AI specialists hit pay dirt as talent war rages

The battle for AI talent is set to escalate in the coming year as technology multinationals, global capability centres (GCCs), and IT companies race to hire the best workers in a constrained labour market, inflating wages, said industry experts.

Salaries of AI specialists have been outpacing their peers in traditional IT roles by 35-70%, showed data from staffing firm Ciel HR. The ensuing talent war will see their pay premiums surge further by 15-20% over the next 12-18 months as companies compete aggressively in a limited talent pool. The cost impact will be more pronounced on mid-to-senior roles, experts said.

“Every organisation is aggressively building its AI capabilities with generative AI and advanced machine learning becoming critical differentiators,” Aditya Narayan Mishra, MD and CEO at Ciel HR, told ET. “As companies race to establish AI leadership, we anticipate the competition to remain extremely high, potentially even more aggressive than what we have seen in 2024.”

As per industry estimates, AI talent demand is expected to reach 1.3 million by 2027, a twofold rise from the existing pool of 600,000-650,000, even as the AI market itself is forecast to expand at a rate of 25-35%, exacerbating the gap, experts noted.

Meanwhile, AI adoption in the Indian IT sector is reaching 60-65% while 80% of new GCCs in the country are prioritising AI/ML capabilities.

Companies are no longer looking for just technical skills, but for professionals who can strategically leverage AI to drive business transformation, said Mishra.

“With global companies aggressively setting up GCCs and AI-focused R&D centres, the talent gap may widen unless upskilling initiatives match the demand,” he added.

Salaries for AI professionals have been already rising by 15-30% annually, even attracting premiums of 25-35% during job transitions, data from Teamlease Digital and Quess IT Staffing showed.

Increasing complexity of AI projects and emergence of new AI applications will also require specialised skills that are in short supply, said Kapil Joshi, CEO, Quess IT Staffing.

“This growing demand for specialised skills will further fuel the competition, making it crucial for companies to offer attractive compensation packages and career opportunities to secure top AI talent in an increasingly tight job market,” he said.

Teamlease Digital VP Krishna Vij noted that organisations are offering higher compensation packages, signing bonuses, and stock options to secure top talent.

“To manage these costs, companies are taking a multipronged approach, reskilling existing employees, tapping into talent in Tier II and III cities, collaborating with academia, and leveraging AI tools and automation. This helps balance rising expenses while meeting their growing talent needs,” she said.

GCCs in particular are enhancing their appeal through competitive compensation, often with 30% higher pay than conventional IT roles. Organisations are also stepping up their efforts by offering enticing projects, competitive benefits, upskilling and career advancement opportunities, and Esop-linked retention bonuses specifically designed for AI talent, according to the experts.

Joshi, however, said that the higher salaries offered by GCCs are unlikely to be sustainable in the future. And as the IT industry adapts, competitive salaries will remain a part of the landscape, but they will be balanced by higher productivity and enhanced profitability, ensuring that margins are not adversely impacted.

“It’s important to note that these specialised roles and AI-driven projects typically command high gross margins and offer long-term value,” Joshi said.