IT providers expect wage inflation to ease by 2026

Service Leadership, part of ConnectWise, has reported early survey findings that suggest wage inflation among IT solution providers will ease further in 2026 and move back towards historical levels in most regions.

The company based its initial assessment on responses gathered for its 13th Annual IT Solution Provider Compensation (Remuneration) Report. The study covers more than 60 roles that IT solution providers commonly employ, including management, sales and marketing, service desk and field technicians, and engineers across security and infrastructure disciplines. It also includes automation engineers for the first time.

Service Leadership said wage inflation peaked in 2022, fell in 2023, and held broadly steady in 2024. It described 2025 as a year of continued decline. The organisation linked the shift to a cooling labour market and increased investment in automation tools among providers.

"Our findings from the compensation survey show the trend of lower wage inflation over the past few years continuing into 2026, in most regions worldwide," said Peter Kujawa, EVP & GM, Service Leadership & IT Nation, Service Leadership. "In 2025, there was improvement and the 2026 projections show the most wage inflation improvement since 2023, giving IT solution providers an opportunity for further improvements in gross margin and ultimately, profitability."

Profit tiers

The early findings indicate a widening gap between the compensation plans of higher-margin providers and those under greater pressure. Service Leadership defines "best-in-class" as the top 25% most profitable IT solution providers.

Best-in-class providers plan to give top-level pay increases of more than 6.0% to around 6.1% of employees. That compares with approximately 24.2% of employees at bottom-quartile providers, which Service Leadership described as roughly four times as many staff receiving increases above that threshold.

The numbers suggest that the least profitable providers expect to keep using larger pay rises to retain or attract staff, even as the wider market signals moderation. Service Leadership did not disclose sample sizes by profitability tier in its early findings.

VARs vs MSPs

The survey results also point to differences between business models. Value-added resellers expect lower rises than managed service providers, according to the early findings.

Among best-in-class VARs, nearly 38% of employees are set to receive increases of 3.0% or less. Service Leadership positioned that as a sign of more conservative wage plans among VARs than MSPs, without giving an equivalent figure for MSPs in the same tier.

Regional variation

Service Leadership said Europe stands out as the only region in which wage inflation appears more persistent. It described Europe as the only region not planning on more than a 50% decrease in employees receiving top-level increases versus 2025.

The US and Australia/New Zealand show a different pattern in the 3.1% to 6.0% increase tier. In the US, 55.8% of employees fall into that bracket. In Australia and New Zealand, the figure stands at 47.8%. Service Leadership attributed those distributions to fewer employees receiving top-level increases, rather than a shift to higher overall wage growth.

Canada recorded the lowest planned increases among the regions cited. Only 6% of employees are expected to receive increases of 6.0% or more. Around 51% are expected to receive increases of 3.0% or less, according to the early findings.

Ownership signals

The early findings also separate compensation planning by ownership structure. Private equity-backed solution providers plan top-level increases for 0.9% of employees in 2026. Privately owned providers plan top-level increases for 9.9% of employees.

The figures point to a sharper constraint on larger rises among providers with private equity investment, based on the survey responses. Service Leadership did not provide detail in the early findings on differences in workforce mix, geography, or role distribution across ownership categories.

Service Leadership said the wider dataset includes target annual earnings, projected raises, and bonus information. It said it covers roles across technical and commercial functions. The full report will include pay-rate benchmarks by role, and it will be released in early March 2026.

The final report will be sold for US$1,999, according to Service Leadership.