Lack of IT professionals is driving salaries through the roof

The salaries for IT specialists in Germany continue to rise due to the shortage of skilled workers. But US companies also urgently need specialists and are increasingly looking around the German market – and are offering lavish salaries. The Handelsblatt reports that the lower salary level in Germany compared to US companies is increasing as a result of a pull effect.

Accordingly, Microsoft wants to significantly increase its budget for bonuses and stock options for US employees. Amazon has more than doubled its maximum base salary for specialists from the equivalent of 150,000 euros to almost 330,000 euros. In Silicon Valley, the average basic salary for software architects is currently 140,000 euros – with the usual bonuses and stock options in the USA it is even 216,000 euros, according to the Handelsblatt.

With a view to the salaries, Google, Apple and Co. can afford every employee, explains the German founder Jan Becker to the Handelsblatt, who is looking for employees for his startup in Silicon Valley. “They put a million dollars on the table for a brilliant developer.” The average income for software developers in Germany is around 85,000 euros. “Germany is a low-wage country in the IT sector,” says an anonymous manager of a large tech company. “If you don’t do anything stupid, you can retire in the Valley after a decade or two in the tech sector.”

Since the pandemic, specialists have regularly been working from home. The US software company Zendesk is using the opportunity to avoid the high salaries in the USA and “employs half of the workforce even outside the USA,” explains COO Jeff Titterton. This also has a direct and indirect effect on salaries in Germany. Google and Microsoft are internationally the benchmark for payment in the IT industry – other markets outside the USA would usually follow suit.

The median salary of IT systems architects increased by 24 percent between 2019 and 2021, and by as much as 60 percent in the last six years. The development will therefore not stop so easily. According to experts, according to the report, the greatest need is for IT workers with a salary range between 80,000 and 160,000 euros. There just aren’t enough people to do the work here. The Ministry of Education wants to close the skilled worker gap with 45 million.

While larger companies could compensate for the salary development, medium-sized companies would have to think carefully about how many IT experts they can actually afford in the course of digitization. Experts estimate that for a medium-sized company with a turnover of one to two billion euros, a fixed salary of 350,000 euros is now necessary for the head of technology. More and more large private equity firms from the USA are investing a lot of money in software companies and are also looking for good people in Germany.

Managers of the US tech giants are increasingly drawn to Germany due to the high cost of living in the US metropolises – which also drives up salaries. They see advantages in the high quality of life and the education and health system. In the area around San Francisco, with an annual income of $500,000, one is only considered to be in the middle class.


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