The Tech Market of 2024: Hope for Growth? Analysis and Forecast

Technology is one of those rare industries that experienced robust growth even during the pandemic due to accelerated digital transformation efforts. However, in the past two years, the industry still faced significant challenges, such as high inflation, increased interest rates, and global uncertainties. All this led to decreased consumer spending, reduced product demand, lower market capitalizations, and massive layoffs. Despite these difficulties, now there are many signs of potential recovery in the tech industry. Economists have reduced the likelihood of a recession, and analysts express optimism that the technology sector will grow in 2024. Let’s check what awaits us.

What Is the State of the Tech Market in 2024?

Looking at the global IT situation, we can expect that companies will still heavily invest in IT. The 2024 State of IT report reveals that 66% of companies plan to increase their IT budgets for 2024, whereas only 4% will decrease tech spending. And no wonder 59% of companies globally plan to increase the size of their overall staff. Another report shows that “the 20 biggest tech companies in Silicon Valley laid off 7% of their workforces (about 18,800 employees) last year, but the region still had a net gain in jobs”. According to the Silicon Valley Index, Santa Clara and San Mateo counties added 2,700 jobs from June 2022 to June 2023. So, even despite last year’s layoffs, companies had 37,000 more tech jobs in the area at the end of 2019, before the pandemic. “We’re not booming, but we’re not shrinking”, — says Russell Hancock, chief executive of Joint Venture Silicon Valley. “The biggest tech companies “over-hired” during the pandemic, so they have been pulling back," he added. Other positive insides from the report include the market capitalization of publicly traded companies in Silicon Valley and San Francisco climbed $14 trillion in February 2024. One of the factors that influenced such growth is Wall Street’s love for tech giants such as Meta and Amazon, whose stock rose to 179% from this time last year (though, these companies were responsible for half of the tech job layoffs in the Bay Area). As for other corners of the world, the tech industry is also recovering from global economic uncertainty. For example, Bruce Kasman, chief economist for JPMorgan, recently said, “Asia has done reasonably well in the second half of last year. China's industry benefited, and North Asia obviously benefited more from it.” The Asian tech industry, which thrived during the Covid-19 as companies boosted their digitalization efforts, underwent a slowdown in 2022 and 2023 due to high inflation and lower interest rates. Now, it’s recovering, but not uniformly. One of the most promising sectors is semiconductors, driven by the AI boom. “It is primarily in the semiconductor, dynamic random access memory sector. So we are seeing, for example, Korean production doing quite well. Taiwan is because of the logic chips we are seeing that do relatively well. So those are the two key beneficiaries in North Asia,” — says Ong Sin Beng, head of EM Asia economics research at JPMorgan.

Which Trends Are Driving the Industry?

As we have already touched on AI, it’s worth noting that, according to the annual EY ranking, most companies consider GenAI integration to be the #1 opportunity in the year ahead. Ken Englund, EY Americas TMT Leader, says, "The opportunity for the year ahead is clear. By putting AI at the centre of their strategies, tech businesses could leapfrog competitors who were previously ahead, not only by accelerating their transformation journeys but also repositioning operations to capitalize on rapidly emerging technologies and business models.” However, the EY report cautions that most organizations (90%) are still at an incipient stage of AI maturity. That’s why EY calls companies to establish an “AI control tower” to support safe and ethical AI deployments with a human-centric approach. Despite these precautions, Google and Amazon announce new job cuts in 2024. Last year, Google already reduced its workforce by about 12,000 roles. As for the cutoffs today, Google’s CEO, Sundar Pichai, said recently, “We have ambitious goals and will be investing in our big priorities this year. The reality is that to create the capacity for this investment, we have to make tough choices.” Amazon layoffs will also continue into 2024, and the company has already announced plans to reduce its staff at the Prime Video and MGM Studio departments to several hundred.

Why Are There So Many Tech Layoffs?

