The gloom and doom of the nightly newscasts can make it hard to feel optimistic right now, especially if you’re employed in the tech sector. Roughly 140,000 American tech workers were laid off in 2022. Tech giants like Amazon, Twitter, and Meta each laid off thousands of employees; thousands more were laid off at other companies. A global recession is looming. Inflation and interest rates are both skyrocketing. The world is witnessing intense social, geopolitical, and economic turmoil. Is there anything at all to be optimistic about?
Actually, yes, there is. Somewhat astonishingly, CompTIA, the nonprofit association for the IT industry and workforce, reports in its annual forecast that 80% of professionals in the IT industry are feeling optimistic or very optimistic about their job roles.
This paradox can be explained by several trends that are emerging in the tech sector, and which promise to dominate the industry in 2023. While analysts are predicting that mass layoffs will continue well into the new year, tech workers have reason to hang on to optimism because of these predicted trends:
- The demand for specialized tech workers will remain high, particularly in industries outside of the tech sector;
- Knowledgeable tech workers will be required to implement and maintain emerging technologies such as adaptive AI and the Metaverse;
- In order to attract and retain top talent, business leaders will need to offer key incentives, including increases in compensation and benefits offerings, remote and/or hybrid work arrangements, and chances for professional development and internal mobility;
- New tech hubs will proliferate across the United States, making it easier to find work closer to home;
- An emphasis on reskilling and empowering workers will emerge; and
- Companies will increasingly hire contract/temporary workers, which will allow many tech specialists to embrace flexible work arrangements.
If you’ve been impacted by layoffs in the tech sector, we commiserate. Getting laid off is usually difficult, not just financially, but emotionally as well. But statistics are showing that 72% of tech workers who were laid off in 2022 found new employment within just three months. Further, 52% of those found jobs that paid more than the jobs that they lost. If you’ve been laid off or if you worry about being laid off, stay optimistic. The trends for tech workers in 2023 are quite favorable.
1. Demand for Specialized Tech Workers Will Remain High
Historically, unemployment in the tech sector has been low when compared to the overall national unemployment rate and that trend continued throughout 2022, despite well-publicized layoffs by big tech companies, including Alphabet, Amazon, Meta, and Microsoft.
In the United States, the general unemployment rate hovered around 3.5-3.7% from March to December 2022. In the tech sector, things were a little rockier, with unemployment starting out at a low of 1.7% in January 2022, falling as low as 1.3% and climbing as high as 2.3% as the year progressed, before closing out the year at 2.1% in December.
Strong job creation and an increasing need for tech workers outside of the tech industry means that, as we enter 2023, the demand for skilled tech workers is roughly two times the available supply. According to a piece at CIO Dive, the number of job postings for tech workers grew by 25% year-over-year during the first ten months of 2022.
The financial, retail, defense, and consulting sectors are all clamoring to fill open tech roles and these businesses have a high demand for data analysts and engineers, in particular, as they focus on moving their data to the cloud and maintaining cloud infrastructure.
This trend shows no sign of slowing as 2023 unfurls. While it’s expected that significant layoffs within the tech sector will continue as tech companies recalibrate after their pandemic-era hiring sprees, other sectors will pick up the slack. As long as tech workers are willing to pivot into an industry that they may have previously not considered working in, they will most likely be able to find employers that need and value their skills.
2. Emerging Technologies Require New Skills
Since the pandemic began in 2020, we’ve witnessed significant shifts in the workplace and in how work is performed. But, jobs themselves are changing too, and quickly. It’s been predicted that up to 85% of the jobs that will be available in 2030 to pandemic-era college students haven’t been invented yet.
As automation, AI, and machine learning gain significant traction, jobs will be created to support that technology. And, as technology becomes increasingly enmeshed in our everyday activities, there will be a growing need to manage the changes wrought by this digital transformation.
As we move into 2023, experts such as Bernard Marr predict that there will be a growing need for tech workers in these specialized fields:
- Data Communication/Storytelling, to understand and clearly communicate the data that will become increasingly prevalent in all types of jobs;
- Cybersecurity, to manage the increasingly diverse ways in which cybercriminals can manipulate technology;
- UX and UI Design, to make technology accessible to and usable by all;
- Digital Marketing, to capture an audience’s attention through the use of various tech tools; and
- AI, which will be integrated with all other technology, to augment the skill sets of employees.
As technology emerges and diversifies, brand new skills need to be developed to manage that changing tech. This means that there will always be a demand for tech workers who embrace continuous learning and who have up-to-the-minute knowledge that can be successfully applied.
3. Employee Incentives Remain Key
As tech-based unemployment remains low across all industries, and inflation continues to rise, employers have recognized that they need to step up incentives to attract, engage, and retain employees. However, the evolution of the workplace and the newly-developed focus on work/life balance since 2020 means that traditional incentive offerings need to be tweaked.
