Why scarce digital skills are forcing HR to rethink reward, careers and workforce planning

Digital talent pay is becoming harder to manage globally

Pay for AI and digital talent is diverging sharply between countries, according to WTW’s latest Artificial Intelligence and Digital Talent Salary Survey Reports. The US remains far ahead for mid-level machine learning roles, with median total compensation above $170,000. Germany follows at around $122,000 while the UK sits just below $100,000. Canada has fallen behind the UK this year into fourth place for AI pay, according to the WTW data.

The fastest movement is taking place outside the most established markets. Across the 10 countries studied by WTW median pay for machine learning roles rose by an average of 2% for salaries and 6% for total compensation. Brazil and Mexico posted double-digit growth, with Mexico seeing a 19% rise in salaries and a 29% jump in total compensation.

The message here is one of unevenness. The US is expensive, Germany and the UK are strengthening, some emerging markets are accelerating and Canada appears to be cooling. For organisations building digital capability across borders, a reward structure designed around last year’s assumptions may already be out of date.

Ruchi Arora, head of work, rewards & careers, Europe at WTW, says HR leaders risk narrowing the issue too quickly if they treat AI and digital talent primarily as a benchmarking exercise. “AI and digital talent are much more than purely a benchmarking issue,” she says. “The AI and digital agenda for organisations is being discussed at the boardroom and this is HR’s opportunity once again to strategically partner with the business and elevate its position.”

Scarce digital skills rarely create isolated reward problems. They reveal whether the organisation has a clear view of critical roles, future skills and retention risk.

The pay race is also a planning problem

For HR the pay gap tells us where competition is intensifying, where local markets are moving and where assumptions about global talent may need updating.

The more important question is whether organisations have a clear enough view of their own digital capability. Which roles are genuinely critical? Which skills can be grown internally? Where will external hiring still be needed? And what kind of reward, career path and work experience will make scarce talent want to stay?

The World Economic Forum’s Future of Jobs Report 2025 found that employers expect 39% of workers’ core skills to change by 2030. It also identified technological change, the green transition, demographic shifts and economic uncertainty as major forces reshaping jobs and skills over the next five years. 

This creates a different kind of workforce planning challenge. Digital capability cannot be merely treated as a specialist technology issue sitting in the CIO’s function. AI, cloud, cyber security, data engineering and software capability increasingly affect product development, customer experience, risk, operations, marketing, finance and HR itself.

McKinsey has also warned that technology talent remains an ongoing constraint on transformation. In a 2025 note on the tech talent gap, the firm reported that only 16% of executives in a previous internal survey felt comfortable with the amount of technology talent available to drive digital transformation, while 60% cited scarcity of tech talent and skills as a key inhibitor. 

This matters because the market response to scarcity is often reactive. A role becomes hard to fill, pay is adjusted, recruiters are asked to search more widely and exceptions are made. Those actions may be necessary, but they do not amount to a strategy.

A stronger HR response starts earlier. It asks which capabilities the organisation needs now, which it will need in three years and which roles are genuinely scarce enough to require differentiated reward, accelerated development or redesigned career paths.

Arora says the AI and digital agenda should prompt HR to work with business leaders on the future shape of work, rather than respond only when pay pressure emerges.

“The AI and digital agenda for companies is about how the workforce is going to transform in the coming months and years,” she says. “HR needs to be leading this discussion with business leaders, driving and helping them think about what needs to change – what will future jobs look like, how does work need to be redesigned, which skills and capabilities exist and will be required, how does work get structured?”

This includes working at task level to understand which activities will be automated, which will be augmented by AI and which new tasks will be created.

Anna Penfold, leader of Russell Reynolds Associates’ UK Human Resources practice, believes the starting point is alignment between the CEO, CHRO and executive team on the organisation’s vision and business strategy.

