IT job unemployment dropped sharply in September as small-to-midsize companies scooped up talent left behind by big enterprises. The dynamic shows the skills employers want have shifted in recent months.
Multiple research firms reported that the unemployment rate for IT workers dropped precipitously last month — in one instance, by nearly 37% — a decline that marked a serious shift from months of incremental increases mixed with plateaus in unemployment.
Tech industry watchers say the dramatic uptick in hiring is the result of several factors, including a strengthening economy, AI-related talent needs, and increased hiring by small-to-midsize companies.
Smaller organizations have also been scooping up talent left in the wake of more than two-years’ worth of layoffs by mega corporations. Last month, the number of unemployed IT professionals in the US dropped from 148,000 to 98,000, according to IT industry consultancy Janco Associates. Janco derived its findings from a US Bureau of Labor Statistics (BLS) report released last week.
More than 78,000 IT pros were hired in September, cutting into the backlog of unemployed. “IT Pros who were unemployed last month found jobs more quickly than was anticipated, as CIOs rushed to fill open positions,” said Janco CEO Victor Janulaitis. “Our analysis predicts the same will be the case for the next several months.”
Janco pegged the September unemployment rate for IT workers at 3.8%, down from 6% in August. IT unemployment is now below the overall national unemployment rate of 4.1%, according to Janco.
Over the year, Janco has reported IT unemployment rates that were far higher than other organizations’ figures. For example, nonprofit IT association CompTIA said tech unemployment dropped from 3.4% in August to 2.5% in September; that still represents a 26.5% drop.
Janco’s numbers are calculated differently from CompTIA’s and the firm’s report showed the overall unemployment rate for IT pros grew from 5.6% in July to 6% in August. (High unemployment is defined by the BLS as being 5.5% or greater.)
Janco Associates
Janco’s figures, in fact, showed IT unemployment had surpassed the national unemployment rates for seven of the last eight months. But in September, that shifted dramatically.
“There are now approximately 4.18 million jobs for IT professionals in the US,” said Janulaitis. “Layoffs at big tech companies continued to hurt overall IT hiring. Large high-tech firms continue to lay off to have better bottom lines. Included in that group of companies that have recently announced new layoffs are Intel, Microsoft, and Google.”
Janco’s current forecast is for the IT job market to grow slightly, between 5,000 and 6,000 jobs the remainder of 2024. That, however, will not be enough to absorb all unemployed IT pros looking for work.
AI part of the hiring boom?
Martha Heller, CEO of Heller Search, a tech executive headhunter firm, said a significant portion of the $600 billion that has already been invested in AI technologies by organizations is going to talent — and not just AI talent. “To get ROI from AI, most companies need to hire more data engineers, cybersecurity leaders, and developers in addition to modelers and prompt engineers,” Heller said.
Through 2027, generative AI (genAI) will spawn new roles in software engineering and operations, requiring 80% of the engineering workforce to upskill, according to research firm Gartner. A Gartner survey of software engineering leaders found that 56% rated AI and machine learning engineer as the most in-demand role for 2024.
While AI will make engineering more efficient, organizations will need even more skilled software engineers to meet the rapidly increasing demand for AI-empowered software. “Bold claims on the ability of AI have led to speculation that AI could reduce demand for human engineers or even supplant them entirely,” said Philip Walsh, a Gartner senior principal analyst. “While AI will transform the future role of software engineers, human expertise and creativity will always be essential to delivering complex, innovative software.”
IT workers are paying attention to the need to bolster their skills. A survey by genAI tech company Amdocs of 500 full-time workers who use Gen AI-powered tools or software showed half of Gen Z respondents would consider looking for a new job if their company did not train them on the technology. That compared to 37% of Gen X and 27% of Baby Boomers who said the same thing.
“Many of the larger firms continue to be focused on improvements in productivity and replacing lower-level skills with AI applications,” Janulaitis said, noting that AI continues to slow the growth of entry-level IT positions, especially in customer service, internal reporting, telecommunications, and hosting automation.
C-level executives continue to focus on eliminating “non-essential” managers, staff, and services, he said. “Experienced coders and developers have limited opportunities with legacy applications. The highest demand continues to be for AI, security professionals, new technology programmers, and Internet processing IT pros.”
A closer look at BLS data for tech hires showed companies are pulling back on hiring AI pros and are instead seeking data researchers who can help businesses make better decisions — whether to advance AI deployments or broader business strategy.
Job openings for tech support specialists and database administrators were up 14%, the largest percent change for the month.
After nine consecutive months of growth, the total number of job postings for AI and machine learning engineers declined by 3.7% in September. And new job postings declined by 13.7% during the same period, according to Ger Doyle, head of Experis North America, a ManpowerGroup tech recruiting subsidiary.
“This is mainly due to shifting demands. While there is less demand for software developers, there is increasing demand for roles such as solutions architects and data scientists to build robust data foundations,” Doyle said.
