Global wage inflation for IT TSPs set to improve in 2025

Service Leadership has unveiled early findings from its 12th Annual IT Solution Provider Compensation Report, indicating notable global improvements in wage inflation anticipated for 2025.

The report is recognised for offering detailed compensation insights across more than 50 key positions within IT solution providers (TSPs), which allows leadership in these sectors to benchmark and optimise their remuneration strategies. This year saw a record participation from TSPs around the world.

Insights detailed in the report cover diverse aspects of compensation including target annual earnings (TAE), projected raises, bonuses, and remuneration data across various roles such as management, sales, marketing, and technical functions. Among the technical roles mentioned are service desk personnel, field technicians, security staff, as well as project and network/systems engineers.

The early findings reveal that wage inflation peaked during 2022, with increases in TAE slowing in 2023 and remaining relatively stagnant through 2024. Projections for 2025 suggest that TAE increases will be below those of 2024, hinting at a potential return to historical norms.

Peter Kujawa, EVP & GM of Service Leadership & IT Nation, stated, "Our findings from the compensation survey show a material improvement is projected in 2025 for wage inflation for TSPs in most regions worldwide. In 2024, there was improvement but not to the degree we saw in 2023. 2025 is projected to improve the most since 2023."

A notable disparity exists between best-in-class TSPs and those in the bottom quartile concerning employee pay raises. Best-in-class TSPs plan significantly fewer top-level wage increases—just 9.9% of employees will see a rise exceeding 6%, compared to 29% for bottom quartile TSPs. Additionally, 31% of employees at these top-performing TSPs are expected to receive increases of 3% or less.

Value Added Resellers (VARs) anticipate lower increase levels than Managed Service Providers (MSPs), with best-in-class VARs projecting nearly 41% of employees will have raises of 3% or less.

In Europe, wage inflation demonstrates persistence; this region does not intend to reduce the number of employees receiving over 6% raises by more than 50% from 2024 to 2025. However, there will be a marked increase in those receiving lower raises of 3% or less, rising from 31.6% to 41%.

The United States and Australia/New Zealand are leading the way in planning increases within the 3.1% to 6% bracket, with 63.3% and 57.0% of employees affected, respectively. This marks a significant change for Australia/New Zealand, nearly 16% more than in 2024, attributed to a decline in top-tier raises.

Canada is highlighted as having the lowest planned increases, with only 7% of employees expected to receive raises over 6% and 42% of employees set for increases of 3% or less.

The report serves as a tool for TSPs to maintain competitiveness and transparency. It also provides additional insights such as the staff-to-management ratios of top-performing TSPs, incentive pay allocation for various positions and seniority levels, and owner earnings based on business models and company sizes. New for the 2025 report will be statistics on full-time employee churn rates across all positions.

The complete Service Leadership Index Annual IT Solution Provider Compensation Report, priced at USD $1,999, is scheduled for release in March 2025. Survey participants will receive a complimentary copy as a token of appreciation.