The Scoop: The 2022 Hiring Market, as seen by Tech Recruiters
Four tech recruiters share what they see on the tech hiring market.
Just over a year ago – back in September 2021 – I covered The perfect storm causing an insane tech hiring market. This was the situation:
“I have been debating writing about the elephant in the room; hiring in tech and how hot the market is. I’ve talked with dozens of hiring managers across all continents. All say the market is burning hot everywhere.
If you are a hiring manager who needs to hire, you’ll know what I’m talking about. There is a fraction of the usual candidate applications, closing is more difficult, candidates ask for compensation outside target levels. You might have people verbally accept and then turn around and decline for a better offer.”
Looking back, the second half of 2021 was the hottest the tech jobs market had gotten in at least a decade. In November 2021, I shared how companies were making one-off, out-of-cycle compensation increases of 5-30% across the industry.
How things have changed since then.
In the next few Scoops, we’ll take a broader look at the hiring market. Today, we start by talking with tech recruiters and next week we’ll aggregate observations from hiring managers. Today, we cover:
Early-stage startups and Venture Builders in MENA
Tech companies in the US and Europe
The current hiring posture of companies
Big Tech and Big Finance hiring insights in the US
1. Early-stage startups and Venture Builders in MENA
I talked with Daria Shulepova, co-founder & recruitment partner at Growth Levers, which is a popular recruitment partner for early-stage startups and venture builders in the Middle East and North Africa (MENA) region. Here’s what she shared:
‘Hiring slowed from Q2 2022 across all levels in MENA. Companies became more conservative with hiring; plans slowed down and some on-site roles which are more expensive if based in a Gulf Cooperation Council (GCC) country, moved to remote, which is less expensive.
‘Due to the Russia-Ukraine war, there was an influx of Russian engineers in the GCC, consisting of the United Arab Emirates, Qatar, Saudi Arabia, Bahrain, Kuwait. This is because it became much harder for Russians to move to Europe.
‘Engineering salaries dropped with the influx of talent that was previously more expensive, thanks to the influx of Russian engineers.
‘Demand changes:
Software engineering: 30-40% decrease in positions to fill across clients.
Native iOS and Android: a surprisingly low demand for native iOS/Android engineers, as I see more and more startups/companies moving to hybrid, cross-platform mobile stacks. Note from Gergely: This chimes with findings in the issue: Is there a drop in native iOS and Android hiring at startups?
Data engineering: about a 50% drop in demand. There are fewer positions available; not that data engineers are generally less in demand in the Middle East, in general.
Engineering management: Not much of a change in hiring demand. It’s still challenging to find technically strong EMs with good people management skills.
‘Companies which hired more, even in the current environment:
Government-backed companies, startups, and organizations backed by local national investment funds didn’t slow down and even increased their hiring, especially in Saudi Arabia.
Series A startups-and-above with good funding. Startups and scaleups which managed to close their rounds before Q2 2022.
Proptechs in Dubai. Property technology investment didn’t slow down, thanks to the United Arab Emirates property market boom.
‘Companies which noticeably slowed hiring:
Companies & startups struggling with profitability. It’s a tough time to raise money, so companies/startups that struggled with profitability had to do layoffs.
Crypto and fintech startups. These companies experienced layoffs due to the crypto crisis which triggered massive layoffs at crypto startups. Read more about the Crypto Bust in The Scoop (June 2022).
Early-stage companies that didn’t raise enough money, or didn’t get clear traction and struggled to close other rounds in this climate.
‘I’m expecting a deeper recession and less hiring, going forward. If 2021 until the first quarter of 2022 was a war for talent, I’m expecting the recession to move us back to an employer’s market in 2023. I expect “safer jobs” will be more attractive for candidates.
‘Roles I expect to be more in-demand are mid to senior-level engineers and Director of Engineering positions.
‘The hardest positions to hire for, even in this market, are these:
The first tech lead / CTO / head of engineering in an early-stage startup. This is especially true if the founders are not technical.
Strong senior backend engineers with experience of product-based companies or startups.
DevOps engineers.
Outside of tech: strong product leads. The market is flooded with mediocre talent in this space and in this region. Also, growth marketers and heads of growth can be challenging to find.
