How the Best Hiring Leaders Use Salary Benchmarks to Win Candidates (and Budgets)

Hiring tech talent today is a lot like playing poker. Everyone at the table is guessing what the others are holding, and the stakes are sky-high. Get it wrong by offering too little or too much and you either lose a great candidate or burn through precious budget. The leaders who consistently win aren’t the ones with luck on their side. They’re the ones who know how to use location-specific salary benchmarks as their ace.

Why “location-specific” is no longer optional

Let’s get one thing straight: salary benchmarks aren’t new. But what has changed is how local they’ve become. A senior backend engineer in San Francisco, a machine learning specialist in Bangalore, and a cloud architect in Berlin all carry drastically different compensation expectations. That gap isn’t just about the cost of living — it’s about how hot the market for their skills is in that specific geography.

Consider this: according to Dice’s 2025 Tech Salary Report, the average tech salary in the U.S. is $112,521, with year-over-year growth slowing to just over one percent. Contrast that with India, where the same level of engineering talent might come in at $60,000 to $80,000 a year, depending on the specialization. And if you look at premium skills like AI or advanced data roles, La Fosse’s 2025 Benchmark Report shows compensation for those positions running 10 to 30 percent higher than standard engineering roles in both the U.S. and Europe.

If you’re still working with a one-size-fits-all approach, you’re either overspending in some markets or pricing yourself out in others. Both are bad plays.

The state of pay in 2025: facts that can’t be ignored

Let’s talk trends. Salary increases are flattening worldwide. BambooHR’s Compensation Trends Report notes that average salary bumps dropped to 3.6 percent in 2025, down from 4.6 percent in 2023. That slowdown is forcing companies to get sharper about where every dollar goes. At the same time, the demand for niche tech skills hasn’t cooled — quite the opposite. AI, cloud engineering, and data science remain talent battlegrounds, with candidates commanding top-tier packages.

How hiring leaders are turning benchmarks into a strategy

Here’s the real shift: salary benchmarking is no longer about plugging numbers into a spreadsheet. The smartest CHROs and VPs of Engineering are treating it as an ongoing talent strategy.

When planning their headcount, they segment benchmarks not just by job title, but by location, experience level, and specialization. Instead of saying “software engineer salaries in India,” they’ll zero in on “senior backend engineer with seven years’ experience in Bangalore’s fintech sector.” That kind of granularity matters, because the fintech boom in Bangalore has pushed engineering salaries above averages seen in other Indian cities.

They also account for total compensation, not just base pay. In high-cost cities like San Francisco, equity and flexible work perks can often make up for a slightly lower base. In markets like Warsaw or Bangalore, candidates may value cash upfront more than long-term equity. Getting this balance wrong often leads to rejected offers or unhappy hires.

And then there’s transparency. Leading companies have found that sharing clear salary bands upfront doesn’t scare candidates away — it builds trust. It reduces endless negotiation cycles and speeds up offer acceptances. In fact, many startups experimenting with transparent compensation have seen their offer-to-acceptance ratio improve significantly because candidates felt respected and fairly treated.

A tale of two hires: San Francisco vs. Bangalore

Picture this: you’re hiring a Senior AI Engineer. One candidate is based in San Francisco, the other in Bangalore. Both have similar years of experience and a specialization in natural language processing.

If you treated this as the same role with the same budget, you’d miss the mark. In India, that engineer might expect between $60,000 and $80,000 annually, with additional perks like remote work flexibility or a learning stipend sweetening the deal. In San Francisco, the same role could easily run you north of $150,000, and that’s before factoring in equity.

The right approach isn’t to level them artificially. It’s to use location-specific benchmarks to craft two compelling offers — one built for the realities of Bangalore, the other aligned with Silicon Valley norms. That way, you protect your budget without undervaluing talent.

Pitfalls when benchmarks are ignored

Plenty of companies still stumble here. Some rely on outdated salary surveys and end up under-offering for premium skills. Others overpay dramatically because they don’t segment roles carefully enough. One of the biggest mistakes is treating “senior engineer” as a blanket category without differentiating between someone leading infra at scale versus someone doing frontend work at a smaller firm.

There’s also the danger of ignoring non-salary factors. A company might assume they’re losing candidates because of low base pay, when in reality the issue is a lack of equity, flexibility, or career progression. Salary benchmarking should always be paired with listening — understanding what the candidate values most in their package.

The ROI of getting it right

The payoff for nailing this isn’t abstract. Companies that use strong benchmarking practices consistently report:

• Faster hiring cycles. When offers match expectations, candidates accept quickly.
• Lower attrition. Employees who feel they’re paid fairly relative to market are less likely to leave.
• Budget discipline. Leaders can forecast more accurately and avoid “salary creep,” where each new hire gets progressively more expensive without clear reason.
• Stronger employer brand. Candidates talk, and companies known for transparent, fair offers attract better talent over time.

Take the case of a European product company that recently re-benchmarked its engineering bands. They discovered their Berlin salaries were lagging market rates by about 20 percent. After adjusting, they saw a sharp improvement in their acceptance rates and cut hiring time significantly — a cost that more than justified the higher salaries.

Why Intervue cares about this

At Intervue, we see this play out every day. We help companies assess talent through structured interviews and skill rubrics across geographies. Because we’re constantly engaging with candidates in Bangalore, Berlin, San Francisco, and beyond, we see firsthand how salary expectations shift. Our insights help clients avoid the trap of misaligned offers — ensuring that when they do make a move, it’s competitive, fair, and within budget.

For CHROs and hiring leaders, that combination — interview intelligence plus benchmark awareness — is what separates the companies that win candidates from those who lose them to competitors.

Final thoughts

Salary benchmarks aren’t just about keeping HR spreadsheets tidy. They’re about winning the war for talent while protecting your bottom line. The companies that thrive in 2025 will be the ones that stop guessing, start calibrating, and treat benchmarking as an ongoing strategy rather than a one-time exercise.

So the next time you’re planning to hire, ask yourself: do you really know what this role costs here, today? If you don’t, you’re playing the game blind. And in a market this competitive, that’s a gamble you can’t afford.