Corporate technology chiefs say they are keeping an eye on rising consumer prices and its potential impact on employee hiring and retention in a competitive market for talent.
Efforts across industries to retool post-pandemic operations with digital technology has made the market for technology talent even more competitive. At the same time, the post-pandemic economic rebound is contributing to consumer price increases.
Some expect a new round of wage inflation as both job candidates and existing employees look for higher pay to keep pace with higher prices.
Akamai Technologies Inc. may have to recalibrate its information-technology budget as it may be forced to spend more on hiring, said Mani Sundaram, chief information officer for the company.
“People are being asked to spend more to maintain their standard of living,” he said. The Cambridge, Mass. networking services company is looking for talent to help boost cybersecurity and support its continuing cloud migration, among other key projects, Mr. Sundaram said.
Bhaskar Ramachandran, CIO at PPG Industries Inc., said if salary demands increase, he may shift more of his IT budget to hiring and recruiting.
The Pittsburgh-based maker of paints, coatings and specialty materials is on a hunt for cloud and cybersecurity experts as it works on a number of projects, including a move to a single enterprise resource planning system to run core business functions.
“There are certain types of talent that [are] going to cost even more than others,” he said. The current environment of consumer price increases, and work-from-home flexibility, Mr. Ramachandran said, could lead to wage inflation and impact recruiting and hiring.
However some don’t view the situation as dire.
John Bosco, senior vice president and CIO at Northwell Health, which operates more than 23 hospitals and 830 outpatient centers, said wage inflation isn’t affecting the positions Northwell is trying to fill.
The healthcare provider has positions available in many IT areas, including cybersecurity and data analytics. He declined to specify the number of open positions.
Recent year-over-year IT salary increases have been “relatively tame,” at around 4% or 5%, said Todd Thibodeaux, president and chief executive of IT trade group CompTIA Inc.
The June unemployment rate for U.S. information-technology workers was 2.2%, according to CompTIA, down from 2.4% the month before. By comparison, the overall U.S. unemployment rate in June was 5.9%, up from 5.8% in May.
But if consumer pricing trends hold, 2021 will be the first year in nearly a decade that increases in IT operational spending, which include IT personnel costs, didn’t keep pace with inflation, according to IT management research provider Computer Economics, a service of Avasant Research.
“Those budget increases that looked good at the beginning of the year may well be inadequate by the end of the year,” said Frank Scavo, president of Avasant Research.
If consumer-price increases do bring about wage inflation, said Andrew Bartels, a vice president and principal analyst at Forrester Research Inc., CIOs have three options: Slow down hiring and slate funds for new staff to salaries; rebalance the budget, allocating more for payroll and less for other spending; or request an IT budget increase to pay higher salaries.
“If you’re a smart CIO…then you’re always looking ahead to contingencies,” said Mr. Bartels. “And, certainly, in a world where there’s a lot of talk about inflation, that’s something you think about.”