Navigating the Evolving Tech Market: A Mid Year Review & Outlook
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by Michael Lantry
IT Jobs and Recruitment Insights
It's now June 2024. We are halfway through the year and the tech talent market continues to evolve and change. Recruitment across the sector has changed incredibly over the last two years and 2024 is no exception. In this blog I will try to assess the market right now. As a tech recruitment agency in Ireland, GemPool is at the coalface of the talent market. This gives us a unique perspective that, I think, is worth sharing here.
Firstly a quick recap on the last couple of years. 2021 into early 2022 we saw a hiring frenzy across tech. Salaries inflated, incentives given out like candy to attract talent. There was huge overhiring. Candidates were happy to move to work somewhere better aligned to their expectations for work life balance. We had a cagey return to the office. Then around October 2022 things started to change. We saw high profile ‘big tech’ company layoff announcements. There was a shift from growth to profitability. This made companies cautious and hiring slowed significantly.
By Q1 2023 demand for recruitment services in Ireland had fallen off a cliff. There were ten of thousands of layoffs across tech companies globally. Ireland was hit by this but didn't see a flood of tech candidates on the market. Sectors like pharma and medtech snapped up a lot of the talent quickly. Also, back office staff like Talent Acquisition, Sales and Finance were disproportionately hit rather than software engineering professionals. 2023 remained a very slow year for hiring.
Recruitment agencies in Ireland felt a significant slowdown in demand for perm hiring services. Going into the start of 2024 there was more hiring starting to happen. But still cautiously. Tech companies had reduced headcount in 2023 to be more profitable and we saw more backfills happening and some growth in companies headcounts. All of this was happening while in the background we had inflation going up, then starting to come down, wars in Ukraine and conflict in the Middle East and of course AI going mainstream and on everyone's lips.
So where are we now?
Remote vs Hybrid Job Opportunities
We continue to see a slow movement back into the office. The volume of ‘fully remote’ roles being advertised is going down across job boards. However, these tech roles are still getting significantly higher volumes of applicants. So candidates still want fully remote and highly flexible working. For those companies insisting on being fully onsite or 4 days a week, they will benefit from their employees having stronger relationships and probably a stronger culture, but it will make attracting talent that bit harder.
The world of AI
Gen AI is everywhere. It's the topic at all the talks, conferences, board meetings and lunch tables. It feels like we are still trying to discover the big unlocks it will provide. There are a lot of ‘toys’ out there that promise this and that, but only a few tools (like ChatGPT) have really disrupted so far. What does it mean for the tech talent market? At the Board level, leaders are asking the question of whether they need more people or can an AI do the job. This could mean a reluctance to go and hire more people into their business, particularly in software engineering. This is particularly true for Saas companies. Where will the big winners be for AI over the coming years? My belief is that the chip makers (Nvidia are killing it) and the infrastructure providers (aka Data Centres) will be the obvious big winners. Then the app companies will follow. The number and levels of investment announcements from Data Centre operators like AWS, Google, Microsoft, Equinix, Digital Realty etc, has been phenomenal. Unfortunately most of this investment is going outside Ireland and around Europe as the Regulator here continues to create uncertainty in this market.
Financial Caution
A lot of companies have been cautious over the last 18 months and held back on spending but are now coming out of their shells and looking at projects that were on hold. So this should mean more hiring as the year progresses. This will be supported by a continued growth in consumer confidence in Ireland and underpinned by a healthy national current account balance. This should help smaller companies in particular. But there are a collection of new initiatives that increase the cost of doing business that will temper this. These are things like the increases to minimum wage, pension auto enrollment and increasing statutory sick pay. All good things for the employee, but squeeze margins for the employer.
Big tech have all been posting really positive numbers at their shareholders meetings. This will hopefully translate into more appetite for investment in Ireland and more hiring. One thing locally holding the talent market back is the housing shortage. As a recruitment company in Dublin, we see far less appetite for candidates to relocate to live and work in Ireland, from the EU. There is far more interest from people outside the EU, but this brings the added complication of requiring a work permit.
Growth of IT Contracting
There has been an increase in demand for contract resources. Historically, this is typical at the start of a new economic cycle, coming out of the bottom of the dip. Hopefully this does mean the Irish economy will get better and better from here. Companies are happy to take on a contractor as its lower risk, can deliver value straight away and then when there is more confidence, they can hire permanent employees.
Hiring Trends
Anecdotally, I speak to recruiters in Dublin and recruitment agencies in Ireland all the time about how their own businesses are doing. I have always believed that agency recruitment is a great barometer of the economy. We feel it first when things slow and and when they pick back up. The feedback I am getting is that the tech sector has picked up in 2024 and the feeling is that this will continue into the second half of the year. This is across permanent hiring and also contract hiring. There is no expectation for a massive surge of demand, but rather a continued slight improvement throughout the year.
Change in Salaries
The salary inflation we saw in 2021/2022 has slowed and I don't expect this to go up much for the rest of 2024. There are still candidate shortages for niche tech roles. But there is far less market pressure. The power dynamic has shifted from being fully candidate driven (i.e. the candidate has the power) to being more balanced between candidate and employer. It's probably moving in the direction of being more employer driven perhaps in 2025 or 2026.
Overall, the outlook for the rest of 2024 is OK. I may have to eat my words if more wars break out or Trump wins or a trade war with China escalates. But for now, things are getting slowly better and better for the tech recruitment market in Ireland. Fingers crossed this continues. If you would like to learn more about the market and get more information, please visit career insights page.
