The direction that the technology recruitment sector will move in was very unforeseeable when 2023 got started. We had two prosperous years as a result of the pandemic’s unmet demand. Would that, however, last in the face of unfavorable economic indicators like rising prices, galloping inflation, and rising interest rates?
Because technology is in a “protected” position, we trusted our instincts and believed the market would be robust. Organizations must simply keep funding the digital transformation agenda, and in order to do so, they must have the appropriate personnel and technical resources.
Greater stability on the market
We’re delighted to inform that six months later, this is still the case. Our mandates for permanent placement were really at the same level during the first quarter of this year as they were in 2022, one of the post-Covid boom years.
Nevertheless, activity levels have dropped during the year. This is not always a bad thing because the market was already moving quickly. It is now more measured and less frenzied as it has stabilized. Most likely, we are back to the circumstances that existed before the coronavirus was even discovered. Employers are giving recruiting decisions more thought, reflecting before making an offer, and there isn’t as much of the fierce rivalry there used to be.
Candidates have also become a little more cautious. In a more competitive market and economy, they are carefully weighing the advantages of a shift against the hazards that could arise.
Sectorial inequities are also clearly visible in the market. It goes without saying that large companies in the IT sector have been reducing their workforces, which unhappily has led to some significant layoffs. This tendency, however, has been declining, and in some areas, we are now beginning to see indications of an upswing.
The SME sector of the IT market has also been impacted. The difficulty of raising money for scale ups and startups has affected recruiting, and hiring have grown more selective and directed at specific objectives (tech startup investment in the US plummeted by 55% during Q1 for example). Businesses in the retail and FMCG sectors, which rely primarily on consumer demand, have also experienced a drop in activity.
Other sectors, however, have managed to hold steady and grow. For instance, higher education institutions and public sector businesses have continued to hire due to their objectives and requirements for strategic digital transformation. The financial services sector has also continued to be active, with the large corporations growing their core businesses and competition becoming tighter among the challengers.
Overall, it’s important to emphasize the following four key themes:
1. Business owners
Six months ago, we projected a shift (approximately) from permanent to contractual hires. In fact, that has only just begun to show its first signs, which is just another indicator of how robust the market has been. Contrarily, we have found that when employers recruit contractors, they do so to fill specific roles, and after those roles have been filled, they are more likely to let the contractors leave rather than finding them other jobs.
2. The requirement for fresh digital leaders
In the digital industry, executives and leaders are in great demand. To shift the organization toward product-led, cloud-based environments and systems, especially for larger business clients, a new generation of digital executives is needed. Organizations need leaders who can handle changing operating models, technology advancements, economic challenges, and unanticipated global events. They must learn the “Ted Lassos” of technology in a world where change is the only constant.
3. What is disruptive generative AI?
Writing about change and disruption is impossible without at least mentioning generative AI, such as ChatGPT. Simply put, we are unsure of how this will impact the work for recruitment as well as the labor that people perform vs. machines. But there’s little question that it will disturb things. Every CIO, CTO, and CDO should extensively investigate generative AI and consider the potential benefits it might provide for their organization. According to studies by Github, Microsoft, and the Massachusetts Institute of Technology (MIT), Copilot for Github increased developer productivity by 55.8%.
4. Salary heat is starting to decline
Of course, wages have also been a hot subject. It is currently a very heated subject on the wider macroeconomic arena, with the Bank of England citing pay increases as one of the major causes of national inflation. More than half of digital leaders expressed concern in the previous year’s Digital Leadership Report over the durability of pay rises in the technology sector.
Six months ago, we forecast that IT wages would likely reach their high. There are signs that this is beginning to happen, even if the trend is still upward. Undoubtedly, the astounding pace of salary and contract rate growth from a few years ago hasn’t persisted. This moderation is good news for companies who have to continuously manage budgets and spending.
A good future
Up to the second half of 2023, the market is expected to remain mostly stable. In fact, as confidence grows in the expectation that inflation will finally start to drop and cost constraints would relax, we could observe a new increase in activity.