Will the IT market remain an employee market? On the prospects for the coming years

Magdalena Suszek – Senior IT Recruiter with a solid 7 years of experience in talent sourcing, technical recruitment and recruitment coordination in outsourcing and in-house models. She has extensive experience in identifying hard-to-find talent and hiring the most sought-after professionals, while always providing top-quality applicants and ensuring a friendly recruitment process.

In recent years, representatives of the IT industry have enjoyed an exceptionally favourable situation on the labour market. With a strong demand for skilled workers, they were offered high salaries and attractive employment conditions. It appears however, that although the IT industry may have seemed to be one of the most resilient to the effects of the economic crisis, it is also experiencing a certain slowdown. Are we likely to see the end of the employee market in the IT sector in the coming years? I will address this question in the following article. 

What does the Polish IT job market look like at the moment?

In recent years, the IT industry was also affected by the economic crisis. Until then, the market for IT services had experienced particularly dynamic growth. It was further driven by the pandemic – the need to work remotely, the rise in popularity of e-commerce and the digitisation of many other areas of life resulted in a real digital boom.

The sector may well have seemed to be one of the most resilient. Especially given that nowadays technology is making its way into virtually all areas of our lives. Nonetheless, the demand for IT specialists, which has long remained high, is now subject to change. 

Is the number of IT job openings falling?

According to the “IT Market Snapshot 2022” report published by inhire.io, the number of job vacancies compared to approximately 75,000 in 2021. Last year, a total of over 106,000 vacancies targeting IT professionals were posted. In Q4 2022, however, only 23,000 vacancies were advertised by employers, which represented a decrease of up to 25% from Q3.

Similarly, the number of companies looking for IT specialists has also fallen. There were 3,666 companies advertising for IT jobs in the last quarter of 2021 and 3,968 in Q1 2022. That figure was a record high, but did not last long. In Q4 2022, the number eventually fell to just 3,218.

Employers’ enthusiasm has clearly waned. There are a number of reasons for this, but the major factors responsible for the current condition of the labour market include the looming threat of economic crisis, inflation and the uncertain geopolitical situation.  

Can we already declare the end of the employee market in the IT sector?

The last 3 years in the labour market have clearly favoured IT professionals. The pandemic has forced many companies to accelerate their digitisation processes.  Being in high demand, specialists have been able to choose from a large number of offers and even dictate their conditions to employers – both in terms of remuneration, the mode of work or benefits. According to HR experts, they have definitely become one of the most privileged groups on the labour market.

Signs are that this boom is slowly coming to an end. Has the IT labour market become saturated? No, but once the situation stabilised after the pandemic, demand started to decline. On top of that, many companies are forced to reduce their costs due to the difficult economic environment (rising electricity prices, confusion over the Polish Order, inflation, etc.). Another shock was the outbreak of war in Ukraine.

Changes in the IT labour market

In the last quarter of 2022, there were clear signs of uncertainty in the IT industry. Many projects were stopped, investments were put on hold and even first redundancies were announced. The business climate has deteriorated, but this does not imply a shift from an employee market to an employer market. One could rather say that the market is becoming more balanced, with more room left for negotiation.

The Polish IT job market is beginning to change. Experts in their field can still expect to receive high salaries, but these have also started to slowly decline. Although the salaries of seniors, mids and juniors increased by 12%, 8% and 1% in Q4 2022, the value of their remuneration has in fact decreased. And all this because our country’s inflation rate has already reached 17.9%.

Who are employers looking for?

While the experience of an IT specialist has always played a major role, in recent years the sector’s entry level conditions have been more favourable for new employees. Today, employers are offering considerably better conditions to candidates with several years of experience. Previously, the majority of job offers were aimed at mid-level (53%) and senior-level (40%) professionals. At the moment, juniors definitely have it harder than just a few years ago. Job adverts for junior IT professionals account for only 7% of total listings. So it is no longer enough to be a developer – candidates must excel in knowledge and skills.

For employers, the most valuable professionals are experts fluent in languages such as Scala, Python and C. Also, employees with strong soft skills, including communication, creativity, innovation or teamwork, are in high demand. These enable them to take on more responsibilities and play a greater role in project management, which not only contributes to the quality of projects, but also allows to reduce the number of specialists employed. 

What are the major challenges for the IT market?

According to a sentiment survey, as many as 76% of IT organisations believe that one of the biggest challenges they will face in the coming months is salary growth. Despite, or perhaps because of inflation, employees are expecting raises, especially as a large percentage of professionals are accepting offers from foreign companies. 

The second major challenge is staff recruitment, as indicated by 57% of respondents. As many as 71% of survey participants expressed concern that challenges in this area could negatively impact their company’s turnover in 2023. This is of particular concern for the development of the IT sector in Poland, as, according to a report by the Polish Economic Institute and the SoDA, the shortage of IT workers amounts to 150,000 full-time jobs (as compared to the European Union average).

Another area of concern is high staff turnover. Although it was only indicated by 24% of respondents, as many as half of them agree that it has a negative impact on revenues. Employers find it important to recruit and retain qualified specialists. However, with a high number of job offers, including international positions, programmers tend to change jobs frequently. Also, many prefer to work under B2B contracts, on smaller, short-term projects.

The future of the IT industry – what are the outlooks according to experts?

​​Industry representatives are keeping a close eye on the situation and the ongoing changes. They are aware that in IT, trends may be even faster than in other sectors. This is why analyses and forecasts are an essential part of developing an action strategy that allows companies to prepare for and adapt to market tides. Some opinions point to the need to monitor events. It is doubted whether the slowdown in the IT industry, as witnessed in the second half of 2022, will continue and could result in a reduction in rates. Such scenarios are, however, being considered.

According to survey results, 67% of CEOs and owners of IT companies have a positive view of 2022. Additionally, 53% of respondents admitted that they were optimistic about the future. The opposite view was held by 32% of survey participants. Commenters focus on the challenges of 2022, including Russia’s aggression against Ukraine, the introduction of the Polish Order, as well as the economic crisis and inflation. They point to the current climate of uncertainty and increased caution, especially in the long-term perspective. Circumstances have forced companies to examine their own position, and to review their actions and plans.

Although challenging, the present situation has raised some important questions for businesses that they could no longer brush aside. This has also had a positive effect, however – the IT sector has had to adapt to a new reality that is influenced by a number of external factors, and focus on finding ways to protect itself in times of crisis. As a consequence, the situation calmed down and there was “a noticeable improvement in sentiment towards the end of the year”.

Positive reviews of past quarters affect the general attitude of the IT industry in Poland. Companies are proactively pursuing projects and ventures and are committed to providing globally competitive products and services to customers, also in terms of “quality of work, ethics or cultural proximity”. Experts continue to identify flexibility, readiness for change and continuous development as the key to maintaining market position.

In conclusion, the IT job market is set for change in the coming years. Especially as many employers will be moving towards greater work automation and the use of artificial intelligence. In the not-too-distant future, these may help fill the shortage of IT professionals, which is why the disproportion between those hiring and those being hired is slowly starting to even out. As these technologies evolve, the demand for some IT positions may decrease, but the time when new technologies completely replace human labour is unlikely to come for decades yet.