Tech Shapers Hiring Predictions – March 2025

Hiring predictions, Round 1 for 2025.

This is Sourced’s Tech Shapers with our hiring predictions, opinions, and experience of the Tech hiring levers across New Zealand. As we hit the end of Q1 for 2025, we start to look ahead at what to expect across the year, while reflecting on the predictions we made for this quarter, coming out of a very subdued 2024. In this report we will look at whether we are finally beyond the bottom of the bell curve and on the way back up. Or we are still hiding under the rug when it comes to hiring? Let’s see

What we will cover

Reviewing the key takeaway from September 2024’s report “The past 6 months has seen a further retraction still, with the market almost coming to a stand still, however we now see green shoots of growth appearing” have those shoots grown into opportunity and market optimism or are we still at the bottom of the bell curve?

This time it’s “Yes, somewhat, and no!”

As mentioned in September, 2024 was a year of severe market instability and economic uncertainty. We had a couple of limp tail wags across the year (April and the end of May) but otherwise a year punctuated by rounds of liquidations or redundancies. The great news is that, as we discussed in September, there is daylight ahead.

There is a perception of a significant number of candidates still in the market, however, many are now in the latter stages of interviews, offers, and new gigs.  Those staying in the market longer tend to be in more specific industry verticals where demand is lower. Demand for contractors has also picked up moderately, as employers make the most of more readily available talent to push short-term work across the line ahead of the new June FY.

International talent remains out of favour as employers hold on to the heightened sense of confidence around local talent availability. We should say that some key talent areas remain in demand (almost exclusively mid-careers) and hard to find.

Recruitment activity

While 2024 was a year of subdued activity, by September it was best described as ‘the bottom of the curve’. Over the past 6 months hiring activity has continued to slump, both contract and permanent have been at an all-time low. This was to be expected given an unprecedented post-Covid recruitment drive and market growth, followed by a sharp fiscal correction as inflationary conditions became unsustainable. We see ourselves now at/near the end (hopefully) of a correction.

With mortgage interest rates down, a new financial year approaching and the majority of company restructuring/right sizing now complete, we are optimistic that the worst may be behind us. Short-term resource demands are starting to appear, with 1-3 month initial engagements being the norm. We are predominantly focussed on getting work started ahead of the new financial year, or tidying up work that has been previously mothballed but has returned to focus.

Those who have been fortunate enough to hold on to their permanent or contract roles are keeping their heads down and opting for stability. This results in this slightly inflated sense of candidate availability in the Tech space. 300 applications for a position may look amazing as an anecdote, but very few come close when tested.

Hiring Challenges

Those who are available and willing to move locally now find their opportunities limited. Unless you’re working in highly specialist areas within Software Development and Infrastructure. International candidates new to New Zealand are finding their options extremely limited. Employers are opting for locally proven talent, and in some cases people have been unable to establish themselves locally, choosing to return home.

With new budgets being finalised for the new financial year, we hear a lot of chatter around ‘intention’ ‘need for growth’ and ‘investment’, but we have yet to see pen on paper around actual spend. With a relentlessly sluggish economy, shrinking budgets, and reduced headcount vacancies for the year it is hard to imagine that any rebound will be strong. Perhaps a more gradual return to normality is on the cards.

Canterbury* and Wellington still appear to be feeling the burn more than Auckland, with the majority of downsizing and redundancies in Auckland having happened by mid 2024 and now shaping a recovery.

*RCSA’s latest Jobs Report cites a nearly 26% reduction across the board in Canterbury alone

Contract recruitment

Unfortunately, contracting opportunities followed the downturn with new contracts coming to market less regularly and highly contested. For the first time in many years, Canterbury and Auckland also saw an influx of Wellington-based contractors seeking work in other regions as public sector opportunities dry up. Organisations are taking advantage of the perceived availability of talent to stop using contractors in favour of Fixed-term engagements. This continued to drive uncertainty into the contracting market.

Business Analysts and Project Managers, typically the most sought-after contract resources, are now available in greater volume, and very few contracting opportunities at the Senior PM/Programme level. Contracting volume tends to sit at the mid to lower levels across Support, Infrastructure Deployment and Level 1-2 support.

Infrastructure & Support roles

As per 2022-24, L1-3 Service Desk and Support roles continue to hold centre stage in volume, offering excellent growth opportunities for candidates in the early years of their careers. There has been a significant amount of redundancy in this area, so a round-a-bout of sorts has happened with smaller clients picking up Engineers from vendors who downsized, permanent employees hopping onto short/mid term contracts, and field service engineers moving inhouse. Security roles have once again been a star in a low market with mid-level demand remaining strong.

While previously this hiring had been to manage periods of new systems being deployed, cloud migrations, and change programmes, roles have transitioned towards BAU support with a mix of contract and permanent roles on offer.

International candidate markets

The majority of our larger client employers have now gained Accredited Employer Status. Most have now parked this though, citing costs, timeframes to onboard offshore candidates, and local talent availability as the key reasons to shy away from international recruitment. We continue to see an influx of returning candidates who have lived and worked in NZ pre-Covid, particularly at the senior and executive end of the market. Across 2024 – early 2025 we have seen a significant number of mid-career professionals relocating to Christchurch from around the country in search of more affordable housing (lol!), work-life balance, and communities to attach to before starting new families. This offers a real depth of experience to local employers, but also significant additional competition to an already strong-in-numbers candidate market.

