State of the Sector – Digital & Tech Sector Report

State of the Sector: A Digital and Tech Sector Report for Q1

In 2021, data from CWJobs showed that ‘the technology sector in England and Wales posted more job vacancies in 2021 than the entirety of British businesses did in 2020’, and in the same year there were 12,800 new tech vacancies advertised. It’s no surprise then that so far in 2022 the sector is rife with demand for skilled workers, a pattern that looks set to continue for the remainder of the year. The issue is that the hiring market is struggling to keep up with demand.

Graph showing evolution of tech jobs from 2019 to 2021

Disruptions in the sector, whether they be related to the pandemic, work patterns or innovations in market technologies, have resulted in disruptions to the hiring market and have impacted candidate expectations when moving into a new role.

To give further insight into the state of the sector, we asked our Digital & Technology team here at Heat to rank the factors that have had the greatest impact on the current candidate shortage. The results have ranked skills shortage as the greatest impactor, with the salaries on offer and the desire for flexible and remote-working options becoming increasingly commonplace.

graph showing in different colours the main choices to change jobs

We then asked our specialist consultants to share their personal insights on the current hiring climate within the sector, their experiences operating within it over the first quarter and their predictions for the new financial year.

What have been the biggest changes to your sector so far this year?

“Retention has become an increasing challenge & clients need to be able to conduct processes quicker, with some reducing stages of a process – a very common one being the removal of technical or coding challenges.”
Connor Young: Recruitment Consultant, Software

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Lots of businesses seem to want everyone they hire to hit the ground running; they don’t seem to be as willing to teach and progress candidates anymore.”
Damian Speirs: Senior Managing Consultant

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“The return to working on-site has been one of the most significant changes so far, with clients now expecting new starters to come into the office. This is causing problems, as candidates are still looking for and expecting remote work options. The market is starting to slow as a result of this reluctance to move to site-based roles without significant pay-rise, especially with the impact of the rising cost of living.”
Ben Thompson: IT Solutions Consultant, Software

ben thompson headshot with orange circle border

“The biggest change of note so far this year has been the correlation between increased salaries and remote working. Now that remote working has become more common, candidates are able to obtain higher salaries from London-based companies without having to relocate, meaning that companies in other areas are missing out. We’ve seen an increase in higher salaries being offered in order to poach staff, so companies in less accessible areas need to be realistic and willing to be competitive with their salaries, as well as being more open to remote-working options.”
Marcus Knapp: Senior Recruitment Consultant, Software Development

markus knapp with heat logo in the background

What should clients and candidates be prepared for in the year ahead?

“There are too many clients looking to hire, without enough people on the market to fill the roles. People should be prepared for further inflation on salaries in the year ahead.”
Ollie Tincknell: Senior Recruitment Consultant, JavaScript

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“At the moment, candidates are not on the market for very long, and the ones that are on the market will be expecting higher salaries and remote working options as standard.”
Jan Bonney: Principal Recruitment Consultant, Digital & Product

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“In order to remain competitive in the current market, clients need to be prepared to move faster and to offer more in terms of both salary and package: the competition for quality candidates is fierce, and salaries have risen substantially already this year.”
James Ryan-Henney: Recruitment Consultant, DevOps

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“Clients and candidates need to prepare for increased counteroffers, as no employer wants to lose their skilled workforce. We have seen a large increase in these so far this year.”
Finlay Biggs: Associate Recruitment Consultant, Software

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Key Take-Aways

Streamlining is key

In such a competitive market, time is of the essence. Candidates currently have an abundance of options available to them, and clients would be wise to keep this in mind when considering their interview processes and hiring strategies. A simple method is to cut back on their interview stages and processes: in the period between 2019 – 2022, the utilization of video interviews increased by 57%; businesses who aren’t yet utilizing technology to streamline their processes are putting themselves at significant disadvantage, and are likely to be beaten out by other businesses who have found ways to increase their efficiency and make their first stages of hiring slicker.


Resolving the skills shortage

Every sector is currently facing a significant skills shortage, with companies across the board struggling to recruit workers with the level of experience to suit their requirements. In these times of significant demand and shortage, employers hoping to hire will need to prepare themselves to invest time, money and energy until upskilling and training up their new starters rather than expecting them to already be at the required level. As the CEO of TechUK Julian David puts it: ‘we need to support people better into thriving digital jobs and careers. If we can match the array of tech roles created every day with those displaced by the pandemic and automation, we will play a significant part in helping people transform their employment prospects, and ultimately create the pipeline of digital skills and tech talent that our economy needs.’ The simple fact is that the skills shortage cannot and will not resolve itself; the onus has to be on businesses to play their part in tackling the issue, both for the sake of the prosperity of their own businesses and future business posterity.

Hybrid is here to stay

One of the significant challenges facing the Digital and Technology hiring market in particular is the issue of continued remote/hybrid working. Now that restrictions have been eased, we have seen many firms requiring new starters to return to in-person work. While this stipulation may make sense from the perspective of the employer, the reality is that the world of work has changed: candidates entering the market or looking for a new opportunity are generally expecting the option to work remotely as standard. This is a notion echoed in hiring markets across the world and is evidenced in a survey by Future Forum which found that ‘less than one-third (30%) of global workers are working from home every day’, and equally that hybrid working arrangements have increased to 58%. Hybrid is here to stay, and employers who insist on a return to pre-pandemic arrangements, however practical they may appear from a business perspective, will face a greater challenge in recruiting than those who can offer that degree of flexibility.


Important skills for tech industry comparing 2020 and 2021

Increase in counteroffers

The increase of counteroffers has posed a significant challenge to businesses looking to hire across all industries. Given the difficulty that sourcing skilled staff currently presents, the retention of existing employees remains a high priority for businesses and, in spite of there often being a multitude of pain-points or reasoning for making a career move, a current employer being able to offer a salary increase has proved an effective method of retaining their staff. This makes it even more crucial for those businesses who are looking to hire new staff to benchmark their salaries accurately. In offering a salary that is not competitive enough or does not reflect the current market value of a candidate, you risk losing out on them to a company who will offer them more, or to a counteroffer from their current employer. Salaries are not the only way to attract new candidates: benefits packages, progression, investment in development, culture and flexibility are all important aspects of an employer’s value proposition. But salaries will always hold significant sway over a candidate’s decision to move on or remain, and businesses need to prepare to pay for the talent they need.

In conclusion

Those trends that ruled the hiring market throughout much of Q1 look set to continue into the year ahead. With candidates in short supply, vacancies on the up, and these many hurdles to contend with, this may seem like a daunting prospect. It’s more important than ever that companies pay attention to the trends in the market and be willing to adapt to keep up.

It’s clear that salaries are on the rise, but companies still have other options to retain their talent. By re-examining their recruitment processes and strategies, as well as reviewing and enhancing their benefits options, companies can make themselves more attractive to candidates who are looking to secure a new position.

For candidates, now has never been a better time to make a move. As we move towards the latter end of the pandemic, and confidence in the stability of jobs grows, candidates are in an extremely healthy position to make a career change that could garner them greater opportunity for growth and success, as well as a host of competitive perks and benefits. Digital and Tech businesses will need to bolster their recruitment efforts in order to secure the additional resources to keep up with the growing demand.