How Are Shifts in the Tech Market Affecting Hiring for 2023?

Until recently, the technology market has experienced high growth and buoyancy, causing companies to increase hiring. This rise in demand for specialized, technically skilled candidates led to a significant talent shortage, as open roles proved hard to fill.

However, this situation has begun to shift, with layoffs in the industry becoming more frequent. This means that on the whole, hiring in tech has become a lot more nuanced.

Two recruitment experts from Michael Page Technology who specialize in the Western region of the United States – Senior Manager Alex McClymont and Managing Consultant Isabelle Hansen – share their insights about this shift below.

Here are five key things they had to say about the phenomenon, how it is impacting hiring practices, and why you may want a recruitment partner to help you through the shifting market.

1. VC Funding Rates are Having a Serious Impact

Economic uncertainty has led to a decline in venture capital funding, which was previously in a state of massive growth. “The amount of VC investment has taken a dramatic nosedive,” says McClymont. “When that slows, so does hiring, mainly because the majority of VC funding goes towards headcount growth.”

As a result, some tech companies have started to conduct layoffs or take a second look at hiring plans. Even in companies that were more conservative with their growth plans, some pivots have proved necessary.

“We've had candidates that have been at offer stage, and then had the offer pulled away. Others have announced hiring freezes that affected open vacancies until they know where that money is going to come back in,” says McClymont.

2. Highly Skilled and Specialized Talent is Needed

With all of this in mind, the need for specific talent has changed. Some companies have tightened up hiring budgets to safeguard their success in anticipation of more economic changes to come. As a result of these precautionary measures, their list of desired hires has shrunk and become much more specialized.

“The expectations for candidate skill sets have gone way up,” says McClymont. He explains that top level candidates who would previously have been perfect matches for roles are now having a harder time earning an offer. Additionally, when that offer comes in, it is oftentimes lower than anticipated.

When this does happen, having a partner in the recruitment process to aid in offer negotiations can make all the difference in finalizing that hire.

3. Salary Rates Leveling Off

As the cryptocurrency market took off, organizations in this space were offering very high salaries in order to attract the best talent on the market and aid in their growth. In an effort to compete, other sectors of the tech industry also had to raise their offers. This caused massive salary inflation across the board.

However, those salaries are starting to normalize and course correct. To many candidates, this looks like salaries are actually on the decline. This means that organizations need to make up that value to candidates in other ways, such as benefits or intriguing projects. A strong Employer Value Proposition (EVP) will make those businesses strong contenders in the market.

4. High-Priority Roles are Staying Resilient

Some roles are also more in-demand than others. Hiring software engineers could be a lower priority, depending on how bullish a company has been with hiring these professionals in recent months. On the other hand, product roles – a cornerstone of most tech companies – may still be hard to fill and short on talent as organizations will be reticent to let go of these employees.

Other specific positions that are still strong within tech include CRM, ERP, Cloud, and leadership roles within retail, manufacturing, distribution, and healthcare. Job functions concerning infrastructure around payment and security are also proving resilient right now.

Because of these various effects, hiring strategies may not be as straightforward or even actionable across multiple roles. This is where an expert in the space can really help to provide context and advice on best practices for each search, helping to optimize the process to fill every unique vacancy.

5. Measured Hiring Efforts are the Best Bet

Some specific kinds of organizations, such as streaming services and delivery service apps, have faced challenges because of their hiring strategies and the lingering effects of the pandemic. “After the quarantine ended, the revenue of these kinds of businesses declined because they weren't as necessary for some people,” says Hansen. “They had hired headcount that was reflective of the success and the revenue that they were experiencing during the pandemic. Those businesses that thrived off the situational relevance of their product during quarantine have had to readjust.”

On the other hand, businesses that have taken a slow and steady approach to hiring as we navigate uncertainty have seen success. These organizations have been very intentional about their hiring despite this recruitment rush. Hansen says: “Those businesses have been very intentional throughout this entire time period and they're not hiring unnecessarily. They have a job opening because they need to focus on building or developing a product that's in demand among their current customer base.”

Looking Forward

Hansen says the economic outlook market right now feels “reminiscent of 2019” before the market shifted as a result of the pandemic. This signals to her and McClymont that, at least in tech, we are experiencing more of a correction in the market than a straight decline. The exact trajectory, or course, will become clearer with time.

For now, different strategies will work best for different employers and roles. As your organization continues to make plans amid further market changes, you may find it useful to collaborate with members of our expert team like McClymont and Hansen. They have experience and knowledge in this specific area of hiring and can help you to tailor your recruiting efforts so you know that your investment in new talent is well placed. That could make all the difference in a shifting economy.

We can help to guide you through your hiring practices and find the best strategy, no matter what course the market takes. Please reach out or request a callback to start a conversation today.