Engineering Job Market Insights for Managers in 2023

The headlines around layoffs in the tech job market are dramatic. How do these remarkable reductions in the workforce impact the job market for engineers and designers? And will there be downward pressure on salaries? While there will undoubtedly be an impact on the job market with thousands of engineers, designers, and developers looking for jobs, the impact will probably be smaller than one might expect.

First, let’s delve into the details of what happened in 2022 and the impact on the tech job market. According to Wired magazine, more than 1,000 companies laid off 150,000 engineers and developers in 2022. Among the most visible are the layoffs of 11,000 engineers and developers at Meta; 10-20,000 at Amazon; and another 6,000 at HP; along with planned layoffs of 10,000 jobs at Microsoft and 12,000 at Google’s parent company, Alphabet. According to Crunchbase, 91,000 engineers and developers were let go in 2022 in the U.S. What is behind this and why does it not spell disaster for the job market in technology?

According to many sources, the layoffs are due to over-hiring by these tech giants. With the tight job market in technology in 2022 and 2021, companies may have over-reacted by hiring to forgo the possibilities of talent shortfalls in their companies. This put an excess demand on the talent marketplace. As the U.S. and global economies started to soften and the market rate for engineers’ salaries grew extremely rapidly, executives at many companies forecast that the current cost base was unsustainable. When a few of the larger tech companies announced massive layoffs, a kind of “herd mentality” resulted that caused other company executives to look at their expense for design and engineering professionals, triggering broad layoffs in the tech marketplace. This might have yielded gloom and doom in that marketplace, but that has not been the case.

Related:Successful Product Design: What You Need to Know

Despite all the layoffs, new hiring as reflected in job postings remains strong. According to the Bureau of Labor Statistics, the tech industry grew by 207,000 new jobs in 2022 through the mnth of November—greater that the number of layoffs during the year. The unemployment rate in the tech sector is floating around 2%, which is relatively flat for the last several years (there was a peak around 4% in the middle of 2021). This unemployment rate compares to the overall unemployment rate at 3.7%.

What this means is that the market for technical talent remains quite robust and hiring for these professionals continues to be challenging, especially for employers searching for talent with hardware expertise—domains where the layoffs have been less dramatic. While salaries remain high, which is obviously good news for those of us in design and engineering careers, the massive increases over the last year seem to have flattened.

For employers, here are key strategies for success in hiring and retaining staff in today’s environment to maximize the success of your product development efforts:

While the engineering and design job market has had a recent infusion of talent from big companies, the overall impact on the marketplace for talent has been pretty modest. The unemployment situation in engineering and design remains at a very low level. Managers are advised to make competitive offers to new talent and to do whatever is in their control to retain existing talent. Lastly, consider the use of product development consultants and other outside help to keep progressing towards meeting new product business demands.