The State of the Job Market & How it Impacts IT Hiring

August’s job numbers from the Bureau of Labor Statistics (BLS) show a slight increase from the previous month. Good news, right? Growth is good, right?

Well, not exactly. From March 2023 to 2024, over 818,000 jobs were lost nationwide. And even with the month-over-month increase, the market still hasn’t regained those numbers.

This excruciatingly slow growth puts significant pressure on job seekers and hiring managers alike. More job seekers are fighting over the few pieces of pie that remain, and hiring managers are forced to make the process harder to screen out all the extra candidates.

As a result, the job market has significantly changed how companies—particularly tech companies—hire in 2024. Read on to find out what these changes entail and how you should respond.

Why Is Job Growth Slowing Down?

It probably comes as no surprise that we can’t blame stagnating job growth on any one factor. Rather, a number of issues are contributing to this macroeconomic reality:

• High interest rates make it more expensive to borrow money and invest in growth (which often includes hiring more people)
• High inflation, although cooler than the past couple of years, makes it harder to project future costs and strategically plan your workforce
• Overeager investments pre-Covid had prompted a reactionary cautiousness that makes it harder to get funding for new or expanding businesses

Personnel costs are often the biggest line item in organizations’ budgets, and when money tightens, layoffs are among the first cost control measures to be enacted. Until significant investments flow into the tech sector, hiring will likely continue to be slow.

Why a Cooler Job Market Doesn’t Necessarily Make Hiring Easier in Tech

If you turn on the news or read the latest article from Reuters or CNBC, all signs are pointing to a slow job market. For employers and hiring managers, this is ostensibly good news. A cooler job market means that employers are in the driver’s seat.

But tech hiring managers aren’t feeling that reality. In fact, many of the employers we talk to are experiencing the opposite.

When it comes to key IT & engineering skills, companies are having a hard time finding employees. Some of these high-demand areas include:

• Cloud computing
• Artificial intelligence (AI) & machine learning (ML)
• Cybersecurity
• DevOps
• Software development
• Data science

This means that competition for the talent you actually want to face is higher than the current jobs reports make it seem. As a result, tech companies are changing how they hire to help accommodate these new realities.

How Is Slow Job Growth Changing How Tech Companies Hire?

So what do those changes look like? Here are three tangible impacts of slow job growth on the state of the market right now.

1. Rise of contractor and consulting work

The cost of a bad hire sits at $17,000, according to CareerBuilder. In the tech sector, where core skills are at a premium, that mistake could be even costlier.

One way companies are mitigating risk is by turning to contract and consulting work in lieu of hiring full-time employees.

This approach can be a win-win for both employers and tech workers. On the employer end, you can test out an employee to see if their performance matches their resumé claims without committing to a long-term relationship or fringe benefits. On the employee end, they can command higher rates and achieve more flexibility in their career.

2. Stricter talent screening

As more people find themselves out of work, the queue of candidates for each job application is growing exponentially. This is prompting many hiring managers to adopt stricter talent screening solutions, often turning to AI to scrape key information from resumés.

Automated solutions, especially AI solutions, can certainly be helpful and have their place. But with all their benefits, there’s also a risk involved: it optimizes your talent screening process for people who are good at “playing the resumé/interview game” instead of those who’ve achieved business value in previous roles.

A better solution is to rely on a staffing partner with networks and expertise in the tech field. They can sift through applications and use their experience (and tools) to surface the best three or four candidates to find the best possible fit.

3. Shift to skills-based hiring

In light of the current market, there has been a significant shift away from credential-based hiring (e.g. college degrees or certificates) and toward skills-based hiring. In the latter system, recruiters are looking for a combination of specific skills and, more importantly, success in driving outcomes with those skills—regardless of the official “credentials” of the application.

The challenge with skills-based hiring is that it’s hard to gauge from a mere resumé. A hiring manager who isn’t intimately acquainted with these skillsets may have trouble screening and hiring. But there’s a solution: make sure you have a recruiting partner who knows how to evaluate a candidate’s experience with certain skills. Find a staffing firm that specializes in the field and role you’re hiring for and whose networks can help you navigate the competitive market.

Final Thoughts on The State of the Job Market

In a previous article, we’ve talked about how tech companies are flocking to the Dallas metro area (which is why Concero has opened an office there as well!). So if you’re competing for tech talent in Dallas, you’re going up against Microsoft, Salesforce, JPMorgan Chase, and more.

You may have the resources to compete against these folks. But likely that’s not the case. So you need something else—an “in” with top talent that gives them a reason to pay you consideration.

At Concero, we live and breathe networking. That’s what enables us to do the heavy lifting and connect you with top talent. In today’s competitive market, you deserve someone who knows the scene and the people in it.