Employee rewards watch: tech sector UK 2014

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Rising investor confidence and an improving economic environment have spurred growth in the Technology sector during 2013, which shows few signs of slowing in the year ahead.

As the sector continues to evolve, Technology companies are being forced to change almost everything they do, which is reflected in the numbers planning organisational restructure in 2014.

The boom in mobile technology and broadband connectivity is slowly shifting purchasing power from corporates to the individual, with increasing reliance on user-experience and quality of service.

Innovations such as wearable technology and robotics are changing how people interact with the world around them, with intelligent interfaces allowing better real-time decision-making where the physical and digital worlds converge. This is creating huge opportunities and competition for Technology companies to engage with potential customers at the point of action, driving a large proportion to enter new markets and diversify their propositions over the next 12 months.

The increasing difficulty of justifying the initial costs of traditional enterprise software licences over low-cost subscription and PAYGO applications is making companies rethink and diverge their business models.

However, this cannot be without a cost, and whilst more than half the Technology companies we surveyed expected better financial performance than the previous year, this was lower than the average across all sectors.

The expansion of Technology markets and products is driving competition for key skills and is becoming a global war for talent. Unsurprisingly, more than half the Technology companies that participated expect to increase headcount, but a fifth expect to offshore or outsource roles over the next 12 months.

Despite the increasing success of silicon roundabout, little has been done about the spectre of a significant UK skills shortage, and this statistic reflects low confidence in the recent initiative for ‘exceptional talent’ visas.

This means that employers will have to compete harder to attract and retain the people they need to drive successful business transformation, but against increasing financial pressures.

Understandably Technology companies are being less liberal with pay rises than the average this year, and engaging employees with their benefits package is clearly high on the agenda, with the increased use of branding and total reward statements demonstrating greater return on investment.

Ironically, the consumerisation of IT is reflected in the greater use of flexible benefits by employers in the sector, and this year there are clear indications that using a single outsourced administration provider is improving efficiency.

We expect that the control of benefit costs will dominate the activities of reward professionals in the sector over the next 12 months, as these continue to rise. Whilst this was somewhat inevitable due to the introduction of automatic enrolment into pension schemes, the typically better private healthcare coverage in the sector will continue to prove a challenge. Already we have seen a boom in healthcare screening as focus shifts from remedy to prevention, and the introduction of ‘open referral’ should help to bring premiums down.

With over a fifth of Technology companies looking to change benefit or service providers, one thing is for certain, that 2014 is going to prove a very busy year!

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