Wage Inflation Cools Further in IT Services Sector, ConnectWise Data Shows
Event summary
- Service Leadership Inc., a ConnectWise subsidiary, reports early findings from its 13th Annual IT Solution Provider Compensation Report, indicating continued cooling of wage inflation in 2026.
- Wage inflation peaked in 2022, decreased in 2023, and has been declining steadily since, with 2025 showing continuous decline.
- Best-in-class IT solution providers plan roughly 4x fewer employees (6.1%) receiving top-level increases (over 6.0%) compared to the bottom quartile (24.2%).
- The US and ANZ lead with the largest planned increases in the 3.1% to 6.0% tier, while Canada plans the lowest increases.
- Private Equity-backed solution providers plan only 0.9% of employees receiving top-level increases in 2026, compared to 9.9% of privately owned.
The big picture
The cooling of wage inflation in the IT services sector reflects broader labor market trends and a shift towards automation-driven efficiencies. This trend is particularly significant for IT solution providers, as it allows for improved gross margins and profitability. The regional disparities in wage inflation highlight varying economic conditions and labor market dynamics across different markets.
What we're watching
- Regional Disparities
- Whether wage inflation in Europe will remain more stubborn compared to other regions, given its current resistance to significant decreases in top-level increases.
- Profitability Impact
- How the continued decrease in wage inflation will affect gross margin and profitability for IT solution providers.
- Automation Investments
- The pace at which IT solution providers will continue to invest in automation tools to drive future efficiencies and manage labor costs.
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