The Year of Efficiency: Is it Easier to Hire Tech Talent in 2023?

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Mark Zuckerberg branded 2023 as the year of efficiency at Meta (a.k.a. We’re laying off 20,000+ people and closing 5,000 other roles). Amazon, Microsoft and Alphabet also announced major rounds of redundancies this year.

And even more subjective measures, such as this Hacker News thread, suggest the tides have turned when it comes to tech hiring. 

According to this graph, the ratio of people looking for tech jobs compared to job ads on Hacker News has increased 4x in one year (going from 0.23 to 0.94). 

This brings the question: is it easier to find and hire software engineers now that competition from big tech companies has cooled down?

Let’s find out. 

Here’s the big picture

It’s easy to conclude that the tech sector is going through a crisis.

However, if we look at the economy on a macro level, the unemployment rate is just 3.5% overall and 2.2% in the tech sector. Despite multiple interest rate hikes, the labor market remains strong. 

This indicates that people who were laid off have quickly returned to the workforce. In addition, some industries like AI and technical consulting have been growing and taking advantage of the opportunity to hire experienced engineers from tech giants, often at lower salaries. 

So while there are signals that the labor market is coolding down, the most recent numbers in 2023 suggest that things aren’t as gloomy as they seem. 

Some employers see more interest from tech talent 

Non-tech companies like Walmart and Heinz report seeing more applicants with an outstanding background, likely due to fewer opportunities at the likes of Meta and Amazon. 

Startups and smaller companies are also hiring employees that they would previously struggle to attract. 

At the same time, other companies report an unexpected side effect from tech redundancies. Employees that kept their jobs are now less likely to jump ship and apply elsewhere as they anticipate uncertain market conditions. In other words, they are better off where they are now.

So there is both surprising data (low unemployment amidst high interest rates) and conflicting anecdotal experiences. This leads to the current status of uncertainty when it comes to the tech labor market.

Hence, it’s probably best to explore the question in terms of scenarios.

How to make sense of it all

Whether it’s harder or easier to hire tech talent now is difficult to say. 

However, as an employer, you can take certain actions depending on where the tides will swing in 2023. As the saying goes, “Expect the best, plan for the worst, and prepare to be surprised.”

Scenario 1: A standard economic cycle

After more than a decade of economic growth since the financial crisis (excluding the pandemic dip in early 2020), it’s normal to expect markets, including labor, to readjust. We may be seeing the beginning of a recession in which case companies should strive to stay lean. This seems to be the approach taken by most big tech companies. 

Scenario 2: A major downward shift

A scarier option is also available. The combination of factors like record quantitative easing, the Covid pandemic, inflation and geopolitical issues may bring about a global economic decline beyond most people’s expectations. In this case, employers should prepare for survival mode and focus on their core business areas. 

Scenario 3: Better times are coming

If we ignore conventional wisdom and look from the bright side, it is possible that recent developments in AI and automation can affect productivity to the extent that all negative factors are offset by higher levels of output over the coming years. In this case, investing in growth may be a viable option, especially when considering lower levels of competition for talent and other resources. 

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If you’re in a hot industry that wasn’t affected by layoffs as much, hiring technical talent is likely easier now than it was in recent years. However, given the data, it’s safe to say that the overall hiring landscape for software engineers hasn’t changed too much so far. Things like salary, benefits and your employer branding are still key factors for attracting talented developers. Perhaps financial stability is the biggest addition to the list of perks you’ll need to present.

In order to put yourself in the best position for what’s coming next, thinking in terms of scenarios might help. The wise thing to do is buckle up and prepare for a recession. Still, certain companies should take advantage of the situation, especially in industries where growth is anticipated no matter where the world goes in the next few years.

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