The debates around AI’s impact on labor costs have reached a peak. Tech leaders are now heavily examining the balance between automation and human skills. “There is a heightened anticipation surrounding the potential labor cost efficiencies from adopting AI. While it is believed that AI might replace some jobs or parts of jobs currently performed by human workers, it is important to note that these expectations might be ahead of their time. Nevertheless, given AI advancements, companies are preparing for a major organizational shift,” — says Anna Tavis, clinical professor in human capital management at New York University. With that, she also believes tech industries will continue to change their staffing levels, looking for efficiency and cost-cutting. Overall, 2024 is expected to be a transitional year for generative AI, with many tech companies experimenting with AI applications that can drive efficiency and productivity. Some are likely to evaluate how to boost the software development cycle with generative AI-enabled tools. Among other driving trends in 2024, we can highlight striking a balance between globalization and self-reliance. The global tech industry should prioritize the risks of disruptions from geopolitical instability, supply chain volatility, and raw material shortage. IT leaders should be ready to adapt their strategies accordingly. Reckoning with regulations for the tech industry is another thing companies should pay attention to. The recent Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence in the USA and emerging regulations in the European Union will push tech companies to prioritize data protection and the ethical use of AI.

Hiring Perspectives in 2024

Contrary to many concerns, the demand for skilled tech enthusiasts is projected to rise in 2024. According to the Bureau of Labor Statistics (BLS), the tech job market is expected to continue its upward trajectory — the employment of software developers is expected to grow by 26% from 2022 to 2032, reinforcing the industry's resilience and growth. In 2024 particularly, tech jobs are projected to grow by 4.2%. According to the fresh 2024 IT salary report, companies will continue to focus on hiring candidates for roles related to AI, automation, cloud, DevOps, digital transformation, development, security and privacy, system upgrades, and data integration and analytics. Notably, in the six months to March 2024, many of these and other IT roles have seen salaries increase, particularly those with a shortage of skilled workers. In addition to strong professional skills in the relevant field, companies will look for soft skills like adaptability and continuous learning.

Start-up Hiring Perspectives

After an unseccsessfull 2023, tech hiring is expected to improve by 5-8% within already the first half of 2024, which marks a positive trend in the job market. Among the tech startups to watch for in 2024, we can highlight RunwayML, which will “shape the next era of art, entertainment and human creativity“. Runway is an AI tool that artists can deploy to create AI-generated media (video, audio, and text). In June 2023, Runway raised $141 million in funding, increasing its market value to $1.5 billion. No wonder, this startup was listed in TIME’s 100 Most Influential Companies 2023. Tome is another AI startup making waves in 2023. Founded by two former Meta executives, Tome can help you build polished and professional presentations by leveraging generative AI. In 2023, the tool reached more than 10 million users. This year, the app was named one of Fortune’s Top 50 AI Innovators. Calendly is a promising online scheduling platform suitable for business and personal use. It also serves more than 10 million users worldwide, growing from $181.5 million in 2022 to $276.1 million in 2023. This rapid growth has allowed the company to expand its team by 237 employees. That’s why it’s fair to say that startups are now extensively looking for new talents to carve out a path to success together.

The Forecast for Tech Industry

According to the 2024 State of IT Report by Spiceworks, most companies plan to hire in 2024: 59% plan to increase the size of their overall staff, while only 8% plan to decrease. Though, while overall IT hiring is expected to grow, 63% of senior tech leaders believe it’s currently challenging to hire skilled IT talent. The other positive news is that two-thirds of companies are planning to increase technology investments in 2024 (according to the same report). Overall, IT spending is expected to grow 6% year-over-year, which is higher than in many other industries.

Conclusion

Summarizing everything above, we can confidently say that despite global uncertainties, the tech industry is showing signs of recovery, with positive indicators such as increased IT budgets and workforce growth. So, the forecast for the IT sector in 2024 is optimistic, with most companies planning to hire more employees and increase overall technology investments. That’s why the hiring perspectives for 2024 are positive as well. Companies will be looking for skilled tech enthusiasts in AI, Automation, Сloud, DevOps, Development, Digital Transformation, Security, and Privacy roles. So, if you’re hesitating whether to enter the IT world in 2024, we think the answer is obvious. All good luck to you in 2024 and beyond!