Tech Job Market- Navigating the Highs & Lows

The COVID-19 pandemic brought unprecedented challenges to various industries and the IT sector of 5 million strong employees was no exception. The process of hiring has become notably complex, often causing companies to invest more than three months in finalizing a single position.

With this newsletter, we try to delve deeper into the complexities of navigating tech talent market.

The Great Resignation during COVID Period:        

The outbreak of COVID-19 forced businesses worldwide to adapt to remote work and rethink their strategies. The IT industry, being at the forefront of digital transformation, witnessed a surge in demand for technology solutions and services. While some companies struggled to cope, others thrived and sought to expand their teams. This demand created an opportunity for IT professionals to explore better job prospects and take advantage of the situation.

Many employees in the IT sector felt the need to upgrade their career prospects and sought new job opportunities. Factors such as dissatisfaction with current job roles, limited growth prospects, or the desire for better work-life balance fueled the resignation wave, leading to 21% attrition rate in 2021. Companies with a strong remote work culture and attractive benefits packages attracted a large number of talented professionals. This was further fueled by start-ups flushed with funds.

Lucrative Offers galore:        

Surprisingly, the wave of resignations extended to even those with relatively less experience in the industry. Companies hungry for fresh talent and willing to invest in their growth offered enticing job packages to entry-level professionals. The demand for skilled workers was so high that these individuals were presented with job offers with salary hikes of up to 300% compared to their previous positions.

This sudden boost in salary packages for individuals with limited experience caused a ripple effect throughout the industry. The competition for hiring talent intensified, with companies eager to attract the best candidates.

Looming Economic Slowdown and Layoffs:        

The euphoria of the job market was short-lived as the global economy grappled with the challenges posed by the pandemic. The economic slowdown led to shrinking revenues for many companies, forcing them to re-evaluate their budgets and cut costs. Consequently starting in 2022, organizations resorted to employee layoffs. This included start-ups due to funding winter, big tech firms and also some companies completely shutting down operations.?

More than 40,000 tech employees were affected in India by this layoff in 2022 and the first half of 2023. Companies had to prioritize cost-cutting measures to stay afloat, leading to the difficult decision of letting go of newly hired, higher-paid employees.

Challenges for Professionals with inflated salary package        

As the job market retract, professionals who earlier accepted substantial salary hikes are faced with the challenge of finding new job opportunities that match their previous earnings. With many companies now offering lower salary to new hires, these individuals struggle to secure positions that provide a similar level of remuneration.

The dilemma for these professionals is either to accept lower-paying jobs or stay unemployed while waiting for suitable opportunities.?

Difficulty for Companies in Finding Right Talent:        

Simultaneously companies that are hiring, find themselves grappling with a unique set of challenges.?

The job market is flooded with talent, but candidates' salary expectations often exceed the company's lowered budget range. This has created a misalignment between what companies are willing to pay and what prospective employees are expecting, leading to difficulties in finding the right fit for open positions.?

The changing market dynamics is further exacerbated by demand for new technologies like next-gen software development, cloud computing, machine learning and applied & generative AI. Fast changing technology landscape is keeping organizations on their toes to stay relevant.

With high demand, offer shopping has become a common phenomena and companies are often left in lurch when candidates accept offers and do not join.?

How to navigate the labyrinth of Tech hiring?        

Employer Branding: As per a Linkedin report, 75% candidates check employer brand on online platforms before applying for a job. Building a positive employer brand requires effort but has an immense impact in terms of reduced cost-per-hire, higher offer-to-join ratio, lower turnover ratio.

Effective sourcing & screening: This is the most time consuming process and if done right, half the battle won.?

Technology to the rescue: Technology plays a pivotal role in hiring. Right from resume parsing till cultural fitment assessments, organizations using technology have an edge in hiring better candidates, faster. Merito’s Offer-Vault is one such tool to make sure that a candidate joins after accepting the offer.

Merito helps people-first companies with all three solutions mentioned above. Hit us up if you’d like to know more.

Originally published under Merito Insights.