Reports that some major tech companies — Microsoft, Google, and Facebook among them — are slowing hiring plans, along with the growing concern that a recession is right around the corner, are adding a few wrinkles to the overall outlook for the job market for IT professionals.
Meanwhile, startups boosted by deep-pocketed venture capitalist funds have also been impacted by a more sober economic mindset, and the collapse in cryptocurrencies resulted in a sharp drop in jobs across that market.
However, the overall picture for IT professionals remains solid, says Megan Slabinski, a district president for human resources consultants Robert Half.
“The job market is still very, very strong in terms of the number of openings and very competitive for tech talent,” she explains. “That has not wavered or changed despite some of the recent companies announcing some layoffs or some pausing on hiring. It is still incredibly competitive.”
She points to recent data showing 2,000 new technology positions listed in a one-week period in the Bay Area. “That kind of volume pre-dates COVID and 2019 hiring,” she says. “So, the kind of demand that surfaces in just one week continues to show to me that demand for IT workers is still very high.”
David Wagner, senior research director with Computer Economics, says despite the economic headwinds, about 60% of companies surveyed in the company’s latest report said they were planning to increase headcount — the largest percentage since the 2008 recession.
“We continue to think this is a sign of more IT headcount growth in the next few years,” he explains. “It comes with a small caveat, of course, which is that the economic headwinds have gotten a little stronger over the last couple of months than they were at the beginning of the year.”
However, from Wagner’s perspective, IT has become so strategically important to every business that particularly when it comes to IT staffing companies are going to be as positive about their staffing and their IT spending as they can be.
“It’s not a surprise when Google and Microsoft both announced their most recent hiring freezes right around the time they were giving their quarterly earnings,” he says. “I think what’s going to happen is there’s going to be a pause as companies look around and figure out how bad things are going to be.”
Layoffs Could Hold Silver Lining for Small Businesses
Slabinski agrees potential wave of tech layoffs or additional economic headwinds could mitigate the IT hiring crunch and offer opportunities for smaller organizations struggling to find qualified tech personnel.
“I think that’s the wave that’s coming, and that is the opportunity for small to medium sized companies, who have not had the opportunity to acquire the talent that they need it,” she says. “They’ve been competing for the larger companies against salary, benefits, opportunity, the big brand names, and this is a great opportunity to acquire the talent that they so desperately need.”
Those businesses will still need to be able to compete when it comes to compensation, Slabinski adds.
“Some of the discussions we were hearing in the month of June were companies starting to say, oh, gosh, I saw all these layoffs, does that mean I can now get the talent I wanted at a better price point? And my answer is no,” she says. “You still have to compete at the compensation levels the market’s demanding.”
Smaller organizations can offer additional advantages to young tech workers, she points out, including a larger ownership stake in projects, investment in education and training, and the opportunity to accelerate careers and exposure faster than one could at an enterprise level organization.
“Those are really easy to talk about, not only in that interview process, but even in the job posting,” Slabinski says. “What are you doing to attract people that are maybe more mission and value add focused, and care about things outside of just the highest bidder?”
She adds a big part of what she hears from technology professionals is they want to be put on different teams or different project opportunities outside of their own organization to gain that experience.
“Again, it’s a resume builder, it creates job security,” she says. “And if employees are thinking about how this this opportunity is going to benefit them, employers need to be in a position to articulate that and create a pathway for training investment development.”
Holding Onto the Talent You Have
Slabinski says she thinks a lot of organizations are so desperate for talent right now that they’re missing the opportunity to look at their own backyard and see who they might have that’s already demonstrated loyalty, a great work ethic, the ability to contribute and provide ROI to an organization.
“What could you invest in them to help them be the employee of the future that you might need?” she asks. “Training is expensive, it’s time consuming, and it doesn’t give you the immediate result like going out to market and hiring the person that you need today. But you’ve got to weigh up the cost benefit analysis between both options. And it’s a both/and approach, not an either/or approach.”
Wagner agrees that the pause in IT hiring could be a good opportunity for organizations to think about retaining the staff they have more than worrying about hiring.
“One of the interesting things that we’re seeing is that turnover hasn’t slowed down despite the recession coming, which is interesting because generally people don’t like to change jobs if they think a recession is coming,” he says. “But the companies tracking the number of people intending to resign their jobs are seeing the number is going up.”
This could be due to any number of factors, he says, ranging from the desire for opportunities for promotion, more flexible working conditions, or health and childcare benefits.
In addition, Wagner says macroeconomic factors like inflation and social issues are making employees reconsider where they can find greener pastures elsewhere.
“If you’re a small company — any size company really — but particularly a small company, what you really need to think about is whether or not you’re doing enough to keep the talent you have,” he says.