Following years of an all-out fight over tech talent, 2023 brought the first recent signs of a cooling tech job market.
A key driver behind the slowdown were the layoffs roiling large tech providers, creating a ripple effect across industries. While not all staffers impacted by the cuts held tech positions, 260,000 people at more than 1,100 companies were laid off last year, according to tracking site Layoffs.fyi.
Companies pared back their job postings for new tech roles, though unemployment in IT remained far behind the national averages for the entire year. Preliminary data shows average IT joblessness was 2%, well below the national average of 3.6%.
2023 was marked by fluctuations between tech talent availability and the end of big tech overhiring, but analysts expect the tech jobs market to return to more steady growth 2024. Driving that comeback are new IT projects kicking off as budgets return to normal and the lure of AI bringing more workers into the field.
This year, companies say they have bigger IT budgets than last year, which will make way for more new projects kicking off.
"That leads us to believe that this is only going to be a tighter technology market, and we do expect hiring and the demand for IT professionals to increase as we go throughout the year," Thomas Vick, senior regional director at Robert Half, said.
AI impacts on hiring
After a bearish 2023, leaders entered this year with plans to spend record amounts in IT capabilities, with deferred projects from last year landing in this year's budget line.
Analysts described the scores of workers getting cut at the start of 2023 as the consequences of an economic souring and months of labor hoarding. "Last year was a real whiplash from the previous years," said Fiona Mark, principal analyst at Forrester.
Organizations took a more sober approach to talent attraction last year, focusing on their core services and aligning budgets with what allows them market differentiation, Mark said.
Now, AI has caught the attention of enterprise leaders, shifting priorities in IT strategy as they incorporate new capabilities into workflows — from coding to the help desk.
The drive to AI adoption has shifted organizational focus and, in turn, guided where companies want to build up their skill sets, Mark said.
It's still early to see the full impact the technology will have on hiring trends, but Tim Herbert, chief research officer at CompTIA, believes there are two key paths.
"You do see situations where companies have found use cases where AI is tasked with doing a very structured task, and that lends itself to almost a direct one-to-one replacement for what a human can do," Herbert said. "But we also have seen that companies, when they get into it, they immediately recognize that jobs are the summation of a lot of structured and unstructured tasks. It’s those unstructured tasks that are very, very difficult to replicate right now."
Interest in generative AI will also increase tech talent supply, as the shiny new technology brings more workers into the fold, according to LogicMonitor CIO Ryan Worobel.
"The buzz around it is creating a path that I think intrigues a lot of people," he said. "It gives them an opportunity to potentially get out of a rut."
Upskilling as a retention tool will remain a theme as leaders attempt to keep their organizations running smoothly amid the hot market for new skills. The novelty of rising AI applications suggests there's ample room for growth.
Still, unemployment trends in IT persistently show that qualified workers who want a job in IT can get one.
"It's not quite half the national rate but it is close to half of it," said Herbert. "That is just a continuing signal that it's a fairly tight labor market for tech talent."
