Ukrainian Tech Segment Q2 2023 Salary Growth: What’s Happening?

Q1 2023 saw the salary growth situation in the Ukrainian tech segment losing momentum and slowing down. There were concerns that the situation would evolve more volatile with drastic salary range changes and a complete shift in talent demand.

That didn’t happen. During Q2 2023 Talando Market Research team was busy gathering all the valuable insights into one extensive document – The Q2 2023 Market Research. 

Our previous article outlined Ukrainian Tech Segment’s significant trends during the third quarter. This article breaks down the salary growth dynamics factors in the Ukrainian Tech Segment during Q2 2023.  

• If you want to purchase the complete Q2 2023 Salary Survey – drop us a line.

Ukraine Tech Segment Salaries Factors Q2 2023 Explained

The general trend for salary levels within The Ukrainian Tech Segment coming into Q2 2023 was losing momentum and shifting from a candidate-driven labor market to an employer-driven market. 

• During Q2 2023, it was clear that companies have an advantage when negotiating salaries with potential hires.
• However, that doesn’t mean companies dominate the conversation and dictate their terms without questions. 

At the same time, tech talent is in a tricky spot regarding job opportunities. 

• The volatile market situation makes searching for a new job risky, as you never know whether the new employer will stay around for long.
• On the other hand, many tech specialists have concerns regarding their current employment due to the unstable economic situation of war and global recession.

Several factors make this situation. Let’s look at them one by one.

1. Competition for Talent Scales Down and So is Salary Growth

During 2020-2021 one of the critical drivers of salary growth in the tech segment was competition for high-profile talent. 

• Companies wanted to get all the talent so that the competition won’t get them so that they would be more competitive.
• Tech talent wanted the best possible offer, frequently intentionally farming lucrative job offers to get the highest possible result.

2022 and part of 2023 saw a significant increase in unemployed specialists and switchers from other domains, considerably diluting talent demand and shifting the initiative towards employers. 

• As a result, companies now have more opportunities to make more cost-effective hiring decisions, i.e., hiring talent for lower salaries.

The balance shift in the labor market allowed companies to change gears in the recruitment process. 

• As of late Q2 2023, when it comes to hiring a qualified specialist – companies want to be sure that’s the right person for the job. 
• But even with lower competition for talent, companies can’t afford an endless cycle of replacement recruitment. 

Here’s how things went down during 2020-2021:

• A high-profile DevOps in the fintech segment would get 5-6 job offers within a week or two after starting an active job search.
• During this process, he would increase his initial salary expectations by at least 25% by simply bidding opposing offers against each other.

Now that’s not the case.

• In the current market situation, companies can take their time to hire high-profile tech talent. They want to be sure they find the right candidate to impact the business and don’t need to hurry to get things done.
• Even if the candidate is actively searching, getting 2-3 solid job offers within a month would be big luck. (By solid job offers, we mean the ones that can realistically mean long-term mutually beneficial employment. Not the flash in the pan-hyped-up startups out of nowhere).

As a result, companies can take a firmer position on the salary levels they offer. 

Meanwhile, candidates, for the most part, can’t afford to drag out the negotiation until the other party gives in on their demands. 

2. No Salary Growth: Salary Freeze and Decrease While Bracing for Impact

The next critical factor in changing salary dynamics during Q2 2023 is salary freezes and decreases. 

• The unpredictable market situation due to war combined with the global economic crisis and recession perpetuates Ukrainian tech companies’ complicated positions. 
• The client demand fluctuations make planning hard, while internal situation creates unpredictable challenges confidently.

The sheer scale of salary freezes in various companies in the Ukrainian tech segment made its mark on salary dynamics during Q2 2023.

• The maximum salary level growth more or less slowed down to a crawl during Q2, with minor (up to 10%) fluctuations for in-demand positions. 
• At the same time, new hires showcase a slight decrease in maximum levels with 15-20% drops.
• The third quartile figures started to narrow down during Q1 2023. This trend continued during Q2 2023. There is less variety in the upper part of salary ranges for most in-demand positions. 

Why do salary freezes take place?

The short answer: business is on the down. 

The biggest challenge is decreasing investor interest due to war. While numerous investment companies express their interest in investing in Ukrainian projects – that usually means one of two things:

• the company operates in markets outside of Ukraine;
• the investments will be after the war is over.

As a result, there is less money to spend and fewer resources for scaling. 

