IT firms expect to increase hiring next quarter, ManpowerGroup says

Global staffing firm ManpowerGroup surveyed nearly 6,000 US employers and found that far from laying off employees, companies are still on the hunt for tech talent.

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While organizations across all US industries are expected to boost hiring in the third quarter, employers in the IT market have the most agressive hiring plans, according to global staffing firm ManpowerGroup.

Across all industry verticals in the US, 48% of employers plan to hire in Q3, while just 13% expect staffing decreases, according a survey by ManpowerGroup. For US tech firms, 55% plan to add to their current headcount, up 10% from the previous quarterly outlook. Even so, Q3 hiring projections are expected to be about 5% less than for the same period in 2022.

After IT, the most robust hiring plans are expected in financials and real estate, energy and utilities, and industrials and materials, according to ManpowerGroup's global survey of nearly 39,000 people with roles that include hiring and HR management. Projections  about US hiring plans are based on a subset of 6,000 US-based employers who took part in the larger survey. Responses were gathered April 3-28.

Including the US, ManpowerGroup surveyed nearly 39,000 employees in charge of hiring or with hiring knowledge in their organization in 41 countries. Of those nations, 29 report an increase in hiring intentions higher than in the previous quarter.

manpower global outlook graphic ManpowerGroup

Global by industry intent to hire in Q3

In comparison to the US, only 28% of employers worldwide plan to add to their headcount, according to ManpowerGroup, though 39% of those in the global IT industry expect robust hiring in Q3.

Overall, ManpowerGroup has never seen a more agressive hiring trend, according to Ger Doyle, senior vice president of Experis, a ManpowerGroup-owned IT staffing and project services company.

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US-based hiring intentions by industry

Despite a slew of high-profile layoffs over the past year, 74% of IT employers in the US say they are still having difficulty filling open roles, according to the ManpowerGroup's US employer survey. Top IT staffing priorities include jobs in cybersecurity, technical support, customer experience and fullstack developers, according to Doyle.

"Yes, there were layoffs, but you have to look at the hiring companies did — and not just the tech companies," he said. "The tech companies hired the most and then dropped the most. But if you look comparatively, and consider a company like Microsoft — who is a big client of ours — they hired over 100,000 people and they [laid off] 20,000 people. So, you’re hearing about the down a lot, but not the up as much."

While Novermber 2022 through January 2023 was marked by well-publicized layoffs, Doyle said the market has stabilized and most organizations have finished "chopping."

Of the 41 countries the broader ManpowerGroup survey covers, US employers rank second in the world for IT talent demand in Q3, well above the global average, according to Doyle.

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Among the skills most in demand in IT are project managers, business analysts, and software developers. "I wish we could clone full stack developers. We can't find enough of them," Doyle said.

In past years, ManpowerGroup’s survey has been conducted by telephone. This year, it was done online.

Regionally, the strongest hiring intentions for next quarter are in the west, with 43% of employers planning to add to workers, according to ManpowerGroup. In the northeast, 40% of employers plan to increase staff; the midwest is expected to see a 32% increase; and companies in the south are expected to boost hiring by 29%.

Large organizations with more than 250 employees are more than three times as optimistic as small firms (with fewer than 10 employees) to hire in the next quarter, with employment outlooks of +47% and +14%, respectively.

Earlier this month, the US Bureau of Labor Statistics (BLS) released its hiring data for the month of May; it showed a 0.3% increase in overall unemployment — from 3.4% to 3.7%. Tech companies shed an estimated 4,725 jobs — a figure that includes nontechnical workers — in May, according to an analysis of the BLS figures by IT industry group CompTIA.

Not all job market data is congruous. Some research firms show greater hiring and others less, depending on how they parse government and survey data.

For example, job postings for open technology positions eased off last month, down to about 234,000 from April’s 300,000, according to a report from IT industry group CompTIA. And a report from Janco Associates last week showed that the US economy has slowed during the past several months, with CIOs and CFOs pulling back on many IT initiatives and recruiting. (Janco has been more bearish about the economy than some other firms.)

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At the same time, however, the number of tech jobs throughout the US economy rose by 45,000, according to CompTIA’s report, which was based on BLS data.

“The US labor market continues to demonstrate grit amid chaos — from inflation to high-profile layoffs and rising gas prices,” Becky Frankiewicz, president of ManpowerGroup North America said. “With 339,000 job openings in the most recent BLS report, and a strong outlook across every sector and every region extending into the third quarter, we’re still rewriting the rule book and the US labor market continues to defy historical definitions.”

Layoffs among big tech firms arose largely from two business forces — the need for improved balance sheets and efficiency and changes in customer behavior wrought by changing economic conditions, according to Zachary Chertok, an analyst with IDC Research.

In other words, the tech industry faced two problems. First, large-scale shifts to enable business continuity during COVID left companies with a set of employees who became less necessary as the business and consumer environments returned to more normal operations.

Second, changing economic conditions — inflation, global trade disruptions, and rising interest rates — made it harder for tech to create markets and sell into them as the dominant driver of economic growth and development in non-tech sectors, Chertok said.

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“Despite wide-scale layoffs, we are seeing the net layoff rate significantly lower than the gross rate," he said. "A driving reason for this is that as layoffs are happening, some organizations are shifting to embrace skills-based hiring that recognizes talent that was let go as an opportunity to fill long-vacant roles and be redeployed or boomeranged. Many organizations are handling these concepts miserably in that they shut off their employees when they are made redundant only to turn around within weeks and try to hire them back once loyalty is destroyed — many lack frameworks for proper internal mobility. 

Chertok believes that what was originally billed as the “The Great Resignation” was actually “the Great Realignment,” where talent bottled up in a few industries was being released to the broader market enabling industries that lagged in digital transformation to catch up and become digital consumers.

“As the workforce realigns to distribute technical skills across industries, talent migration is concentrating around corporate and educational/research hubs first, reenergizing the magnetic employment effects we saw pre-COVID and contributing to unevenly distributed unemployment numbers,” he said. 

manpower global by country outlook ManpowerGroup

Global hiring perspectives

In fact, even as the national unemployment rate rose to 3.7% in May, unemployment in the tech market remained low, according to CompTIA, dropping slightly from 2.1% in April to 2%.

In April, employment site Indeed published the results of a survey of 502 employers across the US on how the pandemic shaped current recruiting and future plans. The results: a majority of firms surveyed are moving toward a more flexible model of candidate recruiting that in many cases don’t require college degrees.

Studies have found that when employers drop degree requirements in job postings, they become more specific about skills, spelling out needed soft skills such as writing, communication, and being detail-oriented.

“Even with the layoffs in tech, there is still a major shortage of IT talent — just not as big as it was before the layoffs,” said Jack Gold, principal analyst at research firm J. Gold Associates. “And even with all of the layoffs, it’s probable that we only lost 1% to 2% of all IT [staff], while the need for IT and tech people in general continues to rise.”

IT jobs, of course, are not exclusive to tech firms. Every company these days uses technology to function and requires IT support, whether internal or external, Gold noted.

“So, we can’t just look at big tech layoffs and assume that IT is pulling back," he said." The need for IT people is still expanding, with more and more tech being deployed. It’s just that many of the jobs have moved to other companies and/or service organizations."

Copyright © 2023 IDG Communications, Inc.

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