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In this article, we explore how the shift from the hottest-ever hiring market to the current macroeconomic environment has changed the relationship between demand for senior developers and the average salaries they can command.
Senior developers have, on average, seen their salary growth decrease
It remains a rocky time for South Africa’s tech industry. Over the past two years, we’ve seen a massive shift away from the hottest-ever developer hiring market towards a funding cooldown. As a result, many companies saw their profitability fail to keep up with growth. That’s seen the tech industry as a whole, shift its focus from growth at all costs to capital-efficient growth.
At the same time, historically high demand for developers caused average salaries to increase rapidly, as companies fought to hire the best available tech talent. Senior developers were the biggest winners in the talent arms race and could negotiate year-on-year increases as high as 19%.
Now, many companies are being forced to tighten their budgets or implement retrenchments. That means they no longer have the ability — or need — to offer the types of increases that were on offer during the boom.
However, the current cooldown hasn’t made hiring senior developers any easier, as demand for them remains healthy. But, this got us thinking about the current dynamics between developers and companies: Do senior developers still have the power to negotiate high increases? And if not, how are companies meeting developers halfway?
Looking at the salary data from 2024, it becomes clear that senior developers have not escaped the challenges facing South Africa’s tech industry:
Average software developer salary increases
Over the past year, seniors with six to ten years of experience have seen their salary growth halve.
Super seniors with more than a decade of experience are also feeling the pinch. Historically, they have received the most significant pay increases. Now, they’ve only managed to secure a nominal 0.2% pay rise.
This suggests that seniors can no longer use demand for their experience to guarantee the types of increases that were on offer as recently as 2022. If we factor inflation into the equation, we see that the increases they do receive, aren’t enough to increase their buying power.
Average software developer salary by year adjusted for inflation
More companies are offering seniors bonuses in 2024
While many companies aren’t able to offer the sorts of increases they could during the tech boom, they are looking at other ways to compensate their seniors fairly. One way they’re doing that is through their benefits package:
“What monetary benefits do you get at your current company?”
Over the past year, the share of senior developers receiving bonuses as part of their compensation package increased from 52.6% to 55.8%. This suggests that more companies offer performance or other bonuses to reward developers for driving business impact or profitability.
You need to sell your benefits package as a win-win for you and potential team members
Offering benefits like performance bonuses can help offset lower salary increases, but it’s worth remembering that how you present your compensation package can be the difference between someone accepting and declining your offer. At the same time, you also need to ensure your salaries remain market-related so that you’re not risking alienating your preferred candidates.
We asked developers what they think is the most important part of a great compensation package. The overwhelming majority said that it was their take-home pay. Taking the time to explain how benefits like performance bonuses will work at your company and what that might mean for their income at the end of the month can help manage any potential differences in developers’ salary expectations and what you’re able to offer.
If you’re looking for more salary data to help you benchmark market-related developer salaries, download our 2024 Developer Salary Benchmarking Report.