Julia Hu opted to start an AI brand strategy firm with a friend after getting laid off as director of software engineering at Eventbrite in 2023. AI coding editors like Cursor and Windsurf can generate original code from natural language prompts, supercharging software engineers’ productivity and spurring tales of “tiny team” success (opens in new tab). “Apply to your second- and third-choice companies,” he tells students. But worker sentiments are often more intuitive than quantifiable. “I would encourage workers to broaden their view when looking for a new job,” she said.
Before Big Tech layoffs became a regular occurrence, many of his students would bag multiple job offers from the region’s most prestigious companies, stopping by his office to deliberate about which one to accept. After the dot-com bust, it took more than a decade for employment in the technology sector to return to its previous levels, according to data from the Bureau of Labor Statistics and Glassdoor. With both entry-level and managerial jobs under pressure, tech workers are losing confidence in their career prospects, said Daniel Zhao, Glassdoor’s lead economist. Oxford Economics modeled two scenarios off the back of a tech downturn, an environment where investment slows and stock prices fell in tandem. “But this leaves the U.S. vulnerable if tech suffers a downturn—without tech investment, U.S.
The resilience of large IT firms and their ability to adapt to new technologies could help shorten the downturn. The situation will depend on how global economic conditions evolve throughout 2024. Experts are predicting a potential recession could begin globally in late 2024 – with a probability of around 35%, according to recent forecasts.
Historical Context: Past IT Recessions
- Rising operational costs, inflation, and the disruptive impact of artificial intelligence (AI) have resulted in widespread layoffs.
- The recession period in the IT industry can vary but often lasts from 6 to 12 months.
- Many analysts believe that a formal recession may not occur – but challenges could arise in sectors reliant on global markets.
- “Finally, for tech valuations to reconnect with their own 10-year average would imply a fall (all else equal) of 35%.
Despite the setbacks, the Indian IT sector bounced back, supported by adaptability and demand for global outsourcing. Indian IT companies like Infosys, Wipro, and TCS witnessed reduced contract sizes, fewer client acquisitions, and a freeze on hiring. The dot-com bubble burst led to a massive wipeout of tech startups and a significant downturn for outsourcing firms in India. We’ll also offer practical tips for navigating the downturn and insights into how the industry can bounce back stronger. Morgan assigned a 35% probability of a global recession before year-end, with the likelihood increasing to 45% in 2025.
- AI is expected to automate certain tasks, especially repetitive and low-complexity jobs.
- Experts suggest that if a recession hits the IT sector, it may begin in late 2024 and extend into early 2025.
- Outside the information and professional service sectors, manufacturing, retail, finance, transportation, and healthcare have all seen upticks in postings for tech jobs.
- Recovery will largely depend on improved demand for technology services and innovation in key areas like AI and cloud computing.
Many companies have cut jobs due to rising costs, economic uncertainty, and the increasing adoption of AI. A potential recession could last between six to twelve months, depending on how quickly global economies stabilize and how fast vegas casino apk IT spending rebounds. A recession is a period of economic decline, typically marked by reduced GDP, falling income, lower consumer spending, and rising unemployment. Even though tech overall is still in growth mode, the sputtering of the job market isn’t trivial. Outside the information and professional service sectors, manufacturing, retail, finance, transportation, and healthcare have all seen upticks in postings for tech jobs.
Future Outlook for the IT industry
“Other industries need tech workers too,” said Rachel Sederberg, director of research at Lightcast. But he’s no longer a software engineer; instead, he’ll be a sales rep for a small AI agents startup. Feeding that anxiety, more tech workers are falling down the corporate ladder — 18% report that their pay declined in 2024, versus 11% in 2019. There are an increasing number of people stuck in job-search purgatory, anxious that their severance will run out. “I was so demoralized,” said Pretzell, who chose a career in tech for its stability. Eleanor Pringle is an award-winning senior reporter at Fortune covering news, the economy, and personal finance.
Which areas in IT will remain in demand during a recession?
Continue this article in the Hirist app to get personalised tech job recommendations. Yes, technology can improve efficiency – helping businesses adapt and survive during a recession. Recessions typically last between 6 months to 2 years – depending on economic conditions and recovery efforts. If you’re looking to boost your career during this period, be sure to visit Hirist – a great platform to find the best IT jobs in India.
What Is a Recession?
A recession in the IT sector occurs when technology companies face economic challenges – leading to slower growth and reduced spending. While not officially in a recession, the industry is clearly under strain, facing reduced global demand, major layoffs, and disruption from emerging technologies like AI. Global economic issues, reduced outsourcing, and tech layoffs are affecting major companies like TCS, Infosys, and Wipro. The Indian IT sector experienced notable downturns during the global economic recessions of 2001 and 2008.
