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While recent news of layoffs at high profile tech giants may be grabbing headlines and triggering unease for the IT industry, there is much more to the story that is often overlooked or under reported. As part of my leadership role at one of the largest global IT staffing and workforce solutions firms, I’d like to take the opportunity to share my thoughts and takeaways from the frontline with our valuable clients, partners, and colleagues.
Yes… Overall IT employment gains are marginally slowing.
As evident by the latest employment situation report by the Bureau of Labor Statistics this month, there have been modest declines in overall IT employment with a loss of 25,000 jobs in February 2023. I believe this is a reflection of the overall labor market churn that includes the headline-grabbing layoffs at tech giants and a reluctance of some companies and sectors to add direct headcount at this time.
However, it’s important to note that even the layoffs by high profile tech firms are likely the result of over hiring during the last several years. Despite the layoffs, all five big-tech companies have bigger workforces now than before the pandemic. And relative to the entire industry, big tech comprises a small share of the entire tech workforce.
But… Strong demand & unfilled positions persist.
It’s still a knowledge economy and will be for the foreseeable future. And a knowledge economy is driven by rapid technological advancement, which means tech workers are still in high demand across many sectors and still hold the upper hand. Additional growth drivers in the market include the continuance of 100% remote work, outsourcing of HR activities, and the emergence of technologies like AI, machine learning, IoT, and cybersecurity threats which are expected to create additional demand for IT professionals across end user segments.
There are still far more open positions than people to fill them – to the tune of 375,000 unfilled jobs. In our own business, we continue to see demand for IT talent across many skill sets, particularly among highly specialized tech workers. Our ongoing analysis of job postings activity shows continued increases year-over-year.
Meanwhile… staffing strategies are shifting slightly.
For many of our clients who rely on in-demand IT skills to execute on strategic projects, leverage benefits from existing tech investments, or deploy needed upgrades or features on time, the news of layoffs at high profile tech companies creates an opportunity to engage top talent who are now available in the market. In addition, during economic downturns, recruiters become more efficient in filling more open jobs quickly, particularly for highly specialized or hard-to-find talent.
Also, many companies are bringing on available IT talent as consultants to fill skill gaps and add hands to their teams while limiting headcount costs and creating scalability. In other cases, we see clients responding to tighter economic conditions by redistributing tech talent and/or investing in upskilling IT workers to meet changing skill or project needs.
Right now… try to avoid not seeing the forest for the trees.
It may seem counter-intuitive to talk about long-term hiring challenges today, but it’s important not to prioritize the near-term cyclical without recognizing long-term structural challenges in the labor market. The fact remains there are macrolevel factors that point to an ongoing, long-term shortage of tech talent for years to come. Consider that even though tech layoffs are growing, the tech unemployment rate is dropping.
As business and IT leaders look to adjust their hiring and staffing models to meet fluctuations in the overall economy, balance will be key. Having too many full-time employees on board means layoffs could become a necessary evil. On the other hand, too little talent means teams become overloaded, burned out, and can’t meet business demand or project deadlines.
Flexibility in headcount will become critical while considering holding on to IT skills you know you’ll need once the economy starts accelerating again. Many of our clients are telling us they intend to keep workers even as the economy slows because it was so challenging to recruit and retain them in the first place.
And… turn to your value-added partners.
As we continue to track and monitor the state of the IT labor market with our quarterly IT Trends Reports, a clear story emerges – the past few years have brought tremendous disruption to the IT labor market, requiring tech leaders to adjust their staffing models on a dime – underscoring the importance of getting the most out of your technology staffing partnership.
This sentiment has not been lost on us. That’s why we’ve continued to make strategic investments to further our value and ability to solve supply and demand challenges for our clients. Over the past several years, we’ve expanded our footprint and capabilities organically and through strategic acquisitions, we’ve grown our teams, and most significantly, we’ve combined two of the leading IT staffing and workforce solutions companies in the U.S.
We are poised to deliver exceptional value to our clients through access to the best talent the IT market has to offer, as well as a virtual upskilling and talent development solution to equip our clients’ talent with the high demand IT skills necessary for today’s digital environment.
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