Hiring Software Engineers? Rethink Regional Pay First

If you’re hiring software engineers in 2025, you’ve probably noticed the signals are all over the place.

Some engineers are still asking for city-weighted salaries while living hundreds of miles from HQ. Others are looking beyond the paycheque entirely. Meanwhile, leadership teams are reworking budgets and pushing back against inflated expectations that don’t reflect current business realities.

So, where does that leave you?

The salary surge that began during COVID, driven by remote-first hiring and hyper-competitive funding rounds, has lost momentum. For companies outside major cities, that’s created confusion on pay bandings and packages.

This blog explores why the regional pay gap is narrowing and what that means for your next hire. We’ll break down what’s changed, what MRJ is seeing across the market, and how you can stay competitive without overspending. If you’re speaking to software recruitment agencies or planning to scale your software team, this will help you get clarity.

The Origins of the Regional Pay Gap

Before remote work changed the game, salary expectations for software engineers were shaped by location. London and the South East consistently offered the highest pay. That wasn’t just down to the cost of living. These regions had the highest concentration of tech companies, the deepest talent pools, and the strongest competition for experienced engineers.

Elsewhere, salaries were lower, not necessarily because talent was weaker, but because local demand wasn’t as intense.

Companies hiring outside major cities often relied on regional benchmarks that reflected a smaller, more stable market. This created a fragmented salary landscape. A mid-level software engineer in Manchester might earn significantly less than someone in London with a similar skillset. The assumption was that if you’re based outside the capital, you don’t need London pay.

Recruitment strategies followed suit. Salary bands were tied to the postcode. Companies budgeted less for regional hires and often missed out on talent willing to relocate or work remotely, even when those candidates had the exact skills needed to strengthen a software team.

In engineering recruitment, that mindset stuck around for years. But it was always based on geography, not capability. But the pandemic forced a reset. And as hiring borders disappeared, so did many of those old assumptions about engineering jobs and compensation.

The Changes in How Companies Think About Value

When lockdowns hit, location stopped being a factor. Businesses needed to keep building products and shipping code, regardless of where their engineers were based. Suddenly, a developer in Durham or Devon was as viable as one in Shoreditch.

How Remote Work Reshaped Expectations

• Developers outside London gained access to nationwide roles
• Salary transparency increased across the boar.
• Engineers began benchmarking against national not local pay scales, and according to Stack Overflow’s 2023 Developer Survey, more than half of developers now work fully remotely, further blurring regional pay distinctions

The Funding Boom Effect

• Tech companies prioritised fast growth and rapid hiring
• Remote-first job specs became standard
• Salaries spiked as competition intensified
• Pay bands flattened to attract top talent regardless of location

What’s happening now

• Budgets are tightening across tech
• Investors are pushing for more disciplined spending

Many engineers are still remote or semi-remote. They’re not relocating, and they’re not accepting location-based pay cuts either.

That’s left hiring managers asking:

• Do we pay London rates to hire someone in a different region?
• What if a competitor offers more flexibility or better pay?

These are the questions we’re hearing every week. The bottom line is that the engineering jobs market is permanently distributed. And in a distributed market, geography alone can’t drive your salary decisions.

See how MRJ helps companies hire cloud, DevOps and remote engineers across the UK.

How Companies are Adjusting Compensation Models

As the old rules fade, businesses are rewriting their compensation playbooks.

Some have ditched regional pay bands altogether. Others have introduced flat rates by level, regardless of where an engineer is based. The logic is that if you’re hiring from a national talent pool, your salary model should reflect that.

New approaches we’re seeing include:

• National salary bands: One benchmarked rate per role, based on overall market demand.
• Cost-of-living zones: Some companies group locations into tiers, offering modest adjustments for high-cost regions.
• Flexible perks: More businesses are supplementing cash offers with remote work budgets, upskilling stipends, or four-day work weeks.

MRJ has worked with clients who adjusted salary ranges after losing out on top candidates and others who’ve hired successfully by making perks the differentiator.

What’s important is clarity. Candidates want to know how pay is calculated, whether it’s negotiable, and how it compares across roles. Vague or outdated banding leads to drop-off and will negatively impact your engineering recruitment strategy.

If your model still assumes Manchester = cheaper talent, it may be costing you more than it saves.

We recommend:

• Benchmarking against national salary data, not just local averages
• Making compensation decisions part of your EVP
• Being transparent with candidates from the start

Talk to MRJ about how we’re helping companies with hiring software engineers and with rethinking pay structures for a distributed workforce.

What Engineers Want Beyond Salary

Salary obviously matters. It’s incredibly important, but not the only driver for those choosing their next engineering roles. We’ve seen a clear shift with candidates wanting the full picture. They’re looking at how roles fit into their lives, not just their wallets.

Here’s what’s being requested more and more:

• Remote and hybrid flexibility: Engineers want to work where they’re most productive, without being penalised for it.
• Career growth: Clear progression paths, technical mentorship, and investment in upskilling matter more than ever.
• Team and culture: People want to work with modern tech, collaborative teams, and managers who value autonomy.
• Work-life balance: Burnout is a red flag. Four-day weeks, wellness budgets and realistic workloads go a long way.

If your offer is built purely around cash, you’re likely missing out on engineers who care about culture, growth and flexibility. That’s especially true in today’s climate, where demand for top engineering roles is high and candidates are being selective.

At MRJ, we help businesses design roles that speak to today’s market. That might mean revisiting job specs, rethinking progression, or creating a more compelling overall package - all key factors when working with top software recruitment agencies.

Explore our software recruitment services or build out your software team with support that goes beyond filling seats.

Advice for Today’s Hiring Managers

It’s easy to get stuck between wanting to control costs and needing to stay competitive. But hiring software engineers in 2025 means balancing both.

The first step is clarity. Too many businesses still rely on outdated assumptions or benchmark data that doesn’t reflect how people work today. Because the real risk is not in overpaying, but in missing out altogether.

Here’s what we recommend:

• Get your benchmarks right: Use fresh, national-level data to understand where salaries are heading.
• Be transparent from the start: Candidates want to know what you’re offering and why. If there’s room for negotiation, say so. If not, explain the reasoning.
• Don’t default to salary as the only lever: Flexibility, team culture, and meaningful work are just as influential.

At MRJ, we speak to software engineers every day. We know what makes them walk away and what makes them say yes. That insight is what helps our clients stand out, especially when budgets are tight.

Whether you’re building your first engineering team or scaling a mature software function, we’ll help you shape roles that resonate and deliver long-term value.

Learn more about how we support software hiring or get in touch with the team for personalised hiring advice.

FAQs

Should we still offer regional pay for remote roles?

Not unless there’s a clear, justifiable reason. Most engineers expect equal pay for equal work, especially if their responsibilities mirror those of London-based colleagues. Regional pay cuts for remote staff often create tension and increase attrition risk.

How has remote work changed salary benchmarks?

It’s made them broader and more visible. Candidates compare offers across the country, not just within their local market. That’s why national benchmarking is now the safer route.

What if we can’t afford London-level salaries?

You don’t always need to. Engineers are increasingly choosing roles based on flexibility, autonomy, and growth. If you can’t compete on cash, lead with culture and progression.

Rethink Value

The regional pay gap for software engineers isn’t what it used to be. And that’s a good thing. It signals a shift toward more balanced, transparent, and values-led hiring. One where salary still matters, but so does the full employee experience.

At MRJ, we help companies build software teams that deliver long-term impact, not just short-term solutions.

Find out how we support high-growth tech companies or speak to our team if you’re rethinking how to hire in 2025.