Higher salaries make IT hiring for MSPs more challenging

IT labor is still the most expensive cost any managed service provider (MSP) is going to incur, and a new report suggests those costs will only continue to rise.

The report, based on an analysis of 907,000 interview requests involving more than 47,000 active positions and a global survey of more than 2,000 IT professionals conducted by Hired, a provider of a marketplace for recruiters, finds that not only have salaries for IT professionals with more than three years or more of experience grown; the salaries of remote IT workers are outpacing salaries of IT professionals that have returned to an office by $3,000. Further, average remote salaries climbed to $162,950 in 2022.

Geographic location and role impact compensation

Less surprisingly, IT candidates in the San Francisco Bay Area continue to see the highest salary offers at an average local salary of $174,063, followed by Seattle ($168,069), New York ($161,128), Boston ($158,548), and Austin ($157,612). The top three highest paying markets in the US for remote salaries remained the San Francisco Bay Area ($175,909), Seattle ($171,432), and New York ($162,261). The San Francisco Bay Area was also the only market in which local office salaries continued to pay higher (1 percent) than remote salaries.

The exodus from traditional big technology hubs has also pushed salaries higher in smaller cities, with Philadelphia (+12 percent), Dallas/Fort Worth (+11 percent) and Denver (+11 percent) showing the highest average local salary increases across all markets. Other highest growth markets were Toronto and London, globally, which ranked above Boston, New York, SF Bay Area and Seattle this year in terms of YoY salary growth.

Additionally, engineering management roles continue to command the highest salaries in the U.S., United Kingdom and Canada. Engineering management roles have on average a salary of $196,000 in the office and $198,000 for remote workers.

A growing preference for remote work

When asked if they would be willing to return to work in the office, if it meant greater job security, over half (54 percent) of candidates stated yes, but would start looking for another job with more flexible remote work options immediately. Only 33 percent of respondents would trade remote work for an in-person role with a higher salary.

Organizations of all sizes are also interviewing candidates from other locations as more job candidates showed an increased preference for remote-only roles, with 32 percent of all active job seekers open to “Only Remote” roles on the Hired platform.

Extended recruitment times and salaries impact hiring

Researchers also found that in 2022, the time to find IT job candidates is up to a 60-day average time-to-hire in the U.S. and 68 days in the U.K. Remote positions on average took 40 days to fill.

The survey, meanwhile, finds more than a quarter of respondents (27 percent) feel employers in 2023 will have a stronger negotiating position but 90 percent also said if they were denied a raise in the next six months, they would start to immediately look for a new job. Despite overall tech salary increases in 2022, 42 percent of remote respondents and 29 percent of local respondents said they do not feel that their salaries have kept up with rising inflation and living costs.

Challenges and opportunities on the horizon for MSPs

Higher IT salaries are, of course, something of a double-edged sword for MSPs. They need to compete for IT talent alongside companies and IT vendors that are all hunting for the same types of expertise. However, the higher IT salaries climb the more likely it is an organization will contemplate relying on an external IT services provider.

Many MSPs, of course, have been employing remote workers for years that live in places where the cost of living is substantially less than, for example, New York. The challenge, as always, is to find the best talent available at the lowest cost possible without compromising the customer experience. Of course, if it was easy then everybody would be doing it so in that sense, at least, there may be a silver lining in that increased payroll.

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