The dust mainly resulted in job cuts starting in 2023. As tech workers bear the brunt, the long-term impact on IT talent continues.
Consumerism and hyperinflation have destroyed hundreds of thousands of jobs in the economy, many of them concentrated in large technology companies. Tracking self-reported layoffs showed that 485 companies cut more than 138,000 jobs in 2023.
One example is Facebook's parent company, Meta, which cut 10,000 jobs on Tuesday. This is the second wave of meta cuts in recent months. The company laid off 11,000 workers in November, citing the effects of the general economic recession.
According to Art Zeil, president and CEO of DHI Group, one of the challenges of downsizing is communicating the performance of management teams to investors. But the most striking sign is the realignment of employment trends after the boom period.
What was once an employment boom is dwindling as companies begin to pull back from efforts to integrate technology en masse.
"We overreacted and now the pendulum is swinging the other way, but we're kind of back to the middle," Zell said. "That's what we're doing now."
Another, more complex aspect of the downsizing cycle is the normalization of the workforce.
Businesses saw significant growth in 2021 as the effects of the pandemic subsided. Many beat expectations for employment growth and cut jobs in response to lower profits. Despite the adjustments, IT skills are still in demand, albeit at a slower rate than in recent years.
However, due to changing hiring appetites, long-term talent acquisition will continue to be critical for technology leaders, and recruiting and retention practices are imperative.
"In a way, what's happening for most of 2022 is that non-tech companies are starved of talent because tech is pouring a lot of money into the talent pool," said Jemmet, partner at Arora Everest Group.
Hundreds of thousands of layoffs are still significant, and the IT job market is unlikely to return to previous employment patterns as companies scramble to attract as many tech workers as possible.
Impact on the labor market
A series of layoffs earlier in the year sent thousands of skilled tech workers scrambling for new jobs. While this will ease hiring restrictions in large non-tech sectors, the impact will not be immediate.
Data from the US Bureau of Labor Statistics show that the number of technical workers in the economy has declined slightly, while employment growth has peaked in recent years.
Despite the economic downturn, high-tech employment is much higher than before the pandemic.
Internships in Computer Science and Mathematics, January 2020 – February 2023.
Tim Herbert, chief scientist at CompTIA, said after the U.S. Bureau of Labor Statistics released its February report that the impact of technology disruption is beginning to show in official employment data. .
"The recent return represents a relatively small portion of the large tech workforce," Herbert said in an email. "The long-term outlook remains unchanged as demand for technical labor continues to drive job growth in the economy."
There is evidence to suggest that for the majority of laid-off workers, the revolving door leads to careers in technology. Although the survey was released ahead of mass layoffs starting in 2023, research firm Revelio Labs found that more than three-quarters of laid-off workers were able to find another job within three months of receiving a layoff notice, according to December data. report. .
"I think there's still such a huge demand for technicians that anyone who wants a job can apply, apply and get that job right away," Zell said.
As more companies cut their workforce forecasts starting in 2021, there is some early evidence that a further slowdown in tech hiring is affecting certain job categories, such as software developers.
According to Indeed, the number of vacancies for programmers has started to decrease. After steady growth in 2021 and part of 2022, the demand for software engineers gradually declines to epidemic levels.
Herbert told CIO Dive that "a larger percentage of software professionals are being hired by technology companies, so part of the decline in job vacancies reflects ongoing layoff announcements."
After a sharp increase, the number of tech jobs is approaching pre-pandemic levels.
Percentage change in job advertisements as of February 1, 2020
For some companies, Arora said, the downsizing was a restructuring of the workforce, with companies cutting senior positions and keeping junior technicians. This is likely to weaken and shape overall labor market dynamics.
"Demand for younger young talent will continue to be in demand, but I think the oversupply situation we may see is more about senior talent," Arora said.
Janelle Hill, Director of CIO Research at Gartner, says CIOs are struggling to hire their people due to a persistent talent shortage.
"They have a number of different strategies. One is to train their employees in new skills," Hill said. "The second important task is to identify employees in your company whose work is related to a critical technology component."
The need for talent will require more coordinated workforce development efforts, such as collaboration with multiple professional technology organizations and fine-tuning of the technology workforce.
The wages of technical workers are decreasing
The cumulative effect of changing workforce dynamics is beginning to affect the wages of technicians.
Salaries for most tech workers are stagnant due to the spike in the pandemic
Percentage change in technology worker salaries from 2019 to 2021 and 2022.
A cold employment market has allowed wages to normalize. The data shows that wages for technical workers continue to rise, but at a more moderate pace than in recent years.
"There may be a small impact because of the layoffs and because it's moving from a seller's market to more of a buyer's market," Zell said.
According to the Dice report, salaries at tech companies grew 2.3 percent last year, which is less than the 6.9 percent growth rate expected in 2021.
But in context, the growth rate in 2021 was a statistical anomaly, the highest wage growth in more than 17 years.
"This feels like a break from a period of real disruption in terms of the value of talent in IT," Zell said.
Matt Usher contributed to this story.