‘In my experience, the easiest hires are:
Junior software engineers
Data engineers
QA engineers
‘A few final observations about the MENA market:
Engineering salaries increased by 30-40% over the past 2-3 years. I’m expecting salaries to drop over the next 12 months.
Companies might hire more engineers remotely to save on costs and build on the post-Covid-19 “new normal” of remote work.
I see a growing demand for fractional CTOs. With fractional CTOs, companies and startups tap into great talent, who can help build a strong tech infrastructure without having to pay a full-time salary.
Due to the Russia-Ukraine war, the talent which escaped these countries has settled in new locations. There are new tech hubs forming in Georgia, Armenia, Kazakhstan, Serbia or Kyrgyzstan.
Thanks to Daria for these interesting insights, via Growth Levers.
It’s pretty clear we should be bracing for a market correction; in fact, we’re probably in the middle of it. What struck me as surprising is that even MENA companies might be looking at remote to further reduce their costs. I’m not surprised about this in markets with the highest labour costs globally – like the US or the UK – but it’s interesting that this trend might hit MENA, as well.
2. Tech companies in the US and Europe
I reached out to Glenn Murphy, managing partner at Riviera Partners. Last year, in the issue Finding the next company to work at, I listed Riviera Partners, noting they are “possibly the biggest firm in the Bay Area,” in terms of executive and senior-level recruitment. The company recruits from seed to public-stage tech companies for software engineering, product and design roles, specializing in the US and Europe. This year, they’ve helped about 400 tech companies hire tech functions.
Here are insights straight from Glenn, based on his discussions with the head of engineering, director, VP and C-Suite levels.
‘We haven’t seen the hiring demand change as much, but the in-demand profiles have changed. Engineering managers who aren’t close to their teams and guiding them on tech decisions, are struggling to get offers. We are seeing an increase in demand for leaders who are willing to get their hands dirty.
‘Data engineering has been in-demand. We have seen more companies breaking out data for their business and putting a Director or VP in charge of data engineering.
‘Certain types of companies have not slowed their hiring at all. These companies hiring as before, are typically either early-stage ones (Seed, Series A) growing strongly, or are post-IPO companies doing well.
‘We are being told these companies have to continue building. They see an opportunity to poach talent from some great companies.
‘We also see companies with solid ARR (annual recurring revenue) and good funding snapping up experienced talent at all levels. We see good opportunities in Fintech, climate tech, and a bit of resurgence in Adtech.
‘We’re observing certain types of companies hiring less, usually they’re between Series B to Series D funding.
‘The companies slowing hiring typically overhired during 2021 and haven’t been able to raise a new round of funding, or have only been able to raise at a lower valuation. Thanks to their struggles with fresh funding, they’ve trimmed team size and focused more on core areas, as they try to ride out the next couple of years.
‘The next six months, I expect the hiring emphasis to shift to builders, and less on structure and org design. I do expect more demand for software engineers and data engineers. However, for engineering managers, I expect more emphasis on builder skills, over organization design. I expect engineering managers will need to be able to pass more rigorous technical screening tests than just six months ago.
‘Starting from the summer of 2022, it’s been common to hear that companies have been advised to conserve cash for the next two years. That said, there are a number with either the luxury of being opportunistic, or which need to go ahead and build because if they don’t, they will cease to exist.’
Thanks to Glenn for these comments and the insights via Riviera Partners.
I can’t help but agree with his observation on how hands-on builders will be more in-demand, which could be especially true for engineering managers.
3. The current hiring posture of companies
Hung Lee writes Recruiting Brainfood, which is probably the largest newsletter for recruiters. He ran a poll on LinkedIn, asking recruiters across all industries about the hiring situation for their company. After more than 2,000 votes, here’s the responses:
The majority of companies seem to still be hiring. I treat a LinkedIn poll cautiously, but this particular one is worth paying more attention to, as it’s likely that the majority of respondents are indeed recruiters. Unfortunately, there’s no breakdown by industry or company size.
Hung also noted something interesting about the poll:
"As a critique of my poll: LinkedIn offers only 4 options for polls, but there should have been a fifth one: hiring for less growth. I believe that “hiring for less growth” would have been the most popular choice, had it been included.”
