Hiring predictions, Round 2 for 2024.This is Sourced’s Tech Shapers with our hiring predictions, opinions, and experience of the Tech hiring levers across New Zealand. Like last year, we have dragged this one a little later into the year to see if time creates some clarity in our foggy crystal ball. It is disturbing that this update could just about be a copy and paste from 12 months ago.TL;DR? It’s been miserable. There have been a couple of limp tail wags across the year (April and the end of May) but every time we think the dip is in there seems to be another round of liquidations or redundancies announced. The great news is that there is daylight appearing at the end of the tunnel.What we will coverWhere are we sitting on the recession curve, have there been any signs of a return of employer or employee confidence, is it still an ‘employers market’ right now?As mentioned in our last report, by March 2024 the employment market was best described as ‘in decline’, and over the past 6 months has well and truly flat-lined, both on the permanent and contract fronts. This was certainly to be expected, given an unprecedented post-Covid employer growth, and recruitment drive, and we see ourselves now (optimistically) towards the end of a sharp correction that has affected every corner.Most employees are staying put in roles, regardless of job satisfaction. Since our last report, demand for contractors has steadily declined, with short-term gaps resourced via fixed-term contracting arrangements, or rearranging resources internally to cover gaps.The purpose of these hiring predictions 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?’.As usual, there is something for everyone here so a lot to cover:RECAP: Recruitment activity * Contract recruitment * Infrastructure & Support roles * International candidate markets * Staff retentionHOW WE SEE THINGS: * So what happened? * Employer Intentions * Contract Employment * International Talent * Let’s talk about WellingtonSUMMARY AND PREDICTION: * So how did we do? * The Market in a NutshellTech jobs market recap: The past 12 monthsThe theme of the 12 months to April 2024 was that candidates were staying in the market longer before taking up permanent positions. In addition, demand for contractors had softened moderately, with a mix of public sector casualties, and employers making the most of more readily available permanent resources to release contractors in favour of Fixed Term contract options.International talent remained readily accessible, giving clients a heightened sense of confidence around their talent attraction, however, some key talent areas remained in high demand and hard to find.Recruitment activityMortgage interest rates were on the rise, the cost of living was increasing and company restructuring/right sizing was becoming more and more prevalent. Permanent and contract candidates were keeping their heads down and opting for stability in favour of seeking career progression or better work/salary conditions.Those candidates who were available and willing to move locally were finding their opportunities limited unless working in highly specialist areas with only demand for Desktop/M365 and Infrastructure bucking the trend.Contract recruitmentThe demand for contracting resources, particularly in the Professional Services space had 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 had been the 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 and customer centricity was front of mind, alongside modern, cloud-available systems.International candidate marketsInternational candidates up until early 2024 were in solid demand, both on a contract and permanent basis. They were supplying the market well, particularly in the contracting space where they were able to get a quick foothold in the market and demonstrate their market readiness. Working Holiday Visa candidates were supplying the market well and were using Visas to bridge into permanent positions through Open Work Visas and accredited employers. This was a real depth of talent available to be tapped.Staff retentionStaff retention remained high, with the great roundabout of jobseekers finally complete, and we were seeing a really high level of retention that showed no softening. Those left to move in early 2024 were being very selective, more demanding in their negotiations, and looking for strong incentives to make their move.So what happened?In short, the market dropped even harder and further than many predicted or hoped, with demand for contract and permanent resources at an all-time low. While the dip was expected, given an unprecedented post-Covid growth cycle and awful economic conditions affecting sentiment, it was a lot more severe than many anticipated and has lasted much longer than we would hope for.Employer Intentions6 months ago, the market was slowing down, however, the contracting market remained buoyant with clients continuing to rely on contractors to deliver work when committing to permanent headcount just wasn’t in the budget. The past 6 months has seen a further retraction still, with the market almost coming to a standstill, however, we now see green shoots of growth appearing, and as mentioned, what appears to be the bottom of the curve.Looking ahead to 2025, our prediction is that