Compensation has always been a key incentive, particularly for technology professionals. Even with layoffs trending and executives trimming expenditures, this will not change in 2023. Experts predict an overall average pay increase of 4.6% for US workers this year. However, it’s quite likely that tech workers will see higher salary increases than workers in other sectors, as in years past. In 2021, the median salary for tech positions increased by 6.9%, while it increased by 6.7% in 2022. It is still a candidate-driven market and, as reported by Yahoo Finance, 9 out of 10 tech professionals would start looking for another job or would expect to negotiate other benefits if they don’t receive their expected wage hikes.
What’s key is that, in lieu of wage increases, tech workers would expect to negotiate other benefits. Experts predict a move away from onsite perks like ping pong tables and free meals, which will no longer appeal to workers who increasingly want to adopt remote or hybrid work arrangements. In fact, the opportunity to work from home for at least a few days each week is tied with compensation as the factor most important to employees when they are considering a new job.
Other types of incentives will likely be optimized in 2023 as well, as employers look for ways to attract and retain tech talent, including:
- Improved benefits packages;
- Professional development opportunities; and
- Support for career development and internal job mobility.
4. New Tech Hubs Emerging
America’s established tech hubs in Silicon Valley, New York City, Washington, D.C., Seattle, and Boston are witnessing the dispersal of talent for a number of reasons. The high cost of living in these centers, the move towards remote work, and the increasing use of tech by all businesses have spurred the creation of new tech hubs.
A piece in Business Wire points out that, as all of us increasingly use technology in every aspect of our lives, companies are focussing on “digital transformations to meet consumer expectations, improve internal efficiency and maximize their reach.” Tech companies no longer dominate the hiring landscape when it comes to tech professionals. Non-tech industries, including healthcare, aerospace and defense, finance and banking, consulting, and retail have edged out the tech industry when it comes to job posting numbers as they race to create in-house tech teams. Companies like Walmart are not usually considered tech giants but that company announced plans to hire 5,000 tech workers last year.
Many of these newly-emerging hubs offer not only exciting job opportunities for tech workers, but also a lower cost of living and potentially a better work/life balance. Smaller centers may offer shorter commutes and easier access to childcare or eldercare, for example. Tech workers who are willing to relocate in 2023 may find moving beneficial for several reasons.
5. Upskilling, Reskilling and Employee Empowerment
Savvy business leaders are recognizing that, rather than expending time and resources to hire new talent, investing in their current employees can help solve internal labor shortages.
Upskilling and reskilling are key. Teaching existing employees new skills not only prepares them for a change in duties and roles but also signals that they are valued by their employers, providing a strong incentive to stay with the company. Gallup reports that 65% of workers consider upskilling to be an important job benefit, which is understandable since upskilling can lead to career advancement opportunities, increased income, and a better quality of life.
Upskilling and reskilling are often seen as a way to empower employees to manage the new tech that is emerging in their workplace. However, upskilling and reskilling are important for those already trained in tech as well. A piece in Forbes, for example, reports that Verizon recently “launched a $44 million upskilling program to help candidates train for in-demand jobs such as junior cloud practitioner, IT help desk technician and digital marketing analyst.”
With low unemployment among tech workers continuing into 2023, employers will struggle to attract and retain skilled employees unless they offer attractive benefits – including upskilling opportunities.
6. Contract Work Will Flourish
While contract – or gig – work has long been important to the American economy, it gained momentum during the pandemic and shows no sign of slowing.
Contract work can be beneficial for both employees and employers. As we outlined in a past blog post, contract workers can:
- Choose projects that most interest them, rather than being tied to a job where they are required to contribute to multiple projects;
- Choose projects that are well suited to their skill sets, allowing them to complete those projects expertly, leading to higher job satisfaction, better performance, and better quality of work;
- Set their own flexible work schedules, allowing them to achieve a better work/life balance.
Businesses who hire contract workers benefit as well, having access to a highly-skilled and high-performing workforce that adjusts to the ebbs and flows of the business’ needs and that doesn’t incur significant overhead costs (if any at all).
As pandemic concerns waned in 2022, many businesses expected remote employees to return to the office. But many of those employees dug their heels in, refusing to go. In the opening weeks of 2023, several corporations including Disney, Starbucks, Vanguard, Paycom, and News Corp have announced that remote work will be phased out in the coming months.
For employees who don’t want to give up the flexibility that remote and hybrid work offers, contract work will be tempting. And, as employers struggle to fill open roles, the increasing pool of contract workers will offer an easy solution to their hiring woes. It seems certain that 2023 will see contract work flourish, with both employees and employers benefiting from this trend.