• In the past, these were the major salary growth factors. 
• Consequently, such quality of life changes as salary raises and benefits packages become increasingly out of the question for the foreseeable future. 

In many cases, the decision to freeze salaries for a while or until further resolution is a matter of survival via cost-cutting measures.

However, salary freezes also perpetuate the other long-term problem – employee retention. 

• Sooner or later, the more extended salary freeze goes on, the more employees are willing to consider other job opportunities with higher salaries and better benefits packages.

3. An Influx of Job Seekers on the Market Shifts Salary Growth Balance

Q2 2023 Ukrainian Tech Labor Market got lots of tech talent currently looking for a job. Let’s count down all the driving forces behind it:

• Burnout and stress as one of the reasons to change careers;
• An attempt to find new fresh job opportunities to shake things up;
• Relocation;
• Company’s lack of flexibility regarding employee’s personal situation;
• Concerns with the company’s financial stability;
• Layoffs due to company reorganization, closing local offices, ceasing operation, etc;
• Switching from other domains;
• Finishing beginner’s courses.

In one way or another, the number of tech talent on the market actively or passively looking for a new job has grown considerably during Q2 2023. Our research shows that activity growth is up 25% from late 2022.

Even more so, candidates are more proactive in their job search. They send CVs for job postings, write to recruiters, and market themselves on LinkedIn.

• But there’s a catch. There are not enough jobs for everyone on the market. 
• As a result, the influx of job seekers also alleviates the talent scarcity that scales down the competition for talent. 
• That’s the reality for in-demand positions like Python, Java, JavaScript, and C#.

4. The Junior Factor Weighs In and Switches Salary Growth Gears

The sheer volume of incoming junior talent slowly but surely pulls down the minimal salary levels for junior and middle levels. 

• During Q2 2023, the decrease was around 12% compared to Q1 2023.

In addition, switchers from other domains go into tech, thinking it is the promised land where you can earn a lot of money. 

• The growth of these two categories significantly contributes to the long-term solution of the talent scarcity problem. 
• But as a side-effect, emerging tech talent also slightly pulls down the salary levels and, over time, levels the field.

If we look at new hiring salary dynamics, things go like that:

• There’s a minimal 10-15% growth and, in some cases (hyped-up niches like AI), a 20% growth. This kind of growth is more or less the result of ongoing inflation and not actual growth.
• In rare cases, a high-profile senior+ and lead-level talent would get a 25-35% salary raise from place to place. But it takes time, patience, and effort to find the right offer.
• A 50% salary raise for new employment is a rarity unless it is employment for foreign companies operating in hot niches (AI, cloud tech, fintech, etc).

5. No Sudden Moves from Seasoned Professionals

The other significant factor in changing the salary dynamics during Q2 2023 is that middle+, senior, senior+, and lead talent became much more hesitant to change jobs. 

• Our May 2023 survey shows that number of respondents willing to change jobs due to higher salary offers is down 20% from February 2023. 
• Compared to November 2022, the number is down 34%.

But it doesn’t mean high-profile specialists are perfectly fine with their current employment.

• Salary freezes, lack of raises, lack of bonuses, and other cutbacks take their toll. The volatile market situation creates a long-term retention problem for the companies.
• Concurrently, while the motivation to change jobs for better opportunities is still present among tech talent, it is not like a high-profile specialist will jump on board if you give him a nice enough job offer. 

The expectations for possible new employers are much higher than candidate expectations from December 2021. Here’s how:

• Higher salaries became a less dominant point in candidate expectations compared to 2021. But that doesn’t make things easier.
• The company’s long-term financial stability became a more prevalent concern as candidates are interested in staying with the company for a long time. 
• Company reputation, or lack thereof, also became more influential in decision-making. Even if the no-name company jumps out of nowhere with a perfect job offer, candidates are less likely to consider this opportunity than those with a credible market presence.
• This particular aspect greatly complicates the recruitment process for startup companies, as candidates are often unsure whether the project will stay around for years to come. 

In conclusion

The Ukrainian Tech Segment Salary Change dynamics has been a rollercoaster ride during Q2 2023. 

• While the figures themselves haven’t changed drastically, the driving forces behind them have changed. 
• This gear shift creates a vastly different economic environment going into Q3 2023.

Our next article will break down the situation with the candidate’s salary expectation during Q2 2023.

Drop us a line to purchase the complete Q2 2023 Talando Market Research.