SAP S/4HANA Contingent Labor Pay Rate Data Trends – September 2024

Brian Trout, Executive Vice President, Sales, Baer
By
Brian Trout
Executive Vice President, Sales
13 September 2024

The SAP contingent labor market has seen its fair share of fluctuations in the past five years. Just as S/4HANA was gaining traction, the pandemic hit, causing organizations to briefly push pause on investment. Then, when it became clear how essential transformation was to surviving the new normal, it was all systems go. We were in hyper-acceleration mode. The market cooled in 2023 due to recessionary headwinds, but 2024 has brought increased investment. Demand has not yet reached the pandemic pinnacle, but it’s headed that way.

Are these trends being reflected in average pay rates? What do rate fluctuations mean for your program? I once mined our Baer proprietary data to find out. I looked at aggregate payrate data across finance, HCM, SCM, and technology functions to identify and break down the trends in each area—and share where I think the market is headed next.

SAP S/4HANA Finance: Average Payrates Peaked in 2023 but 2024 Rates Are Stabilizing

Average payrates for SAP finance expertise began rising in 2021.  Rates peaked in 2023, with a full 15% increase over the 2020 baseline. 2024 year-to-date data shows a modest rate decline, but the average is still a full 7.5% above 2020.

My Take

This tracks with the overall S/4HANA implementation trends. The early pandemic coincided with a wave of implementations, and the finance core is traditionally the area where organizations begin their transformations. Expertise in this area was in demand, driving up rates. But as organizations completed their financial transformations more talent became available, and rates have softened. However, demand remains high enough to prevent a rate collapse.

Looking Ahead

Baer data is indicating another wave of implementations beginning in Q4 of this year, both in the public and private sectors. I anticipate demand will remain steady and potentially increase, again driven by initial investment in finance.

S/4HANA HCM: Average Payrates Fluctuated, with a Significant 2024 Increase

Average payrates for S/4HANA HCM expertise have fluctuated over the past several years. In 2021, they decreased somewhat, went back to baseline in 2022, then decreased again 2023. 2024 marks a 9.5% increase over the 2021 low water mark.

My Take

Many organizations postponed their HCM transformations due to complexity and risk, but as they have completed their essential finance transformations, this is increasingly an area they want to tackle. This increase in demand may be what is driving the 2024 rate rise.

Looking Ahead

I anticipate demand will remain steady and potentially increase, creating some market compression. As a result, I don’t anticipate ongoing rate fluctuation. Rather, I think it will hold steady and perhaps continue to rise as more organizations undertake HCM transformation.

S/4HANA SCM: Average Payrates are Down but Expected to Rise

Average payrates for S/4HANA Supply Chain & Manufacturing (SCM) expertise peaked in 2020 and have fluctuated since then. 2021 saw an 11% rate decline, but they bounced back up in 2022, although not to peak levels. Since then, they have remained relatively steady.

My Take

SCM is a sweet spot for SAP. With the supply chain upheavals of the early pandemic, many organizations pressed pause on complicating things with a process transformation. Yet, the disruption brought the critical nature of optimization into focus. After the initial drop off, organizations have been steadily investing, with demand for talent and rates have been equally steady.

Looking Ahead

I anticipate demand for SCM expertise to increase dramatically in Q4 of this year and remain strong in subsequent years. At Baer, we are fielding an increasing number of requests for talent for clients in the Aerospace & Defense and other discrete manufacturing industries. These are long-term commitments, and as SCM investment ramps up, I expect to see both labor compression and associated rate increases.

SAP Technology: Average Payrates Fluctuated with a Significant 2024 Increase

Average payrates for S/4HANA technology expertise saw a marked increase in 2021, then decreased somewhat in 2022 and held steady in 2023. 2024 rates to date mirror 2021, with an increase of 17% of the 2020 baseline.

My Take

This tracks closely with what was happening in the overall SAP space in terms of demand: hyper acceleration of investment in 2021 and 2022 and cooling in 2023. 2024 brought increased demand, and rates have risen accordingly, but we haven’t yet reached hyper-acceleration mode.

Looking Ahead

I anticipate demand for S/4HANA technology expertise to remain steady and likely increase in parallel with overall adoption trends. The need for this type of expertise cuts across every vertical and is needed for both implementation and ongoing maintenance, so it only declines due to market maturation.

Payrates—Driven by Demand

Overall, the data suggests that demand has a much bigger impact on pay rates than inflationary pressures—although plays a role in demand. All signs are pointing to an increasingly competitive SAP S/4HANA contingent labor market, starting in Q4 2024 and sustaining into 2025. Enterprise investment alone would make it so, but we are entering a period of unprecedented parallel private and public investment. When you’re looking for dozens—or even hundreds—of people with specialized expertise, that can make an impact on your bottom line. When budgeting, you need to understand what to expect. When hiring, you need to understand the market so you can pay competitive rates.

But the real risk is not payrates. It’s access to specialized expertise. When demand increases, it’s infinitely more challenging to find the talent you need, when you need it. That’s why it pays to partner early with an enterprise performance partner like Baer vs. a traditional IT staffing agency. At Baer, we understand the SAP S/4HANA space, we’re looking down the innovation curve to identify the trends, and we’re proactively lining up in-demand talents. That means, when the time comes, we can place the experts you need with precision, saving you valuable time and supporting the stability of your program.

About Baer

Unlike typical technology staffing companies, Baer is a true enterprise performance partner. We have a deep understanding of the scope of enterprise digital transformation and the highly specialized skillsets you will need at different stages of the process.

To learn more about how Baer can make a positive impact on your enterprise transformation, please reach out to Brian Trout, Executive Vice President, Sales, at btrout@baergroup.com, or John Wilson, Vice President of Strategic Accounts, at jwilson@baergroup.com.

Corporate Headquarters:
100 Ashford Center N Suite
460 Atlanta, GA 30338
General Information:
info@baergroup.com
© The Baer Group 2023, all rights reserved.
Privacy & Cookies Policy
chevron-down