“When deciding whether to buy, build or borrow skills, executive teams – beginning with the CEO and CHRO – must be fully aligned on the organisation’s vision and business strategy. Reskilling a workforce, whether through human resources or augmented by agentic AI capabilities, is only valuable when the leadership team has carried out a thoughtful diagnostic to determine the capabilities required to deliver the strategy. To do so, future growth ambitions, market goals and overall company direction must be clear and well-defined.”

This diagnostic should begin with the skills and leadership potential already inside the organisation. Penfold argues that one of HR’s most critical contributions is clarity on which skills and roles drive the most value. This requires a reliable view of the current skills base, using existing performance data, deeper assessment approaches or external support where needed.

AI talent attracts attention, but software and cloud still matter

WTW’s research finds that AI applications and machine learning roles continue to command higher pay than other high-demand digital disciplines such as cyber security and cloud computing engineering. The firm attributes this to the scarcity of advanced AI skills, including algorithm design, neural networks and data modelling, alongside the growing strategic importance of AI across sectors.

Yet the same research also points to a more complicated picture. Cloud computing pay is rising quickly, with median salaries for cloud engineering increasing by an average of 9% across the 10 countries studied and total compensation up 12%. China and India saw particularly strong growth, reflecting investment in cloud infrastructure across Asia Pacific.

The survey also finds that the most in-demand digital roles globally remain software-led. Software engineers top the worldwide demand rankings, followed by application developers and data scientists. Machine learning and AI engineers rank lower in current demand, although WTW expects their strategic importance to grow as adoption deepens and infrastructure readiness improves.

This distinction is important for HR. The public conversation often makes AI talent sound like a single category. In practice, digital capability depends on an ecosystem of roles: software engineers, data scientists, cloud engineers, cyber specialists, product managers, business analysts, data governance specialists and people who can translate between technical teams and business functions.

If HR over-focuses on a narrow set of AI roles it may miss the broader capability system required to turn investment into value. Many organisations need better workforce planning across the digital operating model.

Many organisations do not need more machine learning experts. They need better workforce planning across the digital operating model.

Incentives are becoming part of the retention architecture

One of the most significant findings in the WTW research is the stronger growth in total compensation compared with base salary. Across the countries studied, median salaries for machine learning roles rose by an average of 2%, while total compensation rose by 6%. WTW says this suggests that short and long-term incentives are becoming more important in digital talent retention. Arora notes that some employers are using restricted stock units with regular vesting periods to make pay packages more attractive and “sticky”.

This is a useful signal for HR leaders. When scarce skills are hard to replace, organisations often move beyond salary into retention bonuses, long-term incentives, differentiated benefits, learning opportunities, flexibility and career acceleration. Nearly half of organisations in WTW’s survey now offer differentiated reward programmes for digital talent, with enhanced base pay the most common tool, alongside flexible working, learning and development, retention bonuses and long-term incentives.

The risk is that differentiated reward becomes a series of exceptions rather than a deliberate strategy. If some roles receive special treatment HR needs to explain why. If incentives are used to retain scarce digital talent, HR needs to know whether they are strengthening commitment or simply delaying resignation. If long-term incentives are introduced, the organisation needs to understand which behaviours and outcomes they are designed to support.

Arora says organisations need to be more precise about which roles and skills genuinely justify differentiated reward.

“Not all skills and roles in the market are demanding premiums or alternative reward approaches, therefore encapsulating it all under one general segment of ‘digital talent’ may not always be the right approach to take,” she says.

As pay and career transparency increase organisations need to explain the logic behind differentiated reward in a way employees can understand. “Whichever approach a company takes, the real test is: can you explain it to your employees and how will it be understood and perceived?” says Arora. Employees also need to understand whether pay, growth and career opportunities are fair and transparent.

This is where reward, career design and workforce planning need to work together. A retention bonus may keep someone in a role for a period. A credible career path, meaningful work, access to learning, strong leadership and a clear sense of contribution may build a more sustainable relationship.

Careers matter because scarce talent has choices

Pay matters, especially in a competitive global market. But pay is rarely the whole story for digital talent. People with scarce skills often have options. They can move between employers, geographies, sectors and in some cases employment models.