An interesting detail is that there are about as many companies growing as are not, or which are shrinking. “Hiring for replacement” indicates only backfilling is taking place and is pretty much the same as having a hiring freeze wherein some backfills are permitted.
Hung has a unique insight into recruitment, thanks in part to a large Facebook group which he runs, where recruiters discuss trends and observations. I wanted his take on the market and here’s what he said:
‘I still expect a candidate shortage to persist for senior engineers, despite the Big Tech layoffs. Some argue the layoffs at Big Tech will disperse talent to smaller companies, cooling the market to a degree. However, I think other effects are stronger. I’d expect some of these engineers to take time off, some will launch a startup themselves, while several others will go to consult or freelance for higher rates. In the end, I expect most former FAANG engineers to not join smaller companies and to not materially impact the tech labor market.
‘A candidate shortage has been persistent during the past three years, despite the macroeconomic conditions. Basically, there have been more tech jobs than people to do them.
‘We still have the “everybody wants to hire a senior engineer syndrome,” across tech. This is where the candidate shortage is the most acute. Interestingly, the shift to remote doesn’t help here. Companies are less comfortable hiring less experienced candidates in a remote setup. The shift to remote has actually accentuated the demand for senior engineers.’
Thanks to Hung for those comments.
In The perfect storm causing an insane hiring market, I also mentioned how remote work has had a huge impact on the market. Back then, the impact was more on how it pulled up wages in formerly lower cost areas, such as in the US. It’s interesting to see how sustained remote pushed companies to hire more senior engineers.
I like how Hung calls out “everybody wants to hire a senior engineer” syndrome, which is the reality of the current market. I’m not sure I am as optimistic as Hung about how the events at Big Tech won’t impact the tech industry. I agree the layoffs are unlikely to have the largest of impacts. However, combined with hiring freezes, we’ll see far fewer people enter Big Tech. We’ll thus see a surplus of software engineers with the skills to work at Big Tech, and this surplus will have a cooling effect on the whole market, as they find the “next best” options.
4. Big Tech hiring in the US
Michael Novati is co-founder of Formation Fellowship, an organization providing world-class mentorship by the best engineers in Silicon Valley. Michael’s name might ring a bell for readers: he’s the software engineer for whom Facebook created the “Coding Machine” archetype, as detailed in the issue, Inside Facebook’s engineering culture.
Michael is not a tech recruiter. However, as graduates of Formation Foundation interview for tech roles, he has a unique, real time view into this market. Here are observations he shared about the current US hiring market:
‘We have supported Fellows through hundreds of technical interviews in November 2022. Here’s some insights based on them:
‘Google, at least on a team basis, appears to have started hiring again and is picking up the pace for experienced engineers and we’re seeing people are getting to the offer stage. Meta continues to have very limited hiring, but we are seeing them looking for a handful of specialist contractor roles. Amazon has really slowed dramatically from their frantic hiring pace earlier this year, consistent with their reports of hiring freezes.
‘TikTok is continuing to hire fairly aggressively.
‘We’re seeing finance-related companies continuing to hire at a healthy pace. Bloomberg, Palantir, and more generally, banks and credit card companies, like Capital One, JP Morgan Chase, and American Express are hiring engineers. Capital One was also hiring at an Amazon-like pace earlier this year and has slowed the pace, especially with more junior roles, but is still moving ahead.
‘Hedge funds and trading firms like Citadel, Jane Street, and HRT are hiring large numbers of engineers, and continue to have very high bars. I don't know if the pace is more or less than usual, but it's definitely robust hiring in a market that has tightened.’
My comment here is that among Big Tech, Google seems to be the employer hiring most openly, based on discussions I’ve had. Meta, Amazon and Microsoft have mostly frozen their hiring; talking with software engineers at Apple, several of its organizations are also frozen, which in this case means that backfilling might be allowed; although this is not the case at Amazon. Also, even during a freeze, exceptions can be – and are – made for key hires.
5. A few observations from hiring managers
I’ve talked with more than 20 hiring managers in the past week to collect their points of view. Here are a few common observations several of them made.