Businesses in the information technology (IT) sector expect to let more staff go than they hire this quarter for the first time since 2020 with the sector showing a steep decline in hiring optimism, a new report shows.
The ManpowerGroup Employment Outlook Survey is based on feedback from 420 employers across Ireland. It asked whether employers intend to hire additional workers or reduce the size of their workforce from January to March.
Used internationally as a bellwether of labour market trends, the net employment outlook – calculated by subtracting the percentage of employers who anticipate reductions to staffing levels from those who plan to hire – now stands at 21 per cent.
The outlook has weakened by 10 percentage points since the previous quarter and by two points when compared with the same time last year. This indicates weaker hiring sentiment tracking back towards average ranges for the past three years.
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The survey shows hiring optimism in the tech sector has declined from 55 per cent two years ago to -8 per cent. This was in response to slower-than-expected growth and companies preparing for continued business stagnation.
Despite the reduced hiring expectations, the survey also reveals that 90 per cent of businesses in the IT sector are having difficulty finding candidates with the skills they need for the jobs they are advertising despite recent redundancies. This is up 11 percentage points year on year.
Across all sectors, IT and data skills are hardest to find – especially in the IT sector – with 69 per cent of tech companies struggling to source candidates with the IT and data competencies they require.
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“Ireland’s tech sector has entered a period of contraction following a period of significant over-hiring,” said John Galvin, managing director of ManpowerGroup Ireland. “Tech companies, especially multinational software companies, have had to respond to slower-than-expected growth and reducing global demand.
“Most of these redundancies have been mid-level business support roles like HR and customer experience, hired in anticipation of massive growth which did not materialise in 2023.”
The tech sector downturn is most pronounced in Dublin, where IT employers report a net employment outlook of -20 per cent, down from +53 per cent two years ago.
However, 88 per cent of IT businesses in Dublin city report difficulty finding the skills they need in candidates, while 35 per cent of employers report IT and data skills are the most difficult to find.
“We continue to see vacancies for specialist, high-skilled tech roles like cloud architects, cybersecurity specialists, developers and data engineers, where employers are still looking to fill vacancies despite the wider downturn,” said Mr Galvin.
“This talent shortage is being driven by demand for specialist skills rising faster than the economy can supply, but we know those with more generalist skills are encountering a much tighter labour market.
“Companies are also turning to more contracting and interim hiring strategies to compensate for permanent candidate shortages in the short term, but employers have to introduce and utilise upskilling programmes for tech candidates in the new year if they plan to overcome this talent shortage.”
The communication services and transport, logistics and automotive sectors report a net employment outlook of +48 per cent, with the fast-growing healthcare and life sciences sector following at +40 per cent.
However, each of these sectors report facing record skills gaps, making optimistic hiring intentions difficult to turn into filled vacancies.
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