Predictions For The Tech Job Market In 2025

The United States tech job market is poised for a rebound in 2025, following a period of turbulence marked by mass layoffs and strategic shifts in response to artificial intelligence advancements. According to Karat and Harris Poll’s latest Tech Hiring Trends report, the industry is emerging from a multi-year downturn characterized by a transition from high-volume hiring to a more focused approach on quality recruitment.

The tech sector’s recent journey has been tumultuous, beginning with a natural correction to the rapid post-pandemic hiring surge, which then evolved into widespread job cuts. The landscape was further disrupted two years ago by the introduction of ChatGPT, prompting business leaders to recalibrate their hiring strategies and redirect investments toward AI initiatives. This resulted in a prolonged cooling labor market, with companies prioritizing the quality of each new hire over quantity.

As we approach 2025, the initial wave of generative AI progress appears to be stabilizing, and hiring targets are showing signs of improvement compared to previous years. The tech job market is adapting to the new AI-driven landscape and preparing for renewed growth, albeit with a more strategic and quality-focused approach to talent acquisition.

Tech Companies Are Optimistic About Hiring

Despite a five-year low in software engineer job postings, the U.S. tech industry remains optimistic about hiring, with companies targeting an average of nearly 300 open software engineer roles, representing a 12% year-over-year increase, the report found.

The hiring landscape extends beyond domestic borders, with 81% of U.S. engineering leaders planning to hire abroad. While this shift toward global talent acquisition reflects the industry’s adaptability and recognition of the diverse skill sets available internationally, the globalization and offshoring of U.S. jobs will further intensify competition for available positions.

Additionally, in response to reduced headcounts from the previous year, there has been a notable uptick in contractor hiring. Twenty-eight percent of U.S. leaders now prioritize outsourcing via contractors. This cost-saving incentive may lead businesses to prioritize contractor hiring over full-time positions, which could reduce the number of full-time job openings in 2025.

Valuing Quality Hires

The tech industry is shifting from volume hiring to quality hiring, as companies prioritize the impact of each new employee in a softening labor market. This is evidenced by Karat’s talent benchmarks, which reveal a 12% increase in the average technical interview score required for job offers at major tech companies over the past year.

Moreover, in this employer’s job market, organizations have the luxury of being more selective in their hiring decisions. Companies are capitalizing on this opportunity by bringing in more qualified candidates at each stage of the hiring process. As a result, engineering leaders are reporting higher average numbers of candidates progressing through different interview stages, allowing them to make more informed decisions and ultimately improve the quality of their hires.

Prioritizing AI Skills

As the tech sector gears up for 2025, AI engineering roles are emerging as the top hiring priority, with a dramatic increase in demand compared to previous years. According to the report, 60% of U.S. tech managers are hiring for AI engineer positions, a significant jump from 35% last year. This surge in AI-focused recruitment is complemented by a growing need for full-stack engineers, who play a crucial role in building AI systems, marking the second-largest increase in hiring priorities.

The emphasis on AI extends beyond specialized roles and will impact the skill sets sought after in software engineers across the board. Managers will prioritize AI-related competencies, including AI engineering skills, the ability to integrate AI functionality into products via APIs and data science capabilities.

Furthermore, the AI skills in demand are not limited to core development areas. Many tech employers are also prioritizing candidates with expertise in leveraging AI tools during coding processes, training new AI models, machine learning, interpreting or analyzing AI outputs and prompt engineering.

Financial Services Bolstering Engineering Teams

The rapid integration of AI across various industries is reshaping the job market for technology professionals, opening up new opportunities beyond traditional tech companies. This shift is particularly evident in the financial services sector, which is increasingly attracting tech talent as it embraces AI-driven innovations and digital transformation.

Recent data from top universities illustrates this trend. At Cornell University, the proportion of computer science graduates entering the financial services industry jumped from 16% in 2022 to 22% in 2023. Similarly, Carnegie Mellon University’s Heinz College reported a rise in the percentage of master of information systems management graduates opting for careers in financial services, from 16% between 2018 and 2021 to 19% between 2020 and 2023.

As banks and fintech companies continue to integrate advanced technologies into their operations, they are competing more aggressively for top tech talent, offering exciting opportunities for professionals to apply their skills in developing cutting-edge financial products and services.

“The past few years have been a unique opportunity for enterprises to bolster our internal engineering teams with the pause in big tech hiring, and we’ve really used that time to elevate the quality of our software organizations,” Michael Ruttledge, chief information officer at Citizens Financial Group, stated in the report.