The latest jobs report is in, and it’s a mixed bag. On the surface, the U.S. labor market added a healthy 303,000 jobs last month (March 2024) – that’s more than what economists were expecting [1]. Dig a little deeper, and you’ll see a more nuanced picture. Wait a little longer, and you’ll see a bigger picture when H1 wraps and a macro view takes shape. Still, we can pay attention to the markers we’ve got.
For Tech Sector: Layoffs and “Right Sizing” Continues
While new jobs are great overall, it’s important to remember that not everyone shares in the new job prosperity. For the 57,000+ workers in tech impacted and seeking new employment, headlines about a strong job market can feel like empty platitudes. I recognize countless industries and professionals feel the lull too; but since my company, Digital Knack, recruits for the tech sector most, it hits the hardest. As companies look to break even and “right size” their margins, layoffs keep rolling in like a set rather than a single wave – this will continue until desired results or necessary reports are achieved. I’ve watched both companies and candidates flail, focus or oscillate between the two. How we use our attention, energy and time during this lull is paramount and I feel for the people impacted and the people having to make those impossible layoff decisions and rollouts just the same. Ultimately, fiscal tightening and short-term profitability are pinching wages and stunting employment monetary growth – my hope is that under this pressure comes new possibilities ahead.
IPO, Exits and Early Stage Hiring
The pace of startup hiring might be low, but it’s not null. Investors are playing it cautious, meticulously combing through potential investments just like startups are critically evaluating every new position they open and hire they make. In some ways, this laser focus is a good thing. After all, early-stage funding is supposed to fuel growth, and that includes the talented people who make it happen. Hiring for true need may bring more job security in 2024. That said, with M&A activity and IPOs lagging, that capital might be stuck on hold. Until we see a healthier flow of successful exits, that cash infusion needed for aggressive hiring sprees may remain a distant dream for many startups. The key? Hiring with purpose, not just filling seats. Building a team that aligns with company goals will be critical for startups navigating these cautious times.
M&A activity for VC-backed companies plummeted in 2023, according to Crunchbase data. Deal numbers sank to just over 1,600, a sharp decline from nearly 2,500 in 2022 and over 3,100 in 2021. This mirrors the funding slowdown, where seed startups securing Series A funding within two years has become significantly harder. The frothy valuations of 2021 are a thing of the past in 2024, with significant valuation drops across all stages. While this might bode well for future deal performance, it’s speculation, not a surefire prediction. Seed and Series A rounds seem most impacted, but the full picture will emerge over time. A bright spot is generative AI, where investment activity remains robust.
Meanwhile, as startups prioritize profitability, private equity (PE) firms have ramped up acquisitions. Whether these PE firms can achieve their intended exits in 2024 remains to be seen.
Increased Spending on IT and Software in 2024?
Deloitte predicts that enterprise spending on software and IT services will be a major factor in fueling growth this year. They point specifically to companies angling for a comeback via AI, cloud computing, and cybersecurity. Meanwhile, investments in generative AI can stage for growth ahead. Generative AI has in fact, been the early-stage outlier, gobbling up much of the early-stage tech investments in 2024.
So what does this mean for employment in Tech?
According to the Bureau of Labor Statistics (BLS), the tech job market is expected to continue its upward trajectory in 2024, reinforcing the sector’s resilience and growth. Remote and hybrid hiring is here to stay, so companies are wise to start investment in remote-based management and development strategies that stick.
I think tech that serves traditional labor markets, such as Construction, Logistics, Education and so on will bring practical software and solutions that enable SMB and Enterprise sectors of these industries to advance far beyond what they could just a few years ago. Working for companies solving practical, real-world, scalable problems through technology has never gone out of style; and will continue to be a sought-after angle of the top performers in market today.
