Wage Growth and Sector Development: Does Rising Pay Reflect Productivity in the IT Sector?

In recent years, Georgia’s IT sector has seen rapid growth in both scale and value. However, not all indicators are growing at the same pace—there are visible gaps between the growth in sector revenue, employment, and wages. Between 2019 and 2024, company turnover in the IT sector increased ninefold, while the number of employees grew fivefold, and the average salary rose 3.1 times.

These figures indicate that company revenues are growing faster than both workforce size and compensation. In fact, in 2023, IT businesses paid employees a total of 1.2 billion GEL, which accounted for 57% of sector turnover. In 2019, this share was just 34%, and by the first three quarters of 2024, it had risen further to 63%. This shows that wages are not only increasing in absolute terms but are also taking up a larger share of company income.

But does this wage growth reflect an actual increase in productivity—or is it simply a shift in the distribution of value?

One explanation is that productivity—meaning the value generated per employee—is indeed improving. Revenue growth is being driven by service diversification, the expansion of high-value tech offerings, and improved access to international markets. Under these conditions, companies are generating more value per employee, allowing them to offer better compensation to remain competitive.

A global comparison reinforces this. For instance, in Poland—one of the fastest-growing IT hubs in Central Europe—productivity per IT employee increased by around 30% in just four years (McKinsey, 2023). In that case, wage growth was largely aligned with rising output, not just market demand. This balance helped Poland establish itself as a competitive export-oriented tech economy, despite ongoing talent drain.

Yet global competition plays another major role. The rise of remote work and international demand for Georgian professionals has reshaped the local labor market. Companies unable to offer competitive salaries risk losing talent. In this context, wage increases are not always driven by output but by the urgent need to retain skilled workers.

This raises two key questions:
First, are Georgian IT companies truly improving productivity—generating higher-quality revenue, not just volume?
Second, if wage growth is primarily a reaction to market pressure, can companies sustain this pace when external demand stabilizes?

In the long term, sustainable sector growth will require a balance—between competitive wages and the productivity that justifies them. Wage increases alone are not enough. Investment in knowledge, institutional capacity, and an ecosystem that supports not only financial but professional development will be essential to securing the future of Georgia’s digital economy.

Find the BTU’s research report on IT sector trends here.