office twice a week. This being the most popular pattern across all regions. Interestingly, Europe, Middle East and Africa stands out with 18% of employees required to be in the office once a week. Asia Pacific also has the highest percentage (19%) of employees needing to be in the office more than twice a week. These insights highlight the different approaches to remote work and the varying degrees of flexibility offered to digital employees worldwide.
01
Companies are not just adopting AI for efficiency but are integrating it deeply into their workflows. This means organizations will continue to attract and retain talent with skills in these fields but are requiring a higher level of proficiency and experience.
02
Hybrid work is here to stay, but it’s evolving beyond just remote work options. Employees, especially those from younger generations, are seeking a more personalized employee value proposition. Flexible hours, wellness days, remote work and a competitive pay package are some examples of how the market will look to differentiate for digital talent.
03
With new regulations coming into effect, such as the EU Pay Transparency Directive, companies will need to be more transparent about their pay structures. This means digital talent will benefit from clearer insights into their compensation, fostering a fairer work environment. However, it also puts pressure on organizations to ensure they are compliant and competitive in their pay practices, and that any differentiation in pay can be explained for objective reasons. Therefore, companies will look to adopt more robust pay equity strategies, ensuring that all employees are compensated fairly, no matter their gender, race, or other factors. For HR and Reward professionals, this means a shift towards more transparent and equitable compensation models, which will ultimately help them attract and retain the best digital talent in a competitive market.
