Economic Uncertainty Is Shaking Up the Tech Industry: Here’s What You Need to Know
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Following a slew of high-profile layoffs at some of the world’s most cash-flush tech companies and a string of experts foreshadowing a potential economic recession, many people are now turning to the tech industry to measure the impact of this latest financial turmoil.
That’s no surprise, given the industry’s incredible resilience throughout the pandemic: Zoom, Microsoft, Meta, Tesla, Apple, and Nvidia prospered during COVID lockdowns. As a result, it’s become the norm to look to tech companies as the bellwether for the overall health of the economy.
However, a recent wave of contradictory events makes it hard to determine what’s really at play.
While tech recruiters complain of a talent shortage, some companies are laying off workers and rescinding job offers. Still, the overall consensus is that skilled tech professionals have the most bargaining power in recent history, with fresh graduates wrangling six-figure starting salaries and flexible work arrangements even as companies attempt to recall workers to the office.
In order to provide the most accurate portrayal of the tech hiring landscape for Springboard graduates and prospective students alike, we’ve dug a little deeper to compile a list of the top hiring trends in the tech job market right now. We’ve also talked to a number of industry experts to get a complete picture of what’s really going on and find out if the tech industry is still a worthwhile career pursuit.
The Talent Shortage Is Real
People continue to quit their jobs in record numbers. In April, 4.4 million American workers gave notice—and a labor economist recently hailed Beyoncé’s new single ‘Break My Soul,’ which references worker burnout, as a sign that the Great Resignation “has seeped into the zeitgeist.”
However, rising prices due to inflation may cause would-be quitters to reconsider jumping ship without having another job lined up. So, what’s really going on?
Candidates are fielding multiple offers
Big Tech companies are poaching one another’s workers, allowing people with in-demand skills like programming and data science to offer their talent for a premium. In fact, even laid-off workers from top companies are quickly snatched up by rival firms.
What’s more, job switchers in today’s market typically see the highest wage growth, which incentivizes job-hopping. A new survey by TalentLMS and Workable shows that a sweeping 72% of employees in tech/IT roles are thinking of quitting their jobs in the next 12 months—significantly higher than the 55% rate for the overall US workforce.
Another factor fueling the hiring crisis is that job seekers have the luxury of choice: many decline offers after going through multiple rounds of interviews in favor of a competitive counteroffer. On average, each tech worker looking for a job is fielding more than two employment offers, according to staffing firm Robert Half.
Jobs are also taking longer to fill, with the average tech role taking over two months to close. In fact, some recruiters continue sourcing candidates even after someone has accepted an offer, just in case they drop out after receiving a better offer.
The job market is still recovering from the pandemic
The hiring crisis is due in part to pent-up demand. Companies that paused hiring during the pandemic are scrambling to fill multiple positions simultaneously. Pandemic malaise is another factor; burned out from caring for children at home while working full-time, or else, working in jobs with a high risk of viral exposure, some workers simply don’t want to rejoin the workforce. Reformed attitudes towards work as the center of one’s identity and a resistance to #hustleculture has also made workers pickier.
“As human beings I don’t think we should put all of our energy into finding our identity through work, even though work is a big part of who we are,” said Erich Schulz, a product designer at Disney Parks, Experiences, and Products and a graduate of Springboard’s UI/UX Design Career Track.
Companies’ insistence that staff return to the office full-time makes it harder to fill positions as workers resist attempts to reinstate the archaic 9-to-5. After employees demanded remote work arrangements, Apple delayed its return-to-office plan, which would require in-person work three days a week.
The hiring process is broken
Tired of being ghosted by employers, enduring excessive interview rounds, and receiving impersonal rejection letters, job seekers are leveraging their “scarcity” to hold employers to account. Employers are feeling the burn: 65% of tech leaders say that hiring challenges are hurting the industry, according to a CIO survey.
When it comes to technical roles, there is often a major disconnect between the skills employers screen for and the actual competencies the job mandates—especially for developers. For the most part, developers are assessed on hard skills: knowledge of programming languages, frameworks, and development environments. However, this leads to an overemphasis on tooling and college exam-style technical assessments that don’t reflect actual job duties.
“From what I’ve observed, technical skills alone will only get you halfway there,” said Sunischal Dev, a mentor for Springboard’s Data Science Career Track and a lead data scientist at Booster. “You really need to have a solid grasp of the domain or industry that you’re working in to be effective.”
