The Outlook for Programmers

Although Sarah Olson is a senior at Massachusetts’ Worcester Polytechnic Institute (WPI) working toward dual bachelor’s and master’s degrees in computer science, she already has secured a job after graduation as a software engineer at Capital One Bank. Amid an environment of layoffs and shrinking IT jobs, Olson is one of the lucky ones.

She credits her good fortune to an internship she had at the bank last summer, along with help from the non-profit organization Rewriting the Code, which supports women and underrepresented communities interested in the technology field and helps them find and succeed in computer science and engineering roles.

Before Olson was offered the job, she said she had applied everywhere she could at companies with entry-level programs for computer science graduates.

“I saw [a post] on LinkedIn for an internship program that had 200 spots and the application pool had 43,000 candidates. It’s absolutely nuts,’’ Olson recalled. She attributes this to the fact that computer science majors are also competing for software engineering jobs with people who minored in the discipline, increasing the competition even further.

There are also fewer overall tech jobs. “I think there was a bit of over-hiring during COVID, for sure,’’ Olson said. “There was a lot of money put into tech at the time and now that’s been backed off and companies can’t afford to keep as many people at the level of pay they were receiving.”

For people fresh out of college, “The notion going in was, you got a computer science degree, you were set. There was going to be a job waiting for you when you got out, and I think many people went into computer science for that reason,’’ Olson said.

Today, that is not necessarily the case.

The Changing Face of the Technology Field

Hiring professionals and technology consultants say the landscape for IT jobs is undergoing a major shift, due in large part to over-hiring during the pandemic, but also because of intense interest in deploying AI to automate processes.

The IT job market over the past two years has been “relatively flat,” said Victor Janulaitis, CEO of Janco Associates, a management consulting firm. “After the rush to fill IT positions during the pandemic, it’s really hard for CIOs to justify salaries over $100,000, and how many programmers do you need to get a new app up? No one wants to take that kind of risk.”

In an overall cooling job market, the tech sector cut the most jobs (6,009) in July 2024, for a total of 65,863 for the year, according to global outplacement and executive coaching firm Challenger, Gray & Christmas. AI appears to be one of the culprits.

“Companies are increasingly exploring and implementing AI tools to see what is possible,’’ said Andrew Challenger, labor expert and senior vice president of Challenger, Gray & Christmas. “These technologies are proving capable of handling tasks traditionally performed by computer programmers, from coding to more complex functions, often enhancing or even replacing human effort.”

However, he added that companies “began to shy away from attributing cuts to AI in their initial public announcement in 2024 and started using the terminology ‘updating technology’.” The firm has tracked ‘technological update’ as a reason for cuts since 2000, he said. In 2024, the firm tracked over 15,000 job cuts due to this reason—the most they have ever recorded, Challenger said.

“We believe companies are switching language due to public backlash,’’ he said. “Most of the companies using this language were in industries outside of tech and traditional huge job creators,” including the warehousing and automotive companies.

An August survey from workforce development company Pluralsight found that 74% of 200 IT professionals surveyed worried their jobs will be replaced by AI tools.

Nick Bunker, director of North American economic research at job board Indeed, is not so sure AI is solely to blame. Indeed has seen a surge in generative AI-related postings—an almost 75x increase between April 2022 to April 2024—potentially signaling a rapid evolution and prioritization of AI innovation across industries, Bunker said.

However, like Olson, Bunker noted that the software field is “still feeling the after-effects of the burst of hiring in 2021 to 2022 at large tech companies.”

Now, “Those companies are trying to right-size and figure out the right number of employees, given their business and outlook,’’ Bunker said. “They’re trying to figure out what they want with a lot of pandemic-era fluctuations behind us now.”

Indeed’s AI at Work Report reveals that all jobs could see some impact from GenAI-driven change. Economists looked at the percentage of typical skills that can be done either well or excellently by GenAI to determine exposure, Bunker said.

