There is a possible hazard to raising wages. It does two things:
- Draw more workers to your company.
- Increase the cost of your existing workers.
The first should be obvious. If you increase wages, you can attract workers from other companies. More workers for you.
The second is less obvious. You don't necessarily have to raise the pay of your current workers if pay can be differentiated. But if you start drawing away workers from other companies with higher pay, the natural tendency is for other companies to raise their wages. Now they are drawing away your original workers. So you have to match their offers and wages for your original workers are up too.
A third result is that paying higher wages reduces your profits. If it reduces your profits past the zero point, you will eventually go out of business. This is especially problematic because in the beginning, what you have is some higher paid workers. But you have no work for them at the higher pay. Because all the other competitors are paying less and charging less. You paying more and charging more win no bids and get no projects.
One reason this is especially dangerous in IT is that it is comparatively easy to work remotely. So one firm might hire a Brazilian in Brazil to do the work, taking advantage of lower Brazilian wages. This sets something of a ceiling on how much firms can charge. There is extra coordination cost to working remotely like that. The Brazilian employee can't attend meetings in person, etc. But there is a limit to how much of a premium one can charge for avoiding that.
To put all this in economic terms, the demand for domestic IT labor is elastic. As prices increase, the quantity demanded decreases sharply. Foreign IT options create a natural substitute.
TL;DR If the pressures limiting how much companies can charge are stronger than pressures limiting how little they can pay, companies will not charge more to pay more.