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Decoding the 2024 tech job market

7 February 2024 , by Philip Joubert

If you’ve been following the tech layoffs and company shutdowns over the last 18 months then it’s not going to be news to you that 2023 was a real shitshow. To put things in perspective, in 2008 about 65,000 tech workers lost their jobs. In 2023 it was 260,000!

My goal with this article isn’t to tell you how bad things were last year. Rather we’re trying to figure out what is happening in the tech job market right now and try to get a sense of what we might expect to happen over the next year or so.

I recorded a video of myself talking through this in a lot more depth, so if you want to get the full analysis check it out here:

Companies have been cutting headcount to extend their runway

VC funding is now at a third of the peak in Q4 2021 

We’re at a low point for global VC funding

While there is a lot of nuance here, the impact is simple: Tech companies have to hit a higher bar while raising less money at lower valuations.

This shift has left founders unsure if they can raise capital again at all. And, even if they can, what kind of deal they’d get. As a result, we’ve seen companies across the globe cutting their costs to extend their runway.

In most tech companies the biggest costs are the employees – so unfortunately, that’s meant a lot of layoffs. While South African companies have avoided the brunt of the effects, many still had to do layoffs: One in twenty SA developers were retrenched in 2023, almost double the rate in 2022.

If we look at global data, things have been a lot worse. As I’m writing this in early February, Q1 2024 layoffs have already exceeded Q4 2023. That said, I still believe the worst is behind us and we’re seeing tech jobs slowly recovering.

Fortunately, the worst layoffs seem to be behind us...

The worst layoffs seem to be behind us…

Tech jobs are still down, but slowly coming back

Continuing with global trends, we can see that tech jobs are still way down from the high in 2022, but we can also see that they’ve started slowly coming back up since the beginning of last year:

Open tech jobs are slowly growing

Open tech jobs are slowly growing

As you can imagine, with high numbers of layoffs and fewer tech job opportunities, each open opportunity is now attracting many more inbound applications. The average number of inbound applications has tripled since 2021:

Inbound application rate for tech roles has tripled since 2021

Inbound application rate for tech roles has tripled since 2021

This affects both developers looking for jobs as well as hiring managers and tech recruiters – and as we’ll see later, it’s making both sides’ lives tougher. But before we do that, let’s talk about how the power dynamic has shifted in the tech job market.

In the tech job market, companies now hold more power

Up until about halfway through 2022, it was very clear that developers held the reins of the job market dynamic. It was a fantastic time to be a software engineer – possibly the best time in history. Companies were desperately competing to fill their tech roles so developers had their pick among an ever-increasing number of options. Standards were lowered, salaries skyrocketed and perks were raining down from the heavens.

Things have changed since then. Companies have reclaimed much of the power they lost over the last few years. The first place we can see this with salaries - where increases have slowed down dramatically.

Developer salaries are stagnating and perks are shrinking

Developer salaries stagnated in 2023

Average developer salaries

Here we’re looking at data from OfferZen’s 2024 South Africa’s Software Developer Nation report (out later in Feb). We can see that average salaries have grown a lot less year on year since 2022 and that it’s looking especially grim for junior developers whose salaries have actually decreased. If you consider inflation and reduced purchasing power, it’s even more gloomy.

We see something similar when it comes to the perks that companies offer. Most perks are down year over year, but it’s especially clear with training budgets and remote setup.

Other perks are being cut too

Other perks are being cut too

This is probably a good time to point out that, while things are looking tough for software engineers at the moment, being a software engineer is still one of the best jobs in the world. It’s just slightly less awesome than it used to be.

We can see that companies are exercising their power inside the building - but what about in the job market?

It’s harder to get and pass interviews

I found this data in a report from Ashby, an Applicant Tracking Service. The graph below shows the percentage of applicants for tech roles that actually get an interview.

The percentage of applicants that get an interview

The percentage of applicants that get an interview

There’s a fairly steep decline from 7.6% to 5.75% - which is roughly a shift from one in thirteen applicants getting an interview to one in seventeen applicants. Meaning that developers need to apply to more jobs to get an interview at all (and companies need to screen more applicants).

In addition, it’s now harder to pass the interview process at many companies. Over at Interviewing.io they published data from FANG interviews that showed exactly what we’re seeing at OfferZen:

Average test score required to pass an interview

Average test score required to pass an interview

It’s not easier to hire developers, it’s just difficult in a different way

It stands to reason that due to all these changes, it would be easy to hire tech talent. Previously it was difficult to just get candidates to come to an interview. Surely in comparison it’s a walk in the park now?

It’s an understandable assumption, but that’s not what we’re seeing in the market. It’s still difficult to hire tech talent, it’s just difficult in a very different way.

If you look at the graph below you’ll see that the average hires per recruiter are have gone down considerably in the past two years, while at the same time applications have tripled:

Recruiters are working harder than ever

Recruiters are working harder than ever

So how come talent acquisition teams are seemingly so much less efficient now?

Firstly, many internal recruitment teams have been disproportionately affected by layoffs and are much smaller than before. Recruiters are stuck needing to do “more with less”.

Secondly, again: the number of inbound applications has tripled since 2021. There’s a huge amount of noise in these applications and a lot of work to get through it all, so recruiters need to review far more profiles to find a candidate they’d like to proceed with.

Thirdly, as interview standards have gone up, companies now interview more candidates to find someone they’d like to hire. That means more interviews, more time interviewing, and generally a much higher workload per hire.

So despite what one might initially assume, many internal recruitment teams are working harder than ever.

So, what are you supposed to do with this information?

There are a few things worth considering:

  • Start looking at retention today – many devs are waiting for the first opportunity to find a new job. Many developers are understandably not super excited about the new reality they find themselves in and are looking for greener pastures (see more in the full analysis)
    • If you can, compete on salary and stability.
    • If you can’t, compete on good management and career growth.
  • Don’t lose sight of the candidate experience - the best candidates are still in demand and still hard to close. If your goal is to build a world-class team you still need to consider how you’ll close top candidates, and they will always have other options.
  • Collaborate on recruitment - if your talent acquisition team was impacted by layoffs and you’re hiring, then you’ll close roles much faster if hiring managers step up.

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