Just 17% of technology firms will see standard pay increases across their organisation compared to roughly half of that of other industries (32%), research reveals.
The 2014 Employee Rewards Watch Technology Report carried out by Thomsons Online Benefits representing over 150,000 employees in the sector found that over a third (37%) of respondents were planning to pay limited increases to select individuals - almost twice the average of other industries (20%).
However, where technology companies were not using pay increases to engage with employees the survey indicated that comprehensive benefits packages were employed to retain talent.
Nine in 10 (89%) technology companies offered employees health and risk benefits compared to 76% of companies across other industries, while two thirds (66%) offered voluntary benefits in comparison to 53% of all other companies.
A further 42% of tech firms had flexible benefits packages for staff compared to 36% of the rest of the industry, as well as more comprehensive healthcare packages including improved technology, higher levels of life assurance, medical assurance, income protection, health screening and onsite caring.
Combined with pensions, 83% of technology firms viewed these benefits as key to improving talent retention and improving engagement (80%) compared to an average of 68% within other industries.
Thomsons Online Benefits chief technical officer Pete Craghill said businesses were being forced to change the way they thought about reward as the competition for the best talent was "fiercer than ever".
"This period of change brings the potential for both risk and reward," he said.
"As mobile, digital and social technologies continue to evolve and impact companies, we're seeing a profound shift in the way technology organisations operate and the services they offer. Adding to this complexity is an increasingly diverse workforce based on different ages, geographies, skillsets and motivations.
"As a result, we're seeing a conscious movement away from using pay as an incentive, with employers favouring a varied and flexible benefits package to cater for different wants and needs. It's the right approach to take, companies just need to ensure they've the technology and resource in place to deliver it successfully," he concluded.