The technology recruiting industry was unpredictable in the beginning of 2023. We had two boom years due to pent-up demand from the pandemic, but negative economic indicators like rising prices, inflation, and interest rates made us wonder if that would continue.
We trusted our intuition and assumed the market would be resilient. Technology is in a “protected” position, so organizations will continue to invest in digital transformation. To do that, they need the right people and capabilities.
A market that is more stable
We are pleased to report that the hiring market is still strong six months later. In fact, our permanent placement mandates were at the same level in the first quarter of this year as they were in 2022, which was a post-Covid boom year.
However, as the year has progressed, activity levels have decreased. This is not necessarily a bad thing, as the market was already moving at a rapid pace. It has now stabilized and become more measured and less frantic. We have likely returned to the conditions that existed before the coronavirus pandemic. Companies are giving more thought to their hiring decisions, and they are taking more time to make offers. There is also less of the intense competition that there once was.
In addition, candidates have become a little more cautious. They are carefully weighing the potential benefits of a job change against the possible risks in a tighter market and economy.
The market is seeing noticeable sectoral inequalities. In the IT industry, major businesses have been downsizing their workforces, which has led to some layoffs. However, this trend is starting to reverse in some places.
The SME segment of the technology market has also been impacted. Due to the difficulty in obtaining funding for scaleups and startups, recruitment has slowed down and hiring has become more selective. The retail and FMCG industries, which rely heavily on consumer demand, have also seen a decline in activity.
In contrast, other industries have remained relatively stable and strong. Public sector organizations and higher education institutions have continued to hire due to their strategic digital transformation plans and requirements. The financial services industry has also remained active, with the major firms expanding their core operations.
Overall, there are four distinct themes worth highlighting:
We predicted that there would be a shift from hiring permanent employees to hiring contractors in the IT industry six months ago. This is now starting to happen, as employers are bringing in contractors for specific tasks and then letting them go once those tasks are completed. This is a sign that the IT market is becoming more competitive and that employers are looking for ways to save money.
2. The need for new digital leaders
There is a high demand for executives and leaders in the digital sector. This is especially true for large enterprise clients, who need to move their businesses to product-led, cloud-based environments and systems. These organizations need leaders who can navigate changing operational models, technological change, economic challenges, and unforeseen global events. In a world where change is the one constant, they need to find the “Ted Lassos” of technology.
3. Disruptive generative AI?
Generative AI, such as ChatGPT, has the potential to disrupt the IT industry. We don’t yet know how this technology will affect the work that people do, but it is sure to have an impact on the demand for certain roles. We urge CIOs, CTOs, and CDOs to research generative AI and to explore how it could be used to improve their businesses. For example, research from Github, Microsoft, and MIT has shown that Copilot for Github can increase developer productivity by 55.8%.
4. Salary heat beginning to cool
Salaries in the IT industry have been rising rapidly in recent years. However, there are signs that this trend is starting to cool. This is due to a number of factors, including the increasing competition for talent, the rising cost of living, and the economic uncertainty caused by the COVID-19 pandemic. While salaries are still likely to rise in the coming years, they are unlikely to continue to rise at the same rate as they have in the past. This is welcome news for employers, who are facing increasing pressure to contain costs.
The job market is expected to remain healthy in the first half of 2023. There is still a strong demand for skilled workers in fields like engineering, data analytics, cloud/DevOps, and product development. Recruiters and job seekers alike will have opportunities in this sector.
As optimism grows in the second half of the year, we may see a new acceleration in hiring activity. This is due to the hope that inflation will finally start to decline and cost pressures will ease.
Overall, the job market is expected to remain fair in 2023. There will be opportunities for both job seekers and recruiters, but it is important to have the right skills and experience to be successful.