The Hot Tech Market is Finally Cooling Off. Or is it? Companies outside of big tech are scooping up tech talent to develop their tech infrastructures.
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In the world of big tech, there have been many hiring freezes and recent layoffs. Many worry that layoffs in this realm signify an impending national economic crisis. Yet, there is hope for tech workers and jobs outside traditional tech giants. Companies outside of big tech are scooping up tech talent to develop their tech infrastructures.
All in all, don't expect a slowdown in Information Technology (IT). What you should expect is a redistribution.
Current layoffs and "cooling off" in IT hiring are a drop in the bucket amid a global shortage of IT talent
Three major jobs in the ICT industry are a software developer or engineer, user support specialist and systems analyst. Other positions include project managers, systems engineers, systems administrators and network engineers. High-profile tech layoffs and hiring freezes are masking the job growth and demand that remains in the job market. Many companies outside of the tech sector are hiring tech workers for their digital transformation processes. As a result, the growth rate outside big tech firms is minimally affected.
Some tech firms' layoffs, such as those at Stripe and Meta, result from over-hiring. This happened as part of the tech boom that emerged during the COVID pandemic in 2020 and has less to do with the state of our economy. Raising capital is increasingly difficult as these tech firms' public market valuations decrease. Therefore, they're switching from a hyper-growth mode to an efficient growth mode.
Globally, there has been a shortage of tech workers for a while. Management consulting firm Korn Ferry predicts we'll be short over 85 million tech workers globally by 2030. That's $8.5 trillion in lost annual revenue. Since technology is rapidly becoming a fundamental element in every operation within any company, there will always be a shortage of highly skilled tech workers, no matter how many companies hire and pay more.
Fundamental demand for IT continues to grow
There is too much work worldwide to build new digital products, rebuild old systems, take advantage of cloud tech and automate human-dependent processes.
Tech job postings are higher by 25% this year as aerospace, finance and healthcare companies are vying to hire tech talent. And since 2020, tech talents worldwide have been finding work in Canada, specifically in Toronto and Vancouver. One reason for this could be the Trump administration's tricky immigration policy. Why jump through hoops to work in the US when neighboring Canada has looser guidelines and available work?
Canada's tech job growth rate has been outpacing that of the United States. This continues even as cities such as Seattle and San Francisco have tech giants hiring masses of workers.
Layoffs and freezes will unevenly affect different sectors
While big tech firms will slow down, other industries (e.g., travel and healthcare) will take advantage, meaning more resources will come in.
Every laid-off tech worker has a job waiting for them in the United States or elsewhere. Remote work, burgeoning since 2020, has extended the job market and made it possible for people to work anywhere.
Frankly, some bloodletting is healthy
Compensation and perks in big tech and Silicon Valley have reached crazy levels. Many believe that the Valley is losing its unique aura. Silicon Valley talent may not be a good fit for "Main Street" and may have little interest in working in such an environment. They will have to adjust, leading to a healthier, adaptable and sustainable tech workforce in the long term. Silicon Valley and New York City, traditional major tech hubs, are cooling down and cutting costs. However, states like Pennsylvania, Arizona, Texas and Florida are seeing tech industry job growth.
It's also important to keep the Eastern European IT picture in mind. What is happening now is that Eastern Europe, which was traditionally considered to be the main competitor, is in turmoil because of the war in Ukraine. Although still working and available, Russia and Belarus are no longer in the picture. Poland, Romania, Serbia and Portugal are becoming more expensive because of war and the reduced talent market. This is benefiting India, which is always a big IT outsourcing hub.
Labor market conditions are only getting better. Tech is the backbone of every company, whether in consulting, healthcare or aerospace. Displaced big tech workers will turn to companies in other sectors where they'll still be paid well and expected to work similar jobs. IT jobs were hot and still are because of the law of supply and demand.
Every company wants to hire the best tech talent. However, there's only so much talent to choose from. It can get pretty competitive when another company can lure away the tech workers that one company has been eyeing. Let the tech talent wars continue.