It is the third major job cuts in the industry within a few weeks. The short message service Twitter had previously laid off thousands of employees after being taken over by billionaire Elon Musk. Microsoft already cut a good one percent of its 221,000 employees worldwide in October.
The economic downturn hits the technology companies hard and ends the boom of the corona pandemic in the industry. According to the technology portal Crunchbase, 45,000 IT jobs were cut in America this year alone – and that’s without the meta layoffs.
This is also noticeable in Germany. The number of job advertisements for IT experts is falling – for the first time in years. Data from the personnel service provider Hays and the Berlin Index Group show that the number of job advertisements placed has fallen by nine percent across the industry since the beginning of the year.
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Among developers, the drop is even greater. According to the Hays Index, a fifth fewer web developers are currently being sought than in January, and the drop for app and mobile programmers is around 15 percent. The job platform Indeed makes similar observations. There, IT jobs are developing below average in four European countries.
Job development in IT: “Leave the church in the village”
Experts see the current economic crisis and the high IT salaries as responsible for the trend reversal. “Currently, the internal company is putting the brakes on costs and the return on investment of ongoing projects is being questioned more,” says Hays board member Andreas Sauer. One or the other expensive IT project could also be canceled.
However, one must “leave the church in the village”, as Sabine Laukemann, head of HR at IT service provider Datagroup, puts it. The decline in job advertisements is happening “at a high level”. “Microsoft, Meta or others are laying off people across several countries, but I don’t expect a large wave of layoffs in Germany,” says Laukemann.
Other industry observers agree. “We cannot see that the shortage of skilled workers in IT is getting smaller or that the situation is easing,” says Lydia Erdmann, labor market expert at the digital association Bitkom. Most recently, 96,000 jobs remained vacant in the industry.
Boom times are over
The wave of layoffs in America is the correction of a long boom phase. The big tech companies have massively increased their teams with IT experts over the years. 221,000 people worldwide work for Microsoft alone – 90,000 more than in 2018. Google has also been able to double its number of employees since 2017. And Meta and Twitter now employ around 60 percent more people than before Corona.
The demand brought the IT and developer guild decent wage supplements even in Corona times. Heads of an IT development department have been able to increase their salary by 13.5 percent since the pandemic, according to a recent comparison of remuneration by HR consultancy Robert Half.
In cybersecurity, the salary increases are even more significant. There, IT security consultants with a lot of experience earn an average of 25 percent more than in 2019 or almost 88,000 euros annual fixed salary. IT security chiefs, so-called CSOs, even get to 170,000 euros today – 55 percent more than in autumn 2019.
“Tech jobs are a huge cost to companies in terms of recruitment and payroll costs,” says Indeed’s Annina Hering. And so, in uncertain times like these, IT specialists “possibly first fell victim to austerity measures”.
“The people we are looking for are not necessarily fired”
However, the cost reductions vary depending on the task and industry. “It is understandable that companies are reluctant to advertise jobs in view of the possible recession,” says Laukemann from IT service provider Datagroup. “Especially companies from affected sectors such as retail are rather cautious.”
But that doesn’t mean professionals are easier to find. “For us, the job market hasn’t changed, both in terms of the availability and affordability of IT staff,” says Laukemann.
The new supply on the labor market does not always meet demand. “One can assume that the people we are looking for will not necessarily be made redundant there,” says Stefan Scheller, HR marketing consultant at Datev, Germany’s third-largest IT company. “It is precisely the people with the technology knowledge that is currently in demand that very few companies will release at the moment.”
Very good mood in the industry
Crisis? Rudi Bauer hasn’t noticed much of this either. The head of the IT job platform “We Are Developers” reports via video link from the Web Summit in Lisbon. On the stage of the important tech tête-à-tête, topics such as the stumbling crypto scene, climate change and the Russian war of aggression in Ukraine dominate.
Apart from that, Bauer reports, the atmosphere at the industry meeting was “very, very good”. The companies have understood “that they have to keep their developers in order to remain successful”. Consequently, it is more about New Work and the best working conditions than about reduction scenarios.
Bauer does not see the need for IT specialists going down. “I rather believe that the mechanics of the IT job market are changing and that companies can no longer reach developers who are in demand through classic job advertisements” – which could also explain the decline in data.
Many specialists were loosely looking for exciting projects, companies and ideas to develop further. “They tend to wait until the next job comes to them and not the other way around.”
More: “A million dollars for brilliant developers”: Tech companies are driving up salaries for IT workers