Hybrid work overtakes pay in competition for AI and tech talent

Hybrid working has overtaken pay as the most common strategy companies use to compete for technology talent, according to new research from International Workplace Group.

The study found that 37% of organisations now use hybrid work as their main lever to attract skilled tech professionals, ahead of competitive pay at 35%. It also found that 78% of business leaders believe organisations offering hybrid work have a clear recruitment advantage over those that do not.

The findings come as competition for AI and digital skills intensifies. More than two-thirds of leaders, 67%, said attracting and retaining top tech talent has become more competitive, while half reported a shortage of candidates with the right skills.

Flexibility becomes a hiring advantage

Flexible work has become a central part of how companies compete for scarce technology skills. Nearly three-quarters of business leaders, 72%, said hybrid or flexible working is important for attracting tech talent, rising to 80% among Gen Z leaders and 79% among millennial leaders.

Retention is becoming a similar challenge. More than two-thirds of leaders, 68%, said competitive salaries alone are insufficient to retain top tech talent. Among tech professionals under 30, work-life balance and flexibility ranked as the most important aspects of company culture at 42%, ahead of financial compensation at 30%.

That places pressure on employers that still treat workplace flexibility as a secondary benefit. For younger technology workers, flexibility now sits closer to the centre of the employment proposition, alongside pay, career progression, and skills development.

AI skills are changing leadership pathways

The research also found that advanced technology skills are becoming more important in leadership decisions. More than four in five business leaders, 83%, said skills such as AI, data analytics and coding are crucial for promotion into leadership roles. One in five, 22%, said they value advanced tech skills significantly above traditional university degrees.

This is affecting how quickly younger technology professionals move into senior roles. Nearly a quarter of organisations, 23%, said they are appointing tech professionals under 30 into leadership roles earlier than traditional career timelines. The figure rises to 45% among Gen Z-led businesses.

Hiring criteria are also changing. Around 31% of leaders said tech proficiency is as important as formal university education when evaluating candidates, while only 5% said formal education remains the primary consideration.

Younger workers are also influencing AI adoption inside organisations. Previous IWG research found that 62% of Gen Z employees actively support senior colleagues with AI upskilling. Among younger workers, 72% said their coaching improved team productivity, while 77% of directors agreed that Gen Z’s AI expertise had improved departmental performance.

Singapore’s skills push adds local context

The findings align with Singapore’s push to build a larger AI-ready workforce. Budget 2026 introduced the National AI Impact Programme, which aims to train 100,000 workers by 2029, alongside enhancements to the TechSkills Accelerator Programme to extend AI fluency beyond traditional technology roles.

The Infocomm Media Development Authority has also introduced TIP Alliance+ to strengthen industry and AI readiness for Information and Digital Technology graduates. This is supported by the Tech Elevation & Career Hub, a centralised platform for technology jobs, training, and career pathways.

Singapore is also preparing to launch the ONE Pass (AI and Tech) visa in January 2027 to attract global AI and technology talent. These measures sit against continued hiring pressure, with AI-related skills remaining among the hardest capabilities to find.

Mark Dixon, Founder and CEO of IWG, said: “The message from leaders – and particularly from younger generations – is clear: companies that do not embed hybrid working into their culture risk losing out in the race for tech talent and accessing the skills they need to remain competitive.”