The high-tech industry in China is overcrowded and the demand for top tech talent is surging, making securing and retaining tech employees increasingly challenging. In a recent survey 3 out of 4 hiring managers pointed out that the biggest challenge they experienced was to find and attract candidates with the required skillsets. A lack of suitable IT candidates available on the market was a major barrier to recruitment. While finding employees with an average skillset is comparatively easy, it is getting extremely difficult to lure highly qualified IT executives.

That said, a company that wants to tap into the top IT talent pool needs to overcome passive approaches to recruitment and do all in its power to actively approach and attract a tech-savvy workforce. Actively searching for skilled overseas returnees or female IT professionals returning from a maternity leave would be a good practice to enlarge the talent pool.

Apart from filling the talent pipeline with external talent, IT companies need to define a talent development strategy and upskill their own staff so that they don't lose their best IT professionals to their competitors. You will need to identify and invest in your high potentials who have the ability to learn and grow, but might not yet have the required skills to step into a senior management role. 

When it has been customary for talent to move from big cities in search of greener pastures in terms of employment and better pay, the reverse is true when it comes to China. In recent years it has been known for tech industry talent moving from top tier cities and going to smaller ones for employment.

Cities such as Beijing, Shanghai, and Shenzhen have seen an exodus of young tech talent in the recent past, and the latter is because of high living costs. Despite the fact that such cities offer attractive pay the living standards have been deemed way too high for young IT professionals who prefer to move on.

That said, if seeking to recruit in China's tech industry, it would be shrewd to consider cities from the second and third tiers. The latter should be so because in these cities salary offers are average and provide a fair living standard. Most IT experts who are finding such living standards in tier 1 cities unbearable are the young task force fresh from college. Employers in China's cities of tier 2 or 3 are benefiting from the new surge in skilled IT talent and take advantage of cost effectiveness and margins when compared with their counterparts in Shanghai and Beijing.

Meeting salary expectations in a market with fierce competition for the brightest IT talent can be a big challenge. Although compensation is not always the number one concern of highly skilled candidates, being able to offer an attractive compensation package and long-term stock incentives for key executives can offer your business a competitive edge. Review your compensation schemes regularly and make sure that you are offering salaries and benefits above the market average to meet the expectations of skilled executive candidates. 

If an IT employee jumps ship from a foreign company like Google, Microsoft, or Amazon to a local Chinese competitor such as Baidu, Tencent, or Alibaba, it’s possible to negotiate a significantly higher compensation package and up to two additional levels of seniority. However, this logic does not apply in reverse. As a matter of fact, multinational IT firms are losing more and more IT talent to their Chinese competitors and their competitive advantage slumps.

Job titles play an important role in China and are considered to be a crucial bargaining chip during employment negotiations. There is a trend to see higher titles in Chinese local tech companies compared to foreign companies. For example, a position at a director level in Baidu, which is the largest search engine provider in China, can be treated as the equivalent of a Senior Manager’s position in Amazon. It is important to keep this in mind when recruiting talent in the Chinese market.

For foreign IT professionals interested in pursuing a career in China it is crucial to realize that classical expatriate compensation packages are becoming rarer in China. Local pay is the way to go and has become a widely accepted practice, even when relocation to China is required.

Compared to Silicon Valley the turnover rate for local tech talent in China has become quite high. It is not surprising to find candidates switching jobs every one or two years. The average turnover rate at Chinese Internet firms has reached up to a staggering 36% in 2016. One reason for the high employee turnover rate is often caused by immature management and business models of Chinese Internet startups, which pose risks of uncertainty.

Another factor is driven by the high demand for young tech talent with cutting-edge IT skills. They have plenty of opportunities and are eager to explore different job opportunities at the beginning of their career or even start their own businesses. Turnover rates will usually decline after the house and kids come along.

The human capital market in the IT sector in China is transforming rapidly and multinationals find it increasingly tough to compete with the local emerging tech giants. China’s BAT companies (Baidu, Alibaba, Tencent) and the evolving IT startup scene have become part of everyday conversation in the Silicon Valley. The race is on and foreign IT firms can only stay competitive and be successful in China if they are able to recruit skilled executives to manage their business operations in China and attract young tech-savvy talent to stay ahead in the market.