In August 2024, the tech job market showed significant challenges as unemployment rates continued to rise, contrasted by an ongoing demand for specialized skills. Reports from Janco Associates and CompTIA both highlight a complex situation: traditional tech roles are declining, while opportunities in AI, cybersecurity, and cloud computing grow.

For CIOs and tech leaders, understanding these dynamics is critical in planning workforce strategies and managing talent.

CompTIA reported that the unemployment rate for IT professionals increased to 3.4% in August, with a loss of 28,000 positions, marking the third consecutive month of employment declines. In contrast, Janco Associates reported a more severe increase to 6%, noting 148,000 IT workers unemployed compared to 145,000 in July.

Janco’s data shows tech unemployment has been above the national rate for seven of the last eight months, highlighting persistent pressures on the sector.

Despite rising unemployment, CompTIA data showed over 500,000 active tech job postings in August, with more than 211,000 new listings added. This reflects ongoing demand for developers, engineers, and data scientists, even as traditional tech roles face cutbacks.

These conflicting trends underline the need for companies to focus on skills that support AI, cloud, and digital transformation.

Economic Pressures and Shifting Demand

Broader economic conditions are impacting tech hiring decisions.

While the national unemployment rate slightly dipped to 4.2%, high inflation and economic cooling are causing cautious spending in tech. Nick Bunker, head of economic research at Indeed, offered that job gains have slowed significantly compared to pre-pandemic levels, affecting sectors beyond tech.

Korn Ferry’s latest financial results provide additional context, reporting a 3% drop in revenue due to lower demand in professional search, interim hiring, and recruitment process outsourcing (RPO).

This decrease reflects how economic uncertainty is driving companies to scale back traditional hiring efforts, further complicating the job market for IT professionals.

“The bumpy stretch of tech labor market data requires the usual balancing of shorter-term and longer-term perspectives.”

Tim Herbert, Chief Research Officer – CompTIA

AI: A Disruptor and Catalyst for Tech Hiring

The rapid rise of AI is reshaping tech employment, disrupting traditional roles while creating new opportunities.

AI’s integration into business processes is contributing to job losses in areas like back-end system management and routine IT support. However, it is also driving demand for roles that specialize in AI technologies.

CBRE’s Tech Insights Center reported that AI-related job postings now account for 14.3% of all tech listings, up significantly from 8.8% in 2019.

CIOs are increasingly focused on filling roles that can support AI initiatives, such as data scientists, AI engineers, and machine learning specialists. As companies continue to invest in these areas, the need for skilled professionals capable of implementing AI-driven solutions is expected to grow through 2025.

This shift is prompting firms to adjust their hiring strategies, focusing on skills that drive innovation.

Skills Gaps and Adjusting Expectations

A critical issue for tech workers is the growing gap between their existing skills and what the market demands. With technological advancements outpacing the current workforce’s capabilities, many professionals find themselves needing to upskill to stay competitive.

This challenge is particularly acute for those who have been laid off, as roles that once offered high salaries are now less in demand.

According to data from Janco and Indeed, job postings for software development and IT support are approximately 30% lower than pre-pandemic levels. Additionally, wage growth in high-income tech sectors has slowed, complicating job searches for those accustomed to the higher pay rates seen during the pandemic hiring boom.

Upskilling in AI, cybersecurity, and cloud technologies has become essential for those seeking new opportunities.

Corporate Layoffs and Strategic Shifts

The recent wave of layoffs among major tech firms reflects the broader restructuring of the industry.

Cisco Systems announced plans to cut 7% of its workforce, around 6,000 employees, as part of cost-cutting efforts. Similarly, Intel plans to lay off 15,000 employees while pausing dividends, illustrating a shift toward prioritizing efficiency.

Even non-tech companies like General Motors are reducing IT staff as they pivot toward AI and software-driven strategies.

These layoffs underscore a trend where companies are reallocating resources from traditional roles to areas that support future growth. More organizations are becoming more strategic in managing talent, emphasizing the importance of aligning workforce strategies with market needs and technology advancements.

The Wrap

This current trend of tech employment highlights a complex interplay between economic pressures, evolving skill demands, and strategic shifts within companies. While layoffs in traditional IT roles create challenges for many professionals, the ongoing drive towards AI, cybersecurity, and cloud-based solutions presents new opportunities.

For CIOs and technology leaders, the focus must be on strategic workforce planning—prioritizing skills that align with innovation, investing in upskilling initiatives, and staying adaptable to navigate this period of technological transformation and economic uncertainty.

Adapting to these changes will be key to future success.