For example, a developer may be asked to implement a breadth-first search algorithm—something most computer science undergraduates learn once and rarely use again—or write a maze-solving algorithm for a front-end developer role.
There is a major shortage of data professionals
Data analytics roles are particularly hard to fill, given the widespread demand for talent to increase data-driven decision-making. AI and IoT technologies are generating more and more data, but the data doesn’t mean much if organizations can’t use it effectively.
“There is a lack of readiness to invest in developing talent—employers expect people to know everything from the start,” said Maria Dyshel, co-founder and CEO of Tangible AI. “Everyone loses out.”
In 2020, for the second time in four years, the number of jobs posted by tech companies for analysis skills—including machine learning (ML), data science, data engineering, and visualization—surpassed traditional skills such as engineering, customer support, marketing and PR, and administration.
Tech Salaries are Climbing Fast for In-Demand Roles
Widespread hunger for talent coupled with inflation led the average tech salary to rise 6.9% from 2020-2021, reaching $104,566—the highest salary ever recorded by the Dice Tech Salary Report. While pay increased across the board, professionals who saw the biggest bump were web developers (21.3%), database administrators (12.4%) and technical support engineers (12.4%).
As companies focus on improving data maturity and growing their web presence, they depend on databases for everything from point-of-sale (POS) to marketing analytics and data science projects.
Recent grads have the most to gain from these inflation-adjusted salary hikes. Hiring managers in the tech industry are offering six-figure salaries for entry-level roles that would have paid $75,000-$85,000. In 2021, Citigroup, Goldman Sachs, J.P. Morgan, and Barclays began offering entry-level workers $100,000 a year in base pay (not including bonuses)—something FAANGS have been doing for years.
However, the onset of a recession could not only erode workers’ historic bargaining power but bring salaries back down.
“Pay is driven by demand and supply, and with layoffs happening now there will be a lot of people who are looking for work,” said Niya Dragova, founder of Candor. “This gives companies more leverage in negotiating salaries.”
Tech Layoffs and a Fraught Economic Outlook Complicate the Picture
Threatened by inflation, rising interest rates, and a declining stock market, tech companies laid off workers at the highest rate this year since 2020.
“In this period, companies will need to make drastic cuts to win investor confidence,” said Dragova, “and I expect we will see layoffs very similar to what happened during COVID.”
In recent weeks, Uber, Microsoft, Twitter, Wayfair, Snap, and Meta have announced hiring slowdowns or freezes. May was the worst month for startup layoffs since the start of the pandemic, where roughly 17,000 workers were let go by 71 tech startups around the world. As of mid-June, the tech industry has shed 21,000 workers this year.
However, some companies point to overhiring during the pandemic as the reason for shrinking their headcount.
“The shift to remote work caused companies to ramp up hiring because they no longer had to rely on candidates from specific locations or those with traditional qualifications,” said Nadeja Adams, head of employer partnerships at Springboard. “But I think a lot of companies may have overestimated their capacity.”
Companies like Redfin, Twitter, and Coinbase have yanked job offers for reasons that have to do with more than just fears of an impending recession.
“Redfin is adapting to sudden economic uncertainty and a cooling housing market caused by the fastest jump in interest rates in history,” Jeff Mahacek, VP of product design and user research at Redfin, wrote on LinkedIn. “As a result, we’ve made the difficult decision to freeze hiring and rescind a small number of job offers.”
Meanwhile, Twitter is preparing for a takeover from Tesla founder Elon Musk, while Coinbase, which recently laid off 18% of its staff, is weathering the fall of the cryptocurrency market.
Dragova noted that the majority of layoffs have been for non-technical roles, similar to the mass layoffs seen at the start of the pandemic.
“Marketing, recruiting, customer support and people ops have been hit the hardest so far—this is what we saw in 2020 as well,” she said. “However, larger layoffs, like at Coinbase and Wealthsimple, also involved engineering, product, and data science because whole product lines were being eliminated.”
The Tech Job Market Remains Hot Despite Cooldown
Despite the hubbub, the tech industry is still prospering in absolute terms. More people are employed in tech-related occupations than at this point a year ago, according to U.S. government data for several categories of tech jobs that ZipRecruiter analyzed for the New York Times.