Arora adds that AI and digital talent is “hungry to grow and develop”, which means the employee experience around careers, skills growth and future employability needs as much attention as pay.

Gartner has argued that providing compelling internal career paths is a top priority for HR leaders as organisations respond to skills shortages and changing talent expectations. It also identifies skills intelligence, workforce planning and internal mobility as central to modern talent strategy. 

That is especially relevant for digital roles where external hiring is expensive and supply is concentrated. WTW finds that the US, India and Germany lead demand for both AI engineers and machine learning engineers. Supply is strongest in India, followed by the US, with Canada and Germany also featuring prominently.

For multinational organisations this raises difficult questions. Should digital work be located where talent is available, where customers are located, where costs are lower, where collaboration is easiest or where leadership wants capability to sit? Should scarce talent be hired externally, developed internally or accessed through partnerships? Which roles need to be employees and which can sit in a broader workforce ecosystem?

Career architecture is part of the answer. HR leaders need to know whether digital specialists can see a future inside the organisation. That includes technical career ladders that do not force people into management, cross-functional movement between technology and business roles, learning pathways that help adjacent talent move into scarce roles and clearer progression for people who build deep expertise.

Local markets need local judgement

WTW’s findings underline why a single global pay strategy rarely works for scarce digital talent. The role that is ‘hot’ in one market may be less pressured in another and the mix of salary, incentives, flexibility and career development that works in one country may not transfer neatly to another.

This is important for HR operating models. Global frameworks create consistency, governance and fairness. Local labour market intelligence captures reality. HR leaders need both.

The OECD’s Skills Outlook 2025 argues that differences in background, education and opportunity shape who develops, uses and benefits from key skills, with unequal access to skills development constraining economic performance.

For employers the supply of digital talent is shaped by national education systems, immigration rules, regional technology clusters, infrastructure investment, employer brand, universities, start-up ecosystems and the availability of flexible work. HR leaders need to know where skills are available, which markets are becoming more competitive, how local reward expectations are changing and where internal development may be more realistic than external hiring.

HR’s role is to connect reward, skills and work design

The central lesson from the WTW research is that scarce digital skills cannot be managed through pay benchmarking alone. Pay data is essential, but it answers only part of the question.

Deloitte’s 2025 Global Human Capital Trends research captures the same tension. It reports that 85% of business executives say that organisations need more agile ways of organising work to adapt to market changes while 75% of workers say they hope for greater stability in work.

This tension is visible in the digital talent market. Organisations want agility, speed and access to scarce capability. Workers want credible careers, meaningful development, fair reward and stability. HR’s opportunity is to design systems that hold those needs together.

This means connecting four areas that are often managed separately:

Reward: Which roles need differentiated pay, incentives or benefits because they are scarce and strategically important?

Careers: Can people with digital skills grow without leaving the organisation or moving into management before they want to?

Skills: Which capabilities can be developed internally and which will need to be hired or accessed externally?

Work design: Are scarce specialists spending their time on the work that matters most or being diluted across poorly designed projects, unclear priorities and excessive coordination?

When these areas are disconnected, organisations end up paying a premium for talent that may be poorly deployed, weakly managed or easily lost.

Penfold adds that once the business strategy and skills requirements are clear organisations need to turn to organisation design. This means defining the right structure, spans and layers so that the workforce is set up to deliver the strategy.

What HR leaders should know

Scarce digital skills are creating a reward challenge and exposing deeper questions about workforce planning, career design and organisational capability.

WTW’s research shows that AI and digital talent pay is fragmenting across global markets, with the US far ahead, Germany and the UK strengthening and emerging markets such as Mexico accelerating quickly.

The strongest HR response is to understand which skills are critical, where they are available, how they can be developed and what will persuade people to stay. AI may be the visible trigger but the strategic question is how HR builds the human capability that makes digital transformation possible.