What does 2025 hold for the technology recruitment market?As we enter a new year, I don’t think many in the technology recruitment industry will be especially sad to leave 2024 behind. 2024 was quite a challenging year in which continued uncertainties dampened volumes and demand. Economic conditions improved a little, with inflation falling back to normal levels, but interest rates only edged down and, overall, rates of growth remained subdued. Combined with continuing geopolitical instability including the wars in Ukraine and Gaza, and the upheaval of elections in the UK, US and elsewhere, the market lacked the continuity and certainty needed to spur widespread, sustained recruitment activity. Companies were cautious, and candidates tended to favour staying put (and negotiating better terms) rather than risking a move – leading some to describe the year as ‘the great stay’. 2025 – key pockets of activity and growth Heading into 2025, I believe that the market will improve and reach a more stabilised level of demand. The OECD has recently upgraded its economic forecast for the UK, raising expected GDP growth in 2025 from 1.2% to 1.7% which puts the UK significantly ahead of European rivals like France and Germany, and behind only the US and Canada in the G7. While this rate of growth remains modest by historic standards, 2025’s growth rate is expected to be twice as fast as 2024, so this could stimulate economic activity and hiring. We also see signs that more technology professionals are looking to move during 2025. A pulse survey of intentions that we carried out on LinkedIn in December found that 68% of technologists were actively looking for a new role, while a further 9% were planning to start looking in the New Year. This represents an increase in activity from last summer when the Harvey Nash 2024 Global Tech Talent & Salary Report found that 50% of UK tech professionals were looking to move to a new organisation in the coming 12 months. There are a number of areas where I expect to see increased recruitment demand: · Big Tech: The Big Tech firms have largely recovered following a period of retrenchment and are beginning to hire again. They are also continuing to invest in the UK – during 2024 Google, which already has more than 7,000 UK staff, pledged to invest $1 billion in a new data centre in Hertfordshire. Microsoft also committed to investing an extra £2.5 billion in the UK. · Financial services: The industry’s resourcing requirements have strengthened in recent months, and I expect to see continued activity, with particular demand on the contingent staff side. AI and machine learning are priority areas. · Public sector: With the government committing to increased investment in the public sector, I anticipate that the kickstarting of projects here will be accompanied by a renewed wave of hiring (particularly contingent staff) following a fallow period in the run-up to the election. The government also recently announced that it would be recruiting staff from tech start-ups in a secondment scheme to embed a ‘test and learn’ culture across government departments, backed by a £100m innovation fund. · Tech start-ups/scale-ups: AI and other emerging technologies are of strategic importance, and I expect the technology start-up and scale-up market to be a strong performer with a continuing need for talent. · Green tech: We are seeing continuing demand for technologists with expertise in green and clean technology solutions and materials as organisations pursue a sustainability agenda and work towards net zero goals. Headwinds to negotiate These factors will inject some life into the market – but there will also be a number of elements that tend to push in the other direction. Firstly, even if the UK may be better placed than some other major countries, the economic outlook continues to be underwhelming. There is also the significant wildcard of Donald Trump assuming the presidency in the US and the possibility of tariffs and increased trade wars. How much this may impact the UK is uncertain. What is certain, however, is that the world continues to be an unsettled and volatile place. Employers are set to continue to take a cautious approach. Secondly, the government’s planned increases to employer National Insurance contributions could have a significant impact. It is likely to have the biggest effect on sectors with high numbers of lower paid staff like retail, hospitality and leisure – but technology won’t be immune. In a global market where tech talent is available anywhere, the increased costs of employing UK talent may lead employers to invest in building or growing their technology teams in other locations instead. Added to this we have the government’s forthcoming package of workers’ rights which, while great news for individuals, will add to the cost and responsibilities of being an employer. Meeting some of the requirements could be a particular headache for start-ups and SMEs – and further incline them to invest in a more remote technology talent model. AI unknown One area that is still largely an unknown is AI. This continues to be a major focus for investment and exploration by businesses – but the real nature of its impact on technology recruitment remains unclear. As yet, it hasn’t led to an explosion in new AI-specific roles. Rather, there is an expectation that technologists can harness and use AI within their roles to enhance productivity and efficiency. It’s a skillset and a capability that is becoming expected. On the other hand, I am yet to see a clear example of job losses because of AI. In short, the impact of AI on the technology jobs market (in terms of number of hires) has so far been largely neutral. Needless to say, the technology is maturing and developing at a rapid pace – so could 2025 be the year that it begins to spawn new roles at scale? One way in which AI is having an impact is on the application process – with increasing numbers of candidates using AI tools to help them make tailored applications, and employers using AI to automate processes including candidate screening and scoring. My message here is simply not to lose the human touch. Candidates should be displaying their own personal skills and attributes, not over-depending on AI to do the work for them; while employers should build in checks to ensure the use of AI is inclusive and not excluding certain groups. They need to show that they are human and personalised organisations that care about people. The importance of culture in the competition for talent We know from the Harvey Nash 2024 Global Tech Talent & Salary Report that technology professionals are placing increasing value on the culture and working environment at an employer – this has become one of the keys to both attraction and retention. This is crucial because, even though we may not see booming conditions in the technology recruitment market, there will nevertheless continue to be significant competition for the best talent with skills shortages in priority areas such as data, engineering, AI/machine learning, software development and cyber. For instance, the Recruitment and Employment Confederation (REC) found in November that software engineers and developers are still one of the most in demand roles in the UK. The employers that can demonstrate a compelling employee value proposition (EVP) will have a significant advantage over the rest in attracting this talent. Diversity high on the agenda A further priority during 2025 which will also facilitate activity is the diversity agenda. We continue to see a real focus amongst employers on strengthening the diversity of their technology teams. They are looking to their partners and suppliers to help them do this – by encouraging applications from diverse talent sources, building relationships with under-represented parts of the community, and creating new recruitment pathways and talent schemes. Expect the unexpected? Overall, my expectation is that 2025 will be a solid but unspectacular year for technology recruitment. However, the nature of the market is that it can move from red to green at a moment’s notice – with no amber in between. We saw that in the post-Covid boom. That may have been the result of a fairly unique set of circumstances, but with AI developing at pace and many other unknowns, employers (and candidates) need to stay agile, flexible and prepared for the market to take an unexpected turn at any time. About the author Andy Heyes is the Managing Director Harvey Nash UKI, Central Europe, Australia & Spinks. He is also a member of Nash Squared Executive Leadership Team. Andy has been at Harvey Nash for 25 years and has extensive experience working across all sectors and industries. Starting out in the contracts division of the London Office, Andy quickly progressed and was appointed as Managing Director for the UK South Technology Recruitment Business in 2020.