“As we go through the rest of these incredible estimates of how much capital is going to be required to build out this infrastructure to avoid seeing electricity prices continue to go up for the public, is going to require a lot of debt over time,” Knapp said. Oracle, Meta and CoreWeave have each raised billions in debt or private credit to finance new data center infrastructure. But some experts are skeptical of the sustainability of the AI-driven momentum. That flood of capital is reshaping how and where money is flowing across the economy.
Global AI investment is forecast to reach $375 billion in 2025 and top $500 billion by 2026, according to UBS. Discover top job opportunities in Java, Python, Data Science, AI, and more. Save my name, email, and website in this browser for the next time I comment. Weak investor sentiment affects startups and new product development.
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Let’s take a look at some statistics about IT recession 2024. Plus, we’ll share tips to navigate these challenging times and emerge stronger. “And they don’t have time to slow down because China is accelerating as well. And I think that’s bullish in terms of the capex cycle that I really view as an AI supercycle.” “Will there be bumps along the road? Yeah but I don’t fear that this is too big to fail given it’s propped up by tech. Trillions on the balance sheet, generating another $3 to $400 billion of cash a year,” Ives said. Despite the risks, many see long-term upside from the current investment cycle and bullish investors remain optimistic. “The labor market looks very, very weak to me,” he added.
The sector has weathered past downturns and emerged stronger each time. Declining GDP in key markets affects outsourcing and software spending. However, India may avoid a formal recession due to a resilient domestic economy and rising investments in public digital infrastructure. Despite these layoffs, Gartner predicts global IT spending will rise to $5.26 trillion in 2024, suggesting long-term optimism despite short-term strain. Though the global IT sector hasn’t officially entered a recession, it is clearly experiencing stress. Recessions can last from a few months to several years and affect almost every sector of the economy.
Wild Cats: The Ultimate Statement Pets
“Management jobs are getting pressure on both ends,” Zhao said. Before mass layoffs in Big Tech started in earnest three years ago, low interest rates meant venture capitalists sprayed money at companies, in hopes that IPOs would generate returns, and they grew, grew, grew. Despite applying to dozens of open positions in the alleged tech capital of the world, with what he thought were strong credentials, he failed to attract a single job offer. As big companies seek to replace human work with code, falling salaries and long job hunts are increasingly common.
A recession is when an economy slows down for a period of time. “GDP is being driven by all this investment,” said Barry Knapp, managing partner at Ironsides Macroeconomics. A September 2025 analysis from Deutsche Bank argued that without AI-related investment, the US economy might already be in a recession. A surge in artificial intelligence infrastructure spending is lifting GDP and driving market optimism, but some experts warn the boom could be concealing underlying economic weakness.
The pressure to deliver more with less leads to scaled-down operations and reduced hiring. “If those are the only headlines you’re reading, it doesn’t tell the whole story of the economy,” Zhao said. Therefore, it’s important to remember that the economy is bigger than the “Magnificent Seven,” he said. Now companies are not hiring or are only backfilling turnover.” “When you have over 100,000 computer science graduates coming out of school and hitting a brick wall, they have a right to feel that the industry is not living up to its promise,” Zhao said.
While this does not confirm a recession, it highlights the growing vulnerabilities in the global and Indian technology landscapes. As whispers of a global economic slowdown grow louder, the IT sector stands at a critical crossroads. “I had some time on my hands, so I should probably ramp up my skill set,” Hu said of pausing her job search after six months. If the industry is so bent on rejecting managers, it’s time for them to get back in “founder mode,” said Lexi Lewtan, CEO at Leopard.FYI, a professional network for women and nonbinary software engineers. Today, O’Brien said, while his students are still able to land jobs, they are often not from companies at the top of their wish lists.
In comparison to that historical nadir, the larger tech job market is still in a broad cycle of growth. Its surveys show that employee confidence in the information sector, which has historically outpaced the overall job market, fell below 50% for the first time in 2023 and has hovered around that mark ever since. When Zach Pretzell was laid off from his software engineering role at a space technology company at the end of 2023, he didn’t expect to still be on the job hunt eight months later. The recession period in the IT industry can vary but often lasts from 6 to 12 months. The IT sector is expected to grow in 2026 – driven by demand for new technologies and services. While there may be short-term challenges due to the economy – companies will likely invest in new technologies to improve efficiency.
Fed surveys indicate that around 60% of U.S. families own stocks, with exposure concentrated among higher-income households who account for 45% to 50% of consumer spending.” And it would still be likely to inflict a severe negative economic blow, not least because U.S. households are considerably more exposed to an equity selloff than they were 25 years ago. The average of all these benchmarks suggests a fall in tech stocks of around 25%,” Slater continued.
“Tech, especially in the Bay Area, had been attractive because it promised accessible, high-paying jobs. Zhao from Glassdoor notes that it might get worse before it gets better, especially with federal government workers unexpectedly entering the job market. With a few engineers able to do the work of sophisticated large teams, there’s a feeling that engineering jobs are being eliminated as AI is more widely adopted.