Here is round two (for 2023 – see our March views for context) of Sourced’s Tech Employment Shapers, our opinions and our experience of the IT jobs market across New Zealand.What we will coverIs the recession hitting (still), has the hiring intensity of 2022 finally softened, and is it an ‘employers market’ right now? No, yes, and in some areas!As mentioned in March, candidates are staying in the market longer before taking up permanent positions. Conversely, since our last report, demand for contractors has remained positive and grown. International talent is becoming more accessible, giving clients a heightened sense of confidence around their talent attraction, however, key talent areas remain in high demand and hard to find.The purpose of Tech Shapers is to address the questions of ‘Where have we come from?’, ‘What did we predict would happen for the tech recruitment scene?’, ‘What took place?’, and ‘What we can expect going forward?’. Let’s take a look.Tech jobs market recap: The past 12 monthsThe theme of the 6 months to March 2023 was that it was the ‘evening time’ of local candidates shifting roles to other local businesses. This was starting to diminish as recruitment driven largely by headcount turnover was resolved and top talent had been cherry-picked, leaving largely migrant workforces to plug remaining gaps, particularly those with specialist skills that may not always be available to be developed domestically.Recruitment activityPermanent recruitment was continuing at pace, with international/migrant candidates being recruited in greater numbers. This led to a softening, or at least a levelling, in salary levels and more selective decisions around hiring on the back of a perceived greater availability of talent. While roles were taking longer to fill, this was largely due to employers proceeding with slightly more caution and in many cases using recruitment agencies to ensure they were successful in securing precisely what they wanted.Ex-pats were making the return home and bringing considerable experience with them, typically working at the strategic/change/executive leadership level. These professionals were initially snapped up, but often into contracting pieces of work where their skill sets may have otherwise been viewed as ‘too big’ for the local market.Contract recruitmentThe demand for contracting resources, particularly in the Professional Services space ramped up, with contractors turning over at a slightly higher rate as they became aware of new project opportunities, and were able to pick and choose more readily. Longer contracts were offered of up to 12 months where typically a 3-6 month initial offering is standard.Infrastructure & Support rolesL1-3 Service Desk and Support roles were more popular than ever, with these roles proving extremely difficult to fill, and again relying heavily on migrant candidate markets to fill gaps.New systems were being deployed, cloud migrations and change programmes were underway within business, and a greater appreciation of the need for internal users to have better access to support of IT systems. Customer centricity was front of mind, and modern, cloud-available systems.International candidate marketsWith most larger employers, and a good percentage of SMB having secured Accredited Employer Status, candidates who were document-ready for relocation to New Zealand, or visiting here already, were snapped up. Working Holiday Visa candidates were supplying the mid-market well on both a contract basis and as a foot hold into permanent employment, and again a real depth of talent remained available to be tapped.Staff retentionStaff retention remained high, and we predicted this was likely to stay that way for some time. With the great roundabout of candidates moving in its final lurches, we were seeing a really high level of retention that showed no relenting.Those left to move in 2023 were being selective, more demanding in their negotiations and looking for strong incentives to make their move.So what happened?While in the 6 months to March 2023, the red-hot tech job market was starting to cool, this has now well and truly fizzled (comparatively).Permanent candidates available and willing to move locally are now finding their opportunities limited unless working in highly specialist areas (Cloud Computing being the current hero). International candidates new to New Zealand are slotting into those more specialist skill areas, or taking their place amongst the contract workforce.Contracting opportunities have defied the downturn and remained buoyant, with new contracts coming to market with regularity. Admittedly this has remained pretty firmly in the BA/Change/Delivery space, and those already locked into contracts have remained unaffected, enjoying the benefit of longer-term engagements they locked in earlier in the year.As mentioned, international candidates are finding that their skills are being more quickly picked up in contract roles than permanent, however, these are often leading to longer-term engagements, so are seen as a very solid path to employment.On the permanent side, the flow-on effect of strong hiring in 2022, lower-than-expected business confidence, and a sluggish economy have created some restructuring across the tech sector. Auckland has seen significant downsizing and redundancies as a result, particularly at the mid-career point (Developers, Testers etc.), while Canterbury has seen more of a reorganisation focus, revisiting where effort is being applied and looking for improvement and efficiency gains.Hybrid/Work from Home – the great balanceIn March we talked about jobseekers and clients feeling siloed, disconnected and isolated by WFH and were starting to come back in. The new level does appear to have landed at the 2-3 days in or out mark, meaning there is sufficient time to keep people connected both within their teams and with their stakeholders. At this year’s 2023 CIO Summit (hosted at Auckland’s Spark Arena, not CHC), it was the hot topic, with more and more emphasis on culture, inclusion, productivity and engagement. There is so much ongoing chatter in this space and we expect this will continue into 2024.Employer Intentions6 months ago, the market was defying the odds and continuing at pace in the permanent space on the back of transformation programmes, with clients moving into cloud environments, reorganising and reimagining their ways of working. This has well and truly slowed down now with the bulk of recruitment complete and new org structures either bedding themselves in or being reviewed to ensure they still make sense.Anybody in permanent work right now should feel rightly cautious about looking to greener pastures, at least until we’re through the election and into 2024.For those brave and willing, however, the contracting market remains buoyant with clients continuing to rely on contractors to deliver work when committing to permanent headcount just isn’t in the tech budget or the appetite is lacking.The great migration?We also saw more international candidates being on the ground in New Zealand and a theme continuation of a few local candidates leaving the country. This remains. Visa processing times have sped up, the process for Employer Accreditation is simpler than it has been, and a large portion of the hiring market has now completed this process (snapping up straightforward local talent), so barriers to hiring new international talent are low.CIO/Tech Executive rolesAs we predicted, we have seen huge movement in the Executive/CIO space with at least 8 CIO/CDO/Head of Technology roles being appointed in Canterbury over the past 6 months. This not had generated the waves we often expect to see as a result, with more of an assimilate, assess, and plan approach appearing to be more the norm.So how did we do?In the last Tech Shapers report we noted the following as the ‘things to watch’ Contractor rates climb as multi-options present to those lookingThis has absolutely materialised, however for a different reason than we’d expected. While contractors have been bought in to deliver large and complex pieces of work, they have also been used to carry over work, deferring the requirement to commit to permanent headcount or move costs. Candidates who have made the move into less than satisfactory roles considering a move to contracting to give them time before committing to another perm role.This prediction has been proven wrong with the market not providing enough positivity to support this move. Candidates are staying in roles they have found less satisfactory until they are able to secure a new permanent position and are carefully considering benefits, salary and WFH opportunities to ensure any move is a mid-long term move. CIO appointments coming to market in numbersThis has been spot on with a high number of CIO roles being appointed in the 6 months to September 2023. There has been a great shift-around as expected and we expect this area to now move into a largely settled period. Level 1-3 Support roles shining as the market’s superstar demand areaThis has very much continued in both the permanent and contract markets, with a specific demand for Cloud Engineers and Level ½ Customer Support professionals Staff retention levels remain high with the vast majority of local job turnover having happenedCorrect as above Salary levels remaining on a plateau or dippingCorrect. Some salaries have lifted again, however on the whole clients are accepting of the ‘new norms’ of salary levels and these are being met but not exceeded. International candidates are doing their research and aligning themselves with local rates and are being rewarded. While we haven’t seen a dip yet, we have certainly seen a plateau.The Market in a NutshellSo, to summarise the state of the current market, this is where we are:As further developments unfold, we will continue to watch the tech market and share more about how it’s shaping up. Keep an eye out for our next update to learn more about the challenges and opportunities of the current landscape, and feel free to get in touch to discuss any of these insights further.