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In the two to three years of the pandemic, the shares of many tech companies rose.
However, this trend has come to an end in 2022. The war in Ukraine, rising prices and lack of chips are some reasons the market is going down a bit economically. The fear of running into a massive economic crisis has caused many companies in the USA to relieve IT specialists of their duties. The wave of redundancies in Silicon Valley was massive and in some cases spilt over into Germany.
Yet, real talent in Tech is actually more than in demand. The move towards AI needs knowledgeable experts who can feed and improve the algorithm. So despite the wave of layoffs, there still seems to be a tech talent shortage. Those who train properly and excel in the market, therefore, stand a good chance of finding a job.
It should be noted that:
- The demand for tech talent remains extremely high
- The industry is growing more and more, mainly due to AI enhancements
- The pandemic has increased dependence on digital technology and people have become even more accustomed to various apps
- The home office has become a new standard, which in turn has a significant impact on the demand for talent
In this article, we would like to explore the impact the last few years have had on the IT industry. To what extent have there been positive growth effects and what negative effects has the pandemic particularly had on the sector?
Why is the demand for IT talent so high?
Even though there have been immense falls in tech companies on the stock market, the demand for digital media, apps and AI is still extremely high. The pandemic has made its contribution. Let’s take the example of Amazon. The company has grown successively over the first 20 years of its existence. Until 2019, the growth in turnover was fairly even. It added an average of 50 billion US dollars in revenue per year.
2020, however, really changed things. In the spring, there was a lockdown in most countries around the world. Shops closed, and online retail was the only way for many to buy necessary products. Sales soared accordingly, growing by more than $100 billion from 2019 to 2020 alone. But that was not the end of the story. In 2022, Amazon finished with more than 510 billion US dollars in sales. Before the pandemic, it was just over half that.
Amazon is just one example of the growing demand. In the last 3 years, the increased importance of AI and digital technology in almost all household appliances has led to a shortage of chips from corporations such as ASML and TSMC. Prices for graphics cards and processors rose accordingly.
This massive growth on the one hand and on the other the fear that the boom could burst like a bubble due to the current war-related recession have created an unusual situation.
De facto, sales are growing while companies are cutting back on staff as a precaution.
Factors influencing the demand for Tech talents
According to current analysis, AI and augmented reality (e.g. on the phone) are the sectors that will grow the most within the IT industry in the coming years. Technologies such as ChatGPT, Alexa, and Google Cloud Machine Learning Engine & Co. alone show that IT professionals today need to be far more specialised than in the past. Simple codes can already be written with the help of AI. So the improvement of such technologies clearly influences the quality of demand for talent in the IT industry.
Apart from that, the recession and the tense post-pandemic situation are making companies more and more inclined to leave simple tasks to AI. They are cutting back on less qualified professionals and specifically looking for real experts for the field they want to work in. But this is exactly where the tech talent shortage is felt. Those who want to escape the wave of layoffs must therefore inevitably train themselves and focus their knowledge on an area where the demand for digital workers is high.
This somewhat ambivalent situation is particularly noticeable in the USA. In Germany, the segment is weathering the crisis better in some respects, even though there have also been layoffs here in the course of rising energy prices. Nevertheless, end-user acceptance of digital technology is steadily increasing: on the one hand because of the improvements, on the other because of ever-new dependencies, e.g. on the smartphone. The tech talent shortage in Germany is thus more noticeable. Companies are desperately looking for competent employees, and those who are well-trained can find work in good conditions.
Other potential opportunities for IT professionals during the tech talent shortage
One important consequence of the tech talent shortage is that many employers are looking globally and online for competent employees. Remote work on computers broadens the supply of potential IT workers. Within a single country like Germany, this increases competition among skilled workers.
One positive aspect is certainly that more and more new jobs are being created that rely on digital technology. Today, every car can be repaired remotely by a computer. Refrigerators, hoovers, windmills, washing machines, etc. contain chips that need to be maintained and programmed. Smart homes in particular, which are being pushed by Apple, Google, Amazon & Co., have created a whole new field of work in which the tech talent shortage makes for a favourable labour market situation for IT workers.
Similarly, the creative economy is becoming increasingly automated. Entertainment, script writing, film production and many other genres running primarily on YouTube, TikTok & Co. are increasingly AI-supported and thus require support from IT professionals. These need to get to grips with the codes behind the shorts, editing studios etc., for example.
So if you want to realign and specialise within the talent shortage in the tech industry, it is best to look in such areas: AI, digital entertainment, chip-assisted industry, smart home helpers, etc. are important business areas of the future. The next step after that could be virtual reality, which has already been put into practice through Oculus Rift glasses.
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