Exposure to GenAI skills measured as “good” or “excellent” in five occupational sectors, which according to Indeed were:

Software development (95.6%)
IT operations (93.9%)
Mathematics (93.6%)
Information design & documentation (92%)
Legal (91.9%)

Bunker believes this trend is “most dramatic” in the U.S., since that is where AI has seen the greatest level of hiring. Canada is facing the same situation, with tech job postings “well below pre-pandemic levels,’’ he said. There are similar trends in Europe as well, specifically in the U.K., where job postings for software developers are down about 40% from pre-pandemic levels, Bunker said.

The IT job landscape for college graduates

Today, it’s tougher for graduates to land jobs at the “large, marquee tech companies,” said Paul Farnsworth, CTO of technology job site Dice. That may not necessarily be a bad thing, he added, because there is a broader trend toward digitization and the realization that companies can no longer operate without technology.

“Business processes are now built on technology. While tech jobs at marquee companies may be declining, the demand for computer science and tech graduates is still strong in other companies,’’ Farnsworth said.

He believes the root cause of the decline encompasses broader economic conditions, like rising interest rates, consumer spending, and inflation driving where people are spending their money.

Farnsworth also believes companies are back-peddling after making large investments in technology during the pandemic. “Meta is a good example; it is fundamentally funded through advertising and requires a strong ad ecosystem,’’ he said. “As consumers fiddle with their spending and advertising became pinched, they had to adjust their operating costs and adjust down. They are regrouping since pandemic capital spending levels.”

High interest rates also reduce mobility, so if employees want to make a geographic move but are already locked into low interest rates, “The move for a job becomes a much more complicated decision,’’ and thus many are staying put, Farnsworth said.

Given the IT globalization trend of the past several years and the outsourcing of tech jobs overseas, the questions computer science graduates have had to face is whether companies are continuing to leverage overseas technologists and whether that will impact their ability to find a job, he said. In the case of smaller organizations, “They may not have the ability to manage [an overseas] team,’’ Farnsworth said.

There has also been a consistent gap between what the forecast for tech professionals has been in the U.S. and the number of graduates being produced, “and that’s resulted in a continued demand for U.S.-based technologists,’’ he said. “It’s not a situation where the U.S. is so saturated with technologists, there is no demand for them.”

While there is evidence companies are continuing to look for opportunities to save on the cost of software development by using global teams, most of those organizations retain core groups of teams in the U.S., Farnsworth said.

Still, 422 tech companies reported 136,782 employees laid off as of August 2024, according to the site Layoffs.fyi. And CompTIA research indicates that more than 211,000 jobs were eliminated from the technology sector in 2023.

Dice does not have data on layoffs, and Farnsworth paints a slightly more optimistic picture. “We are seeing…some recovery in overall job postings on the platform,” he said. Yet, he added, “We are still quite below where the peak was during the pandemic period, where there was a lot of tech hiring going on…[but] we’ve come through the dip.”

Computer science graduates should not be concerned because the degree is well-compensated and there is still a demand for technologies, Farnsworth insisted. Like any industry, there are peaks and troughs in demand, but the larger macroeconomic picture indicates investments in tech will continue, and that means a need for people, he noted.

Ultimately, the role AI plays in the uncertain tech job market boils down to who you ask. While some hiring professionals see it as killing jobs, others say it is creating new roles such as machine learning engineers and data scientists, jobs that require specialized skills in AI and machine learning. By automating some IT roles and taking over repetitive tasks, IT professionals can now focus more on complex and strategic initiatives.

Farnsworth characterizes the AI factor as “somewhere in the middle.’’

“I still think the [jobs] outlook is robust or strong or relatively bright for the [IT] field,’’ he said. “It just will be a different kind of labor market than pre-pandemic. These large tech employers may not be hiring at the same volume as before, or for the same positions, but there is still a need for the skills and abilities that computer science graduates have.”

The difference is, he added, they will mainly be in other industries rather than at the tech giants.

Olson, the college student, echoes that, saying that while she applied to Microsoft, Google, and Amazon, most of the interviews she received were from banks. “I see in my network that a lot of people who were getting software internships were at banks or the financial sector,’’ she said.

The Changing Face of the Technology Field

The IT job landscape for college graduates

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