Economic uncertainty coupled with widespread tech industry layoffs drove CIOs and CFOs to slow IT hiring last quarter. March was the first month this year that saw an uptick in the number of IT jobs added, according to a new report.

In the first quarter of 2023, the US IT job market lost 13,700 jobs, according to management consulting firm Janco Associates. That contrasts with 51,000 jobs created in Q1 of 2022. Currently, there are now just over 4.18 million jobs for IT professionals in the US.

Layoffs by tech giants including Accenture, Microsoft, Meta, and Alphabet have meant about 170,000 workers losing their jobs in the first quarter, according IT industry jobs tracker Layoffs.fyi.

"Layoffs at big tech companies are having an adverse on overall IT hiring," Janco CEO Victor Janulaitis said in the report. "More CIOs are looking at a troubling economic climate and are evaluating the need for increased headcounts based on the technological requirements of their specific business operations."

Fear of an economic downturn remains high for many CIOs and CFOs, Janco said - and that is impacting all decisions around hiring new IT pros and increasing technology-related expenditures.

"Given these facts, we believe that median salaries for IT Pros in 2023 will be 3% to 4% above 2022 salary levels, not the 7% to 8% that was budgeted for 2023," Janulaitis said.

US IT job market growth screeched to a halt at the beginning of the year, with a decline of 2,600 jobs in January and 11,600 jobs in February. In March, the market rebounded slightly with 500 jobs added, according to Janco, which bases its information on data from the Bureau of Labor Statistics.

According to Janco's figures, there are 145,000 unfilled jobs for IT professionals in the US, mainly due to a lack of qualified candidates. Another IT industry group, CompTIA, placed the number of unfilled IT job openings at 316,000; the tech unemployment rate remained unchanged from February at 2.2%.

"Based on our analysis, the IT job market and opportunities for IT professionals are limited but exist for experienced individuals," Janulaitis said. "Layoffs, for the most part, did not hit developers."

In the first quarter, the largest layoffs hit telecommunications providers with 4,500 jobs, hosting and cloud providers with 6,100 jobs, and content providers with another 1,500 jobs, according to Janco. Roles with big job cuts included data center operations, administrative and human resources roles related to recruiting, and DEI (diversity, equity, and inclusion) roles. 

"Some roles, especially in telecommunications and data center operations, are being automated and eliminated," Janulaitis said. "Driving this is CIOs and CFOs who are looking to improve the productivity of IT by automating processes and reporting where possible. They are focusing on eliminating non-essential managers and staff."

Experienced coders and developers still have opportunities, Janulaitis noted. The highest demand continues to be for security professionals, programmers, and blockchain processing IT Pros, according to Janco's report.

Janco forecasts the growth of the IT job market in 2023 to be in the 60,000 to 70,000 new jobs range. That will be less growth than in 2021 and 2022, but still with some growth in the latter half of this year. 

"Employers are still impacted by Pandemic Paranoia - they remember how long it took to bring workers back and are holding onto and hiring business critical talent," Janulaitis said. "We're still seeing concentration of demand in our real-time data, and this survey reflects concentration too, with IT leading the way in hiring plans despite layoffs dominating the headlines. Workers with in-demand tech and soft skills will find themselves in high demand and the need to re-skill today for tomorrow's jobs remains urgent as talent shortages grow." 

Many of the issues faced by the economy continue to be due to ongoing supply chain problems, according to Janco. But if China opens fully, overall supply chains should improve but will still take several months to completely recover. "That should lessen the recessionary pressures that are driving companies to reduce staff," Janulaitis said.

While there has been an overall job market cooling this quarter, global demand for talent remains resilient, and the race for skills continues, according to global staffing firm ManpowerGroup's Q2 Outlook Survey of more than 38,000 employers in 41 countries and territories released in March. 

One indicator of economic and labor market trends is the Net Employment Outlook, calculated by subtracting the percentage of employers who anticipate reductions to staffing levels from those who plan to hire; that currently stands at 30% in the US, up 1% from last quarter and down 5% from this time last year, according to ManpowerGroup. 

"The overall hiring expectations in North America are the highest of all world regions. This aligns with a US unemployment rate that is currently the lowest since 1969," ManpowerGroup's report stated. "All industries and sectors indicate hiring more people in the first quarter."

The highest percentage of organizations in the IT industry report an optimistic outlook (+34% hiring), followed by communication services (+30%) and financials and real estate (+29%). 

In addition, the global talent shortage continues to grow in Q2, with 78% of employers in IT reporting challenges hiring - suggesting that workers who have found themselves laid off in recent reductions will soon be reabsorbed into the market. 

"This labor market continues to defy signs of economic gravity with another robust hiring outlook for the quarter ahead," said Becky Frankiewicz, president and chief commercial officer with ManpowerGroup North America.