While the IT industry is banking on an improvement in the economic situation next year, software company executives do not believe in a return to the boom that brought programmer salaries in Poland to Western levels
“The era of easy money in IT is over, both for companies and employees,” says Bartosz Majewski, CEO of the software company Codibly and president of SoDA, the industry organization of IT Service Employers. According to him, the IT industry is now facing a true revolution that will radically change it in the next three years, forcing business transformation (including a stronger specialization of companies) and affecting the remuneration of employees in the field.
The golden years of IT earnings are a thing of the past and won’t come back soon, says Konrad Weiske, vice president of SoDA and president of the listed company Spyrosoft.
His discussions with software company executives (SoDA already brings together over 200 of them) show that a large part of them will end this year with a decrease in revenue compared to 2022. This is the economic effect of digitizing businesses and means not only fewer new projects, but also smaller budgets than during the technological boom of the pandemic and the expansion into the start-up market.
2023 is a period of stagnation and decline. Next year should be a little better, but I don’t see reasons for a strong recovery, predicts Weiske.
He is not alone in being cautious about forecasts for 2024.
“It will rather bring stabilization than improvement of the situation,” says Przemysław Mikus, vice president of SoDA and manager at Lika Mobile Solution. He adds that the traditional recovery in the fourth quarter, which usually brings a large increase in orders from large clients, currently looks worse than in previous years.
“We are perceived as very good in terms of technology, but we are no longer competitive in terms of price,” emphasizes Przemysław Mikus
According to Konrad Weiske, Polish IT companies now need to learn to operate with new realities and maintain high service prices, with high added value, especially since some clients find it difficult to accept that IT services Made in Poland are no longer cheap. IT specialists will also have to adapt to the new realities, as industry salary increases have not compensated for inflation, and some companies have frozen salaries. As a result, some employees may have experienced a real decrease in wages this year.
The unfavorable economic climate has already affected and will continue to affect the level of remuneration in IT
Already this year, the IT industry has significantly limited salary increases; some companies have frozen salaries (only increasing them upon promotion), and many companies have also decided to restructure jobs, sometimes resulting in layoffs. However, many companies, counting on a recovery in the coming months, retain specialists without projects in progress, bringing significant additional costs. For example, in the Spyrosoft group, in the first half of this year, the share of these costs represents 6% of the company’s total expenses. As unanimously emphasized by the heads of SoDA, Poland is no longer a country with cheap IT services.
This is seen in the latest data from the Central Statistical Office, according to which the average gross monthly salary in the ICT industry was 12,200 zlotys (2608 euros) in August of this year, an increase of 9.1% compared to over a year earlier (at an inflation rate of 10.1%). Meanwhile, in the entire corporate sector, the average salary in August was 12% higher than a year earlier. It is true that the Central Statistical Office data only shows a fragment of the IT industry, because well-paid specialists do not work on employment contracts but on B2B contracts, but here too a decrease is observed.
The solution to overcoming difficulties is optimizing the business value of IT services
Next year, although IT companies plan increases, it will also be difficult to raise salaries above inflation. Hence the general opinion resulting from the debates during the SoDA conference about the necessary changes in the business models of companies, which should focus more on their own products and semi-finished products, as well as on the specialization of software companies. As Bartosz Majewski emphasizes, the key factor will not be the IT service itself, but its business value. Therefore, companies should now adapt to the specializations in the industry, understand the conditions under which a particular business operates, know the regulatory framework in various sectors and markets, to become capable advisers able to provide IT solutions to their clients.