High-profile layoffs, particularly in the technology field, have been hitting headlines since last summer. Twitter, Meta, Amazon, and HP all contributed to the reported 9,587 U.S. job cuts in October, according to Bloomberg—which was followed by a slightly increased IT unemployment rate of 2.3% reported in November. However, LinkedIn CEO, Ryan Roslansky, told Bloomberg that this wave of layoffs was in reality “a great talent reshuffle.” While big-name companies have terminated many employment contracts, small and mid-sized businesses have been struggling with an ongoing IT talent shortage, and this appears to be a prime opportunity to recruit the workers they need.
Experts at Wired Magazine agree, adding Salesforce, Apple, Snap, and Lyft to the list of big tech companies condensing their payroll. Despite these layoffs, the demand for technical talent is still competitive across many other industries. In fact, a recent BLS report announced an additional 11,800 temp jobs—a steady rate of growth month-over-month—as well as notable gains in technical services.
Labor market research firm Foote Partners LLC points out that 40% of those new IT jobs are in technical consulting services and computer system design. This indicates a trend of companies turning to consultants instead of full-time employees—a common practice in an economic downturn or an impending recession.
This data points to a strategic approach for recession-proofing your IT workforce. Hiring contract-based IT professionals will ensure companies can stay afloat during a recession, in addition to staying competitive in the IT talent pool.
Traditionally, essential sectors such as healthcare, education, and government have maintained their demand for talent regardless of the economic situation. It has become clear, however, that IT deserves to be on that list of recession-proof fields.
Companies across every industry are heavily dependent on their digital infrastructure. Four years ago, the Wall Street Journal declared that “every company is now a tech company.” The pandemic only cemented this reality. The exponential increase in remote work required organizations to think more intentionally about cybersecurity, while simultaneously ecommerce sales experienced four years’ worth of growth in just 12 months. The overwhelming consensus is that digital transformation has accelerated at an unprecedented pace since March 2020, bringing with it a bounty of new opportunities and new challenges.
The extent of this technological advancement is one reason why big tech companies are laying off workers now, almost three years after the pandemic first hit. These organizations simply over-hired. Mark Zuckerberg of Meta recently wrote, “Many people predicted this would be a permanent acceleration that would continue even after the pandemic ended. I got this wrong, and I take responsibility for that.”
For companies without the hiring power of Meta and Amazon, however, digital acceleration and increased dependence on technology created a need for technologists that was met by a scarce IT talent pool. That demand has not slowed down. In fact, Staffing Industry Analysts report a projected 7.8% growth in worldwide IT spending through 2027—and professionals will be needed to support that growth.
According to Bloomberg, more than three-quarters of business leaders are likely to avoid hiring full-time employees during economic uncertainty, in favor of freelancers or consultants. The most attractive reason for this approach is the ability to scale up or down quickly as the market changes. This allows companies to be flexible and agile—two qualities that have risen in value since the pandemic.
Furthermore, Forbes suggests that while historical trends show that an “external” workforce of consultants or freelancers is often the first to be cut in a recession, the current employment landscape may change that story for good. Many companies have realized the high value and streamlined convenience of employing contract workers—there is less pressure on HR and finance functions in this employment model. Thus, if a company is aiming for leaner operations, it is likely they may consider other cuts before looking to decrease its contract workforce.
When we better understand the current demand for IT as well as the reasons why contract work is more immune to economic conditions, it is easier to see why Forbes’ list of “recession-proof jobs” is primarily filled with IT jobs. IT product managers, game developers, and data analysts are all growing professions with robust outlooks for the future. Labor market research firm Foote Partners LLC also lists business process automation, 5G, IoT, cloud, edge computing, applied AI, and cybersecurity as high-demand fields keeping IT in the spotlight for the foreseeable future.
If the news headlines about a coming recession have made you question your future IT hiring decisions, think again. Technology is a mission-critical element to the operations and delivery of almost every company, especially in the wake of the pandemic. The result is that technical skills will remain in high demand and IT hiring will not slow down.
A recession is a good reason to consider hiring contract-based IT professionals. There is deep value in hiring consultants when the economic outlook is uncertain. That said, it can be more challenging to recruit and screen for the right fit. Working with an IT consulting firm like Resource 1 can help. We are focused on finding the best candidates to align with your IT needs as well as your company culture.
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