As the tech sector heads deeper into 2025, the industry is still feeling the aftershocks of a market correction that started a few years ago in the wake of the post-COVID boom and inflated valuations. Investor caution remains high, budgets are tighter, and layoffs continue to make headlines.
While these headlines often focus on job losses, the bigger picture is more complex. Many companies are reducing headcount, but they are also making deliberate choices about who they hire, who they retain and how they structure leadership teams to deliver more with less.
This year’s CTO Compensation Report, created in partnership with Albany Partners, takes a closer look at these shifting priorities. What we found is a leadership market under pressure, but far from static.
Why layoffs are still happening
The layoffs we have seen in the early part of 2025 are part of a longer trend. Tech giants like Meta, Microsoft and Amazon have all announced further cuts, but some smaller investor-backed businesses are following suit.
Behind these decisions are several clear drivers:
- Post-pandemic over-hiring: Many businesses expanded too quickly during COVID-19 and are now correcting courses.
- Economic pressure: High inflation, rising interest rates and slower global growth have forced businesses to cut costs.
- Tighter venture capital funding: Startups are facing longer funding cycles and are cutting staff to extend their runway.
- The rise of AI and automation: New technologies are reducing the need for some roles, especially in operations, support and administration.
- A shift in focus: Many businesses are prioritising leaner, higher-performing teams over headcount growth.
This is creating a more selective job market. Salaries have mostly levelled out, with a notable exception within high-demand areas like AI, cloud and data. Meanwhile, investors are pushing harder for profitability and sustainable growth, rather than scale at any cost.
Retention is still one of the biggest risks
While layoffs dominate the news, employee retention remains a critical challenge. Our data shows that 41 percent of engineering leaders are considering leaving their roles. The reasons are familiar, but no less urgent.
Lack of trust in leadership, poor company culture, and the struggle to maintain work-life balance all continue to top the list. Compensation and benefits still matter, but they are not enough to offset deeper cultural and leadership issues.
Without alignment between the leadership team and the broader business, retaining high-performing talent becomes even harder in a market where opportunities are more limited but highly competitive.
The competition for leadership is not slowing down
Despite cost-cutting and hiring freezes in some areas, the best tech leaders remain in high demand.
This year’s report revealed a small but significant number of outlier compensation packages, particularly in equity. Thirty respondents reported equity allocations valued at over £1 million, with a few exceeding even £5 million.
However, these packages are not just reserved for high-growth startups, they are a signal that businesses are willing to invest in leaders who can build lean teams, drive product innovation, and lead AI adoption while keeping performance high and costs under control.
In the current climate technology leadership is seen as a direct driver of business value. Leaders who can balance cost and performance, while navigating complex product and technology challenges, are being recognised as essential to long-term success.
What this means for businesses and tech leaders
For businesses, these shifts mean taking a hard look at how leadership teams are structured, supported and rewarded.
Leaner teams need leaders who can deliver impact without adding unnecessary cost. That makes leadership retention and recruitment more critical than ever.
For tech leaders, the landscape is more competitive but full of opportunity. Those with the right mix of strategic, technical and leadership skills remain in high demand, and businesses are willing to compete to secure them.