Working Holiday Visa candidates are supplying the mid-market well. Much like the wider migrant candidate community, however, they are currently finding there is diminishing opportunity as local talent is snapped up first.

Staff retention

For those companies not downsizing, or beyond this, retention remains at an all-time high and we don’t see this changing throughout the year. While anecdotally a lot of candidates are not fully engaged in their current employment and would like to work somewhere new, market conditions are driving a very cautious approach, with stability being cited as the key decision driver. Those who would consider a move are looking for assurance of long-term stability, with salary, benefits and work-life balance not currently featuring. Those in stable and permanent roles who have left have tended to be looking offshore, with Brisbane featuring highly as the new ‘local OE’ destination. In the face of little market growth and opportunity, this is seen as the next big thing, with the late 20’s to early 30’s age group being the most interested.

There is a continued and heightened sense of power shift from candidate to employer, and where candidates are opting to leave, they are rarely being counter-offered, and even more rarely, replaced. This means a lot of people are picking up extra work for the same pay with higher reported levels of stress and work-life imbalance, but little to remedy the situation.

The Market in a Nutshell

So, to summarise the state of the current market, this is where we are:

So what’s next?

Six months ago permanent and contract recruitment had ground to a halt with international/migrant candidates being rejected in favour of local talent. This led to far more selective decisions around hiring on the back of a perceived greater availability of talent. Employers were proceeding with significantly more caution to ensure they were successful in securing precisely what they wanted. This is likely to continue through this year. Employers will be tapping into their professional networks, and picking up top talent affected by restructuring and reorganisation while they can.

Expats making the return home are finding their options are now more limited with fewer contracting pieces of work available at the higher professional levels. In professional services, their general skill sets are viewed as ‘out of demand’ for both contracting and permanent opportunities. We expect they will start to look at remote opportunities or consider relocation as market conditions remain soft.

Employer Hiring Signals

Six months ago the foot had come completely off the accelerator and onto the brake. This year has seen a continuation of a sustained slowdown in work, or at least slower growth around the addition of resources, however, we feel like maybe, just maybe we could be coming to the end of this. With the new FY approaching, clients are beginning to get a better sense of their budgets for the year ahead and are starting to plan spend and growth. It will take some time for the market to stabilise and all of the retrenched candidates to reposition themselves back into permanent and contracting work, but beyond that point are we headed towards sunnier days?

With a sense of heightened confidence around talent availability, employers will be looking at how to get the most bang-for-buck from their budgets, and challenge salary expectations and contractors will almost certainly be the last on, with FTC/permanent moves happening first (this started at the end of 2024).

The Great BA Availability

Let’s quickly mention the sheer number of Business Analysts in the market right now. Good BA’s have always been the golden child of the Christchurch, AKL and Wellington markets, being there to assess future spending, gather requirements for immediate transformation and growth, and sanity check systems, processes and innovation. With all of these things being deprioritised across 2024 and into 2025, there has never been a higher level of availability of BA’s.

All shapes and sizes are sitting in the market, and many have resorted to short Fixed Term Contract roles to try to ride out the storm. They are very much a barometer of the market and going by their availability, we can confirm we are still in a hold pattern. Watch this go in Q3/4 of 2025. If it does, we’ll know we are on the return to market confidence.

Salary Levels

With continually dropping hiring activity in both the permanent and contracting space, we have seen a significant amount of softening around hourly rates for contractors, and to a lesser extent, a slight softening in the FTC and permanent salary bands. While 2022-23 saw salaries rise sharply, this was also a rebalance after salaries flattened/dropped during the Covid-19 pandemic and very much reflected the new ‘norm’. When the market does rebound watch out for salaries to rise again. Realistically this is a good 6-12 months away. For now, candidates are not negotiating strongly around salary and are prioritising stability and career development opportunities.

Contracting

As we’ve discussed in some detail, it’s a tough time right now to be a contractor not in work. Sourced hosts a considerable stable of contractors, and fortunately, the majority remain in long-term engagements that are rolled over in line with key projects they are assigned to, however breaking into new opportunities remains a challenge.

While a high number of contractors have recently entered the market due to public sector contraction and a move to FTC engagements, we have seen a turnaround on this with several shorter (1-3 month) contracts coming to market in Q1. We expect that over the next 6 months, demand will bounce back with contract terms going longer as employers plan with their permanent headcount growth more caution.

Additionally, with new budgets in place and permanent headcount in those budgets, watch for a high level of selectiveness around permanent recruitment. Employers currently feel confident that they can get everything they want at the salary they wish to pay and will be prepared to hold out for it. When businesses cautiously look ahead to growth or investment, the contracting market is always the first point of call, able to deliver immediate impact with a lower level of commitment. Watch this space.

So how did we do?

In the last Tech Shapers report we noted the following as the ‘things to watch’:

Hiring trends to watch for:

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. Please feel free to get in touch to discuss any of these insights further.