IT Salary Trends in 2025: What Entrepreneurs Need To Know

The information technology (IT) sector is changing at a rapid pace. Those who can’t keep up with these shifts could either face disruptions or closure.

For entrepreneurs, staying ahead means gaining a deeper understanding of the job market, including the financial currents that shape it. Anticipating salary trends is just as important for industry professionals, whether they’re exploring career path options or starting a job search.

This article discusses the essential factors affecting tech salaries and provides tips on how you can use this knowledge to your advantage.

Key Drivers of IT Salary Trends

It’s no secret that tech professionals have some of the highest salary ranges across different industries. Their pay depends on several factors, including education, experience, skillset, and responsibilities. Of course, those holding senior positions earn more than entry-level roles. An IT salary guide can come in handy if you want deeper insights into this matter.

Here are the forces reshaping actual compensations:    

Technological Advancements and In-Demand Skills

The need for professionals with in-demand technical skills—particularly in artificial intelligence (AI), cybersecurity, cloud computing, and data science—continues to grow. This means higher salaries for those with experience in these areas.

Evolving Workforce Demographics 

The increasing diversity of the workforce, alongside the shift to work-life balance and other employee preferences, likewise impacts the median base salary for professionals. Such changes drive companies to increase their salary budgets to offer competitive benefits packages. Additionally, some might attract candidates with flexible schedules and adaptable work arrangements.

Geographic Location  

Regions with a high concentration of tech companies, such as Silicon Valley and Washington, DC, tend to offer higher salaries to stay competitive in a congested job market. The average base salary for mid-level positions in other areas could be the same as the lowest salary for entry-level roles in tech hubs. You can refer to resources containing cyber security salary ranges to determine benchmarks in specific areas.   

Industry-Specific Movements

The demand for tech talents, the sector’s profitability, and the complexity of tech roles influence IT salary trends across different industries. While the tech industry will see significant increases in annual base salaries, IT positions in government offices might experience more modest pay raises.

Similarly, tech jobs in finance and healthcare sectors often have more complicated job responsibilities, including specialized skills in cybersecurity. Professionals in these sectors may have higher median salaries compared to those in manufacturing.

Economic Factors

The state’s economy, including inflation rate, cost of living, and economic growth fluctuations, significantly contribute to pay structures. A stable economy and robust growth often lead to salary increases, depending on company size and performance. Conversely, economic downturns can result in stagnant wages. In some cases, these unfortunate events could force businesses to streamline their operations, reduce their workforce, or completely shut down.

Increased Demand for Cybersecurity and Cloud Computing Professionals  

With cyberattacks getting more sophisticated and costlier to manage, companies are constantly looking for skilled candidates in this field. In 2023, there were some 3.5 million unfilled cybersecurity jobs. Of these vacancies, 750,000 were in the United States, according to Cybersecurity Ventures. IT security roles, including incident responders, penetration testers, and cybersecurity analysts, are expected to stay in demand. (1)

Apart from reinforcing security measures, many businesses are turning to cloud infrastructure to optimize a wide range of operational tasks. This drives the demand for cloud architects who design bespoke solutions for enterprises. Cloud engineers are also highly coveted as they focus on the implementation and management of these systems.  

These specialized skills require additional education and training. As such, they command and justify above-average annual wages.

The Impact of AI, Automation, and Emerging Technologies

AI and other advanced technologies have likewise seen a huge uptick in recent years. Many businesses are integrating predictive and generative AI and other automation platforms in various stages of their operations.

This shift has led to an increasing demand for high-skill IT positions, including data analysts and AI-based software developers. A recent survey shows that tech professionals with AI skills earn as much as 25% more than their peers. (2)

While the skill gap drives salary ranges higher for the right job candidate, it can result in job losses or workers who refuse to upskill. Established companies are shaving off their team members due to massive automation. Some startups are either slowing down or shutting their operations. These have resulted in tech industry layoffs, with over 150,000 job cuts in 2024 and 6,003 dismissals in January 2025. (3)  

Remote Work and Salary Negotiations

Negotiating tech salaries for remote positions can be quite complex. Most recruiters factor in the team member’s place of residence and cost of living. This consideration, however, doesn’t stop remote workers from expecting higher salaries. They know too well that outsourcing work translates to business savings from office space, power, electricity, and other resource needs - expenses that can be added to their core compensation instead.    

The wide availability of remote work options has likewise led to higher pay offers. Companies are adjusting salary budgets to attract better talents from wider geographical pools. Regardless of the circumstances, companies must guarantee equitable pay across a geographically diverse workforce.  

How To Attract and Keep Top Talents

Despite the sporadic job cuts, however, tech talent shortages continue to bug the IT industry. The complex hiring landscape further widens the skill gap by the day.

Consider the following guidelines if you’re eager to find and retain the best candidates for your organization:  

Research the Current Job Market  

To come up with reasonable salary benchmarks, analyze market rates for tech roles similar to the one you’re looking for. Comparing salaries across regions can help you approach salary offers and expectations more effectively.   

Prioritize Skill-Based Hiring

Almost 48% of hiring managers worldwide have difficulty finding candidates with the right skills and qualifications. Identifying potential is another hurdle, with 28.29% of recruiters wondering if those who look good on paper can actually deliver. (4)

Skill-based hiring can overcome these challenges, as it focuses on the candidates’ practical skills and abilities instead of academic degree and candidate experience requirements. Hiring managers could develop competency frameworks for every role and use this as the basis for creating the job description. You can also use hiring platforms to conduct tests and simulations. Review their portfolio meticulously to evaluate their core and additional skills.

Offer Attractive Benefits  

You can still offer an attractive salary package as a startup or a small business. Consider providing lower cash compensation and augmenting wages with variable pay options like stock options, profit sharing, bonuses, and other salary boosts. Apart from offering a reasonable annual salary, it pays to implement programs for proper work-life balance, like unlimited paid time off.

Invest in Your Staff

Targeted training opportunities, particularly for in-demand technologies, are crucial for retaining talent. Why? Employees often seek relevant learning and development alongside career advancement opportunities when assessing potential employers.

The Bottomline  

Even in the digital age, your success as a company still hinges on the people behind your organization. You must proactively determine your skill demands and decide whether or not you'll upskill your current workforce or hire new ones.  

Offering competitive IT salaries is just one of the many ways to attract the right talent. Investing in staff development and embracing flexible compensation models are crucial to building a great team. By staying informed of the latest salary trends, you can assemble a team of professionals ready to withstand the rising tide of changes in the tech sector.

Citations

1.      "Cybersecurity Jobs Report: 3.5 million Unfilled Positions in 2025". Source: https://cybersecurityventures.com/jobs/

2.      "How Much Do AI engineers Make? 2025 Salary Guide". Source: https://www.coursera.org/articles/ai-engineer-salary

3.      "A comprehensive list of 2024 and 2025 tech layoffs". Source: https://techcrunch.com/2025/02/28/tech-layoffs-2024-list/

4.      "Global challenges when recruiting technical roles in 2025". Source: https://www.statista.com/statistics/1296742/challenges-when-recruiting-developers/