In a recession how safe are IT jobs?
ONS data is showing a robust employment market, but if an economic downturn ensues and the data worsens, will IT jobs be at risk?
If there’s a recession how safe are IT jobs?
Historically, the recruitment and construction sectors have been the litmus test for any pending recession. The most recent report from the ONS on construction output presented a fall for the period May – June 2022 - typically the precursor to a recession. However, ONS data is showing a robust employment market, with the IT recruitment industry reporting a record breaking year, but if an economic downturn ensues and the data worsens, will IT jobs be at risk?
The word ‘recession’ usually strikes fear into businesses and employees, with anticipation of custom drying up and jobs being lost. The threat of a recession can almost be blamed for making it a reality, as businesses pause to take stock and review, rather than forging on with growth plans and expanding with confidence.
Are things different this time around?
It’s a fact that the cost-of-living crisis is hurting people and rising interest rates will hurt some more. Employees are worse off in real terms, despite some pay increases, but are people working within IT right to be fearful of their jobs?
We have seen the return of a strong IT contract market post pandemic, a clear indication of the confidence of those with niche skills to present their talents via their own consultancy firm rather than the safety of a permanent job. We’ve seen inflation busting salary increases averaging over 10% in our permanent IT recruitment team over the past 12 months - with companies competing for the best talent and the return of big bonuses within the financial markets.
We have seen increases in demand for the majority of IT roles. Pair this with the ONS reporting a high employment rate and an increasing volume of job vacancies (with no likelihood of a let-up despite possible economic headwinds) our opinion is that if you work in the IT sector you are relatively speaking ‘safe’.
Across all IT disciplines, demand is still outstripping supply
Taking a deeper dive into the job market data, every discipline within IT has seen an increase in demand over the past 18 months. We are now seeing some of those disciplines start to plateau as growth slows. This, however, still leaves demand levels for IT skills at an all time high.
Unsurprisingly, given the increase in cyber crime activity, the cyber security skills required to combat threats have seen exponential growth in demand, with job volumes rising by 76% over the past 12 months, as seen in our IT Insights. This trend is unlikely to slow down given the rise in threats seen globally.
Similarly, there has been a steady increase in demand for those with software engineering skills, with a 63% increase over 12 months. We are starting to see growth slow, but it still remains at record levels.
IT management roles have seen an increase in demand of just 4% over the past 12 months, with demand dropping back slightly since the peak of April 2022. Historically management roles are an easy target in an economic downturn, and we see this as a potential area of risk. In previous recessions we have seen those most successful at mitigating this risk clearly demonstrating the ROI on their projects, making cost savings and efficiencies visible to the board. Within smaller environments those able to imbed themselves in projects or deliver hands on skills, whilst progressing their own professional development, have managed to protect their role or easily find a new position elsewhere.
Demand for on premises Infrastructure specialists has dropped since the start of the year, after a boom period when businesses scrambled to go online during the pandemic. We have seen an upskilling of specialists within this space as they move their expertise to cloud technologies, future proofing their careers.
IT technical support and helpdesk roles have increased by 66% over a 12 month period, with demand remaining high but flat over the past 6 months.
There is an argument that demand for IT skills could actually grow
There is one school of thought (Jim Collins, author of ‘Built to Last’ and ‘Good to Great’, presenting evidence from a 40 year study of over 1000 businesses) that the very best companies see a recession as an opportunity to hire the very best people, similar to the thinking that good companies market their way out of a recession.
The IT team are often called upon when a company looks to operate more efficiently, reducing costs and delivering improved processes through software. The reality is that many businesses are already on this journey, and have been since the downturn of the pandemic, it is unlikely these cost saving initiatives will be axed with any slow down in the economy.
So, will a recession mean job losses in IT? Possibly, but these will likely be from businesses that are economically on thin ice already; such as bricks and mortar retailers and those in the hospitality sector. The demand from businesses in a more robust position, namely those in Banking, Insurance, Law and Professional Services, with a pent up demand for IT skills, will more than compensate.
As we‘ve learned over the last couple of years, the old-school rule book no longer applies; a recession doesn’t necessarily mean job losses or a lack of job security – it could, in fact, lead to a further increase in IT recruitment for sought after IT skills.
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