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How CIOs can retain talent as pay growth slows
IT pay growth has slowed amid economic uncertainty, but senior talent remains in demand. To retain top talent, CIOs must preserve the decision-making authority of senior employees.
The frenzied IT hiring and pay growth sparked by the COVID-19 pandemic has given way to a more cautious and uncertain market.
CIOs are reacting to unclear economic signals, which is showing up as IT hiring freezes and pay stagnation, said Fiona Mark, principal analyst at Forrester Research.
While IT pay growth has slowed for many roles, CIOs aren't facing a mass talent exodus. Instead, AI is shifting demand toward a smaller group of highly skilled technologists, where retention risk is driven as much by engagement and perceived value as by pay. For CIOs, the real challenge isn't simply pay stagnation -- it's how to keep scarce talent engaged and valued in this rapidly evolving landscape.
Steps CIOs can take to retain scarce talent amid an uncertain economy include the following:
- Protect senior employees' ownership and decision-making authority.
- Clarify AI strategy and communicate transparently.
- Commit to real upskilling and enablement.
As economic uncertainty leads to tighter budgets and pay stagnation, CIOs are being compelled to reassess their employee retention strategies.
IT pay growth stabilizes after the pandemic-era boom
The rapid surge in IT hiring and pay during the pandemic, fueled by a digital acceleration, has leveled off as organizations adjust to more sustainable staffing and budget realities. Roles that experienced significant growth -- such as system administrators, software developers and entry-level positions -- now face a slowdown in both hiring and pay increases.
This shift reflects a broader cooling off after what Mark described as a hiring FOMO -- fear of missing out -- period, where organizations aggressively sought talent to keep pace with rapid digital transformation.
"The market is correcting back to something more sustainable," said Nik Kale, principal engineer at Cisco Systems.
AI specialists and senior IT workers remain in demand
While pay growth has slowed for many traditional IT roles, demand has not flattened evenly across the workforce. Instead, AI is concentrating hiring and compensation around roles that require deep technical expertise, governance capabilities and platform-level knowledge, Kale said. The scarcity CIOs face today is more about institutional knowledge than overall head count.
"You can find engineers. What you really cannot find is that deep expertise -- a person who's running your Kubernetes cluster or a very senior engineer who is responsible for building AI agents and overseeing the decision-making and guardrails around those agents," Kale said.
Senior technologists who understand how critical platforms, security architectures or AI governance actually function in practice are the most difficult roles to replace. When these people exit, organizations lose months or years of institutional knowledge that no replacement can immediately replicate.
Additionally, as AI systems take on more tasks and autonomy, the depth of expertise becomes even more critical. "AI isn't reducing the senior talent dependency," Kale said. "It's just concentrating it to very specific roles and to people who can deploy and govern these systems, which are more complex than ever before."
What CIOs can do to retain scarce talent
In an uncertain economy, IT pay growth can slow, leading to turnover. However, even in companies that allocate extra budget for AI specialists and other critical senior IT roles, CIOs must recognize that monetary compensation alone won't secure their most valuable employees.
1. Protect senior employees' decision-making authority
Retention improves when senior engineers have stable missions, clear ownership boundaries and decision-making power. CIOs should shield key talent from constant reorganizations and role ambiguity, because this signals that the organization values their expertise and fosters trust.
"Compensation is often the last straw, but it's not the root cause. What is really causing [senior] people to leave is when their responsibility, or scope of responsibility, shrinks while their pay also slows," Kale said.
2. Clarify AI strategy and communicate transparently
IT workers understand that companies are viewing AI as a way to increase efficiency, which has generated job security fears. CIOs should articulate a clear AI strategy and openly communicate how it will affect employees' roles, Mark said.
Transparency helps ease the uncertainty and fear many IT workers feel amid rapid AI adoption and shifting job expectations.
3. Commit to real upskilling and enablement
Although many organizations have invested in AI, few have fully prepared their workforce to use these new tools. CIOs should offer meaningful training and involve employees in decisions around AI adoption, Mark said. This approach empowers them to embrace change rather than resist it.
Key takeaways
The rapid pay growth of the pandemic era has cooled significantly, but this doesn't signal a broad talent flight. Instead, the risk has shifted to a smaller group of highly skilled workers who possess critical institutional knowledge and expertise in AI, cloud and security. CIOs must recognize that creating an environment where talent feels empowered, trusted and valued is just as important to employee retention as salary growth -- especially in more senior roles.
Looking ahead, CIOs should focus on clear communication of AI strategies to reduce uncertainty, invest in meaningful upskilling for new technology demands, and safeguard decision-making authority to maintain senior employee engagement. These steps can help CIOs retain top talent and unlock the full potential of AI-driven transformation in an uncertain economic climate.
Tim Murphy is site editor for Informa TechTarget's IT Strategy group.