Estimates of the unemployment rates for tech workers are about 1.7 percent, compared with roughly 4 percent in the general economy; for those with expertise in cybersecurity, it’s more like 0.2 percent.
The U.S. Bureau of Labor Statistics predicts that employment in computer and IT systems will grow by 13% by 2030. Job listings relating to “big data” and “cloud” increased by 57% in 2021 compared to the year before. In 2021, FAANG companies listed over 250,000 jobs.
Job openings for software developers, QA, analysts, and software testers are projected to grow by 22% from 2020-2030 (much faster than average), with 189,200 new opportunities each year, according to the Department of Labor, and the median pay of $110,140/year. However, the fastest-growing job is an information security analyst, with a projected growth of 33% from 20202-2030.
Tech is still adding new jobs at a fast pace, but it pales in comparison to the growth seen during the pandemic. Janco Associates estimates that 14,000 new IT jobs will be added each month throughout the rest of the year. This is a cooldown from last year when 20,00 new jobs were being created each month (17,000 in May).
“If you want to stay safe in this economy, pick a department that’s a value generator and a priority for the company,” says Dragova.
According to LinkedIn’s ‘Jobs on the Rise’ report, which lists the job titles experiencing the highest growth rate, the most in-demand tech jobs for 2022 include machine learning engineer, business development representative, UX researcher, computer systems administrator, technical product manager, backend developer, and solutions engineer.
The Metaverse and Other Emerging Innovations Will Only Increase Demand for Skilled Technologists
Forays into self-driving cars, the Internet of Things (IoT), the metaverse, and Web 3.0 (a new iteration of the internet based on blockchain technology) will create demand for more skilled tech professionals.
Tech giants are also scrambling to retain users: Netflix is planning to launch an ad-supported tier by the end of the year, and Meta said it would pay creators for posting original content on Facebook Reels, which creates demand for skilled engineers, data professionals, and content creators.
According to a Gartner survey, 58% of tech leaders reported either an increase or a plan to increase emerging technology investments in 2021, compared with 29% in 2020. This includes investments in things like computer infrastructure and platform services, network, security, digital workplace, IT automation, and storage and database.
A wave of tech companies have announced plans to expand their product offerings and increase their headcount. Here are some recent announcements:
- Meta is exploring the possibilities of the metaverse, as well as finding ways to market its wearables and AR products. The company also plans to launch its own digital wallet as a standalone app in 2022.
- Apple is launching an electric car project called “Titan” and is rumored to be readying for the launch of the iPhone 14 as well as its first pair of AR glasses.
- Amazon is creating a new payment solution Upay, and recently announced expansions in retail, Amazon Games, and Amazon Web Services that would create over 2,500 new jobs.
- Netflix is growing screening operations facilities in 2022.
- Walmart announced plans to hire 5,000 tech pros in cybersecurity, software engineering, data science, and other specialties as it expands investments in cloud, data, enterprise architecture, DevOps, and security.
- Microsoft announced a massive expansion of its 500-acre campus in Redmond, WA, which would enable it to add up to 8,000 new employees.
Merely a Fluke? Tech Layoffs Appear to Be One-Offs
While the recent layoffs and rescinded job offers are concerning, they appear to be isolated to companies experiencing industry-specific setbacks rather than a sign of waning demand—for now, at least.
Netflix, which lost 200,000 subscribers in Q1 of 2022 and recently let go of 300 employees, blames its hardships on competition from other streaming services like Disney+ and Prime Video, password-sharing, and its decision to halt service in Russia. Meanwhile, Meta—which has slowed down hiring but has not laid off any workers—is facing challenges to its advertising business from privacy changes by Apple and is facing steep competition from TikTok. Snap cited similar reasons for its hiring freeze.
Other companies are pausing hiring to re-evaluate their needs or out of an abundance of caution as the economy’s future remains uncertain.
“Springboard students are continuing to be strategic about what they want,” says Adams, “which gives me the sense that they’re still confident about opportunities in the market.”
While there’s no such thing as a future-proof job, given the breakneck pace of technological development, the best thing job seekers can do is keep up with trends in the market.
“Staying in that ‘always be learning’ mindset is extremely important,” says Adams. “I would advise everyone to actively work on projects. Ensure your GitHub profile and portfolio is up to date and always be advocating for yourself.”