Irish Tech Landscape Faces Shift as Staff Reductions Outpace Hiring in Q1 2024

Businesses in the IT sector expect to let go of more staff than they hire for the first time since 2020, according to the latest ManpowerGroup Employment Outlook Survey. Hiring optimism in the tech sector has declined from +55% two years ago to -8% for Q1 2024. This is in response to slower-than-expected growth and preparation for continued business stagnation in the New Year.

The ManpowerGroup Employment Outlook Survey is based on responses from 420 employers across Ireland. It asks whether employers intend to hire additional workers or reduce the size of their workforce in the coming quarter, January to March. It is the most comprehensive, forward-looking employment survey of its kind in the world.

The survey also revealed 90% of businesses in the IT sector are having difficulty finding candidates with the skills they need. This is up 11 percentage points year-over-year. A low supply of specialist skills drives this shortage: across all sectors, IT & data skills were hardest to find – especially in the IT sector – with 69% of tech companies struggling to source candidates with the IT & data competencies they require.

“Ireland’s tech sector has entered a period of contraction following a period of significant over-hiring,” said John Galvin, Managing Director, ManpowerGroup Ireland. “Tech companies, especially multinational software companies, have had to respond to slower than expected growth and reducing global demand. Most of these redundancies have been mid-level business support roles like HR and customer experience, hired in anticipation of massive growth which did not materialise in 2023.”

The tech sector downturn is most pronounced in Dublin, where IT employers report a net employment outlook of -20 %, down from +53% two years ago. However, 88% of IT businesses in Dublin city report difficulty finding the skills they need in candidates, and 35% of employers report IT and data skills are the most difficult to find.

Galvin adds: “We continue to see vacancies for specialist, high-skilled tech roles like cloud architects, cybersecurity specialists, developers and data engineers, where employers are still looking to fill vacancies despite the wider downturn. This talent shortage is being driven by the demand for specialist skills rising faster than the economy can supply, but we know those with more generalist skills are encountering a much tighter labour market.

“Companies are also turning to more contracting and interim hiring strategies to compensate for permanent candidate shortages in the short term, but employers have to introduce and utilise upskilling programmes for tech candidates in the New Year if they plan to overcome this talent shortage”

Other sectors remain in positive territory. The Communication Services and Transport, Logistics, and Automotive sectors report a Net Employment Outlook of +48%, with the fast-growing Healthcare & Life Sciences sector following at +40%. However, each of these sectors reports facing record skills gaps, making optimistic hiring intentions difficult to turn into filled vacancies.

To tackle the ongoing talent shortage, ManpowerGroup Ireland advises businesses to re-evaluate how they approach job vacancies and focus more on skills-based hiring rather than solely on industry experience.

Galvin explains: “Eight years ago, IT skills barely scraped the top ten most in-demand skills. In today’s market, the number of candidates with eight years of experience in cutting-edge tech does not exist in sufficient quantities to meet demand – and the data shows that it is only getting worse year on year. The traditional approach of looking for ready-made candidates with a fixed level of industry experience is simply not a sustainable hiring practice any longer.

“We know from our conversations with candidates that they want flexibility, good work-life balance, and meaningful professional development. Businesses should look to hire candidates who have potential – based on a holistic view of past experience, aptitude, and transferable skills – and be ready to train and upskill the rest, building talent with the technical skills that businesses need and candidates are looking for,” concluded Galvin.