we will return to higher levels of hiring activity, however, this will be buoyed by turnover and candidates moving roles more than market or business growth. Employers are not looking ahead with plans to grow, transform or innovate, there is a much stronger sense of returning to ‘BAU done better’, optimising, bedding in teams and processes that now rely on smaller headcount and stabilising. This is likely to extend throughout 2025. Permanent EmploymentOn the permanent front, the theme for the 12 months to April 2024 was candidates staying in the market longer before taking up permanent positions if they could be found. Now we see this as a real problem that has been exacerbated by the lack of new hiring and a significant number of restructures and downsizing, creating an even larger pool of candidates seeking employment. Their skills have been broad, and have not been in one particular area. They have tended to be at the higher/senior end of the spectrum, with larger than usual numbers across Project Delivery, Product Ownership, and Vendor/Infrastructure areas. Salary levels for the few new positions coming to market have stabilised/have not dropped significantly.Contract EmploymentOn the contracting front, businesses have had to look closely at the use of these resources, and either scale down use, defer project spend, or revert to the use of fixed-term contract (salary-based) models to progress project work. It is no longer unusual to see career contractors on the bench for 6 months or longer, with many now looking to take up fixed term, or permanent employment to weather the storm. For contract engagements that do come to market, rates have lowered as have contractor pay expectations.International TalentInternational talent coming into the country has nearly dried up completely with very few employers considering off-shore options or making use of their Accredited Employer status. While these international talent pools remain readily accessible, few need to take them up, with ample resources available locally.Let’s talk about WellingtonHave you stopped to notice just how many new additions we have to the Garden City? With Christchurch named one of the world’s happiest cities and Wellington’s employment sector at an all time low, more and more are feeling the pull to the South Island, with Christchurch offering similar starting salaries to the North Island, lower starting points for better quality housing, and a lifestyle that is unsurpassed when compared to Auckland and Wellington.Migrants from the north tend to fall into two categories – new parents looking for a better work/life balance teamed with affordable housing, and late-career couples and individuals, looking to escape weather and big city concerns to make the most of the South Island outdoors. While this is growing our tech community exponentially, it is also putting even more pressure on a sluggish job market that is slowly moving back towards an onsite work model, with fully remote options now almost a thing of the past.So how did we do?In the last Tech Shapers report we noted the following as the ‘things to watch’: Competition for local opportunities from typically Wellington based candidates looking to move out of the regionAbsolutely accurate. We continue to see significant numbers of mid and later career professionals making the move to the Garden City. Most have secured employment ahead of the move, or have moved with roles that allow them to work remotely, with the view to securing a position locally once the market returns to bouyancy. As we move towards 2025, 3 years on from the great merry-go-round of permanent staff turnover, permanent staff members starting to consider movingAgain accurate. There is significant anecdotal evidence to support the risk of another mass job changer merry-go-round in 2025 which will be 3 years since the last major shift. Many have hunkered down over the past few years to weather the storm, and will take the first opportunity to jump once market conditions improve. A lift in demand for contractors once again as businesses realise the need to move to deliver on key strategic initiatives.No. On the whole, projects have remained parked, scaled back, or delivering to a more contained work package. Even as we look ahead to 2025 we suspect the market will favour permanent or fixed term employment. We predict that Contracts will be in smaller number for more specialist pieces of work. Salary levels are unlikely to change across the yearWe are going to take the win on this one, but there is a caveat: With employment running as high and for the length of time it has, we are seeing some people (specifically contractors) taking massive pay cuts to take up short fixed term gigs. This gamble may just pay off if the job change machine fires up next year. Staff retention to remain high as permanent staff recognise market softeningThis remains the case though people are starting to jiggle the locks on the gate. There is still a very high level of conservatism from candidates and a reluctance to make any significant job changes. Watch this space after Christmas, once it starts it may not be a small issue.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. Please feel free to get in touch to discuss any of these insights further.
