The strategic approach to attract digital talent
Recent layoffs among tech giants Google, Microsoft, Meta, Twitter and Amazon have left many people wondering: With as many as 10,000+ tech layoffs in some of these organizations, is there no longer a demand for digital talent?
The reality is that digital talent is one of the most challenging areas to attract and retain talent. More than 50% of respondents to WTW’s Salary Budget Planning Report – Global (December 2022 edition) surpassed their 2021 digital talent headcount. Another 30% said they planned to add to that headcount in the next 12 months.
Additionally, both tech and non-tech participants said they are competing for a larger portion of the available digital talent pool to build a top-tier digital workforce. This is evident in disciplines like Data Science and Business Intelligence, and Artificial Intelligence and Machine Learning. See Figure 1.
Top 3 in-demand job disciplines, by country. Brazil: 1. Application Development 2. Artificial Intelligence & Machine Learning 3. Blockchain…” Canada: 1. Data Science and Business Intelligence 2. Artificial Intelligence & Machine Learning 3. Digital Architecture China: 1. Data Science and Business Intelligence 2. Artificial Intelligence & Machine Learning 3. Blockchain France: 1. Data Science and Business Intelligence 2. Artificial Intelligence & Machine Learning 3. Blockchain Germany: 1. Data Science and Business Intelligence 2. Artificial Intelligence & Machine Learning 3. Application Development India: 1. Artificial Intelligence & Machine Learning 2. Data Science and Business Intelligence 3. Digital Architecture Mexico: 1. Artificial Intelligence & Machine Learning 2. Data Science and Business Intelligence 3. Application Development Spain: 1. Artificial Intelligence & Machine Learning 2. Data Science and Business Intelligence 3. Blockchain United Kingdom 1. Data Science and Business Intelligence 2. Artificial Intelligence & Machine Learning 3. Digital Architecture United States 1. Data Science and Business Intelligence 2. Artificial Intelligence & Machine Learning 3. Digital Architecture
Source: WTW 2022 Digital Transformation Practices Report
Now let’s explore how pay looks for some of the most in-demand roles across all countries. The professional career level (P3) role in Machine Learning generally receives higher compensation than the same role in Cloud Computing Engineering in the same 10 countries. (See Figure 2.) For instance, the median value of the actual total compensation of a P3 Machine Learning role in the U.S. is about $157,000 USD while the same level in Cloud Computing Engineering earns about $132,000 USD. The same can be seen in other countries as well, including France, Germany, the UK and China.
Further, organizations across the 10 countries report a willingness to pay hiring bonuses and premiums to attract top digital talent. See Figure 3. Hiring bonuses tend to average between 10% and 20%, but in Mexico bonuses range from 10% to 30%. This is an indicator that the country has become a dynamic market for digital talent.
Hiring bonuses and skill premiums across 10 countries. Brazil, Skill Premiums: 10%-20%; Hiring Bonus: 10%-20%. Canada, Skill Premiums: 10%-20%; Hiring Bonus: 10%-20%. China, Skill Premiums: 10%-20%; Hiring Bonus: 10%-20%. France, Skill Premiums: 10%-15%; Hiring Bonus: 10%-20%. Germany, Skill Premiums: 10%-20%; Hiring Bonus: 5%-20%. India, Skill Premiums: 10%-15%; Hiring Bonus: 10%-15%. Mexico, Skill Premiums: 10%-20%; Hiring Bonus: 10%-20%. Spain, Skill Premiums: 10%-20%; Hiring Bonus: 10%-20%. United Kingdom, Skill Premiums: 10%-20%; Hiring Bonus: 10%-20%. United States, Skill Premiums: 10%-15%; Hiring Bonus: 10%-20%.
Source: WTW 2022 Digital Transformation Practices Report
Similarly, skills premiums in Mexico range from 10% to 25%, whereas premiums in the United States, India and France are between 10% and 15%. Because premiums vary across markets, it is important for organizations to access insights that explain how skills affect pay as well as the current market value for certain skills. Being able to identify the market value for digital skills allows employers to determine the right pay level to attract needed talent while maximizing compensation spend.
It also is worthwhile to examine the pay mix for digital talent in both P3 and Manager (M2) levels across the 10 countries to get a glimpse of how companies are broadening their compensation programs when designing their pay packages. See Figure 4.
Most markets at the P3 and M2 levels have around 70% focus on base, with the remaining for variable pay and equity. Interestingly, the P3 level more strongly favors equity. For example, 49% of compensation for P3 in Canada is from variable pay, followed closely by India where variable pay is 43% for the same level. Countries that heavily weight equity for the M2 level include India (42%) and Brazil and China (both 37%).
Digital talent is likely to receive higher pay opportunities even when there is higher risk as companies bank on advancements in technology.
Aside from cash, there are other factors at play when organizations are attracting and retaining digital talent. See Figure 5. Organizations considered a “great place to work” and offer employees the “ability to have a real impact” on performance tend to be more attractive to digital talent. Meanwhile, those who provide a “clear path for growth and promotion” as well as “interesting/challenging/varied work” encourage digital talent to stay.
| APAC | ||
|---|---|---|
| Rank | Attracting talent | Retaining talent |
| 1 | Cash compensation | Ability to have a real impact on the organization's performance |
| 2 | Reputation of the organization as a great place to work | Clear path for growth and promotion |
| 3 | Ability to have a real impact on the organization's performance | Cash compensation |
| EMEA | ||
|---|---|---|
| Rank | Attracting talent | Retaining talent |
| 1 | Ability to have a real impact on the organization's performance | Interesting/challenging/varied work |
| 2 | Reputation of the organization as a great place to work | Clear path for growth and promotion |
| 3 | Organizational purpose and beliefs | Ability to have a real impact on the organization's performance |
| Latin America | ||
|---|---|---|
| Rank | Attracting talent | Retaining talent |
| 1 | Cash compensation | Clear path for growth and promotion |
| 2 | Reputation of the organization as a great place to work | Interesting/challenging/varied work |
| 3 | Innovation/tech-minded corporate culture | Cash compensation |
| North America | ||
|---|---|---|
| Rank | Attracting talent | Retaining talent |
| 1 | Reputation of the organization as a great place to work | Interesting/challenging/varied work |
| 2 | Cash compensation | Ability to have a real impact on the organization's performance |
| 3 | Interesting/challenging/varied work | Reputation of the organization as a great place to work |
Though enhanced pay levels remain the top measure of retention, 60% of organizations in APAC, EMEA, LATAM and NA offer non-monetary rewards in response to the factors outlined in Figure 5. For example, learning and development opportunities allow employees to enhance their skills and do “interesting/challenging/varied work” that helps them impact the organization’s overall performance. And establishing a flexible workplace helps a company become a “great place to work,” as employees feel more in control of their work-life effectiveness.
It is important to remember, though, that there isn’t a one-size-fits-all approach that will satisfy the demands of the workforce. To effectively respond to employee needs, you need to listen and consider what they value – then design appropriate workplace programs that enhance the employee experience and encourage retention.
Strategy is critical for organizations to attract and retain digital talent, particularly in a time when these skills have become more in-demand across both tech and non-tech industries. To offer competitive compensation, you must consider wider market data and identify which skills demand premiums. Additionally, non-monetary factors also play a key role for attracting and retaining digital talent. It’s a combination of these assets that will ensure your organization has the talent it needs to keep up with the fast-paced digital transformation happening around the world.
