According to this detailed and thought-provoking report, investment and hiring has declined in the tech sector in 2023 as a result of “rising financing costs and a cautious near-term growth outlook” which is “prompting investors to favour technologies with strong revenue and margin potential.”
Technology equity investments fell by 30-40% to $570bn in 2023. And job postings related to technologies designated as ‘trending’ in the McKinsey report declined by 26%, “a steeper drop than the 17% decrease in global job postings overall.” This decline has not been severe enough to entirely eliminate growth in job postings in these areas, which still stands at 8% from 2021 to 2023.
| Annual change in job postings 2022-2023 | Percentage of firms active (experimenting, piloting, scaling, scaled) | Percentage of firms inactive (not investing) | |
|---|---|---|---|
| Advanced connectivity | -24% | 67 | 33 |
| Applied AI | -29% | 74 | 26 |
| Climate technologies | -11% | 54 | 46 |
| Cloud and edge computing | -38% | 75 | 25 |
| Digital trust and cybersecurity | -34% | 63 | 37 |
| Electrification / renewables | +1% | 63 | 37 |
| Future of bioengineering | -23% | 50 | 50 |
| Future of mobility | -5% | 55 | 45 |
| Future of robotics | -20% | 59 | 41 |
| Future and space technologies | -9% | 43 | 57 |
| Generative AI | +111% | 74 | 26 |
| Immersive-reality technologies | -36% | 57 | 43 |
| Industrializing machine learning | -36% | 63 | 37 |
| Next-gen software | -37% | 63 | 37 |
| Quantum technologies | -17% | 53 | 47 |
The stand-out figure here is the +111% YoY growth in job postings connected to Generative AI, which underlines the fact that this is a far more recent technology trend. Whereas in some of the other areas job saturation has been reached with teams at full complement, in this area hiring is set to continue with teams only beginning to coalesce around the opportunity.
The vector score included in the report clearly illustrates the lack of maturity of this technology trend with only search engine queries scoring at the highest vector level while research, patents and equity investment all remain at the lowest level.
Job postings have increased markedly in this area for product managers, data engineers and data scientist, but have decreased significantly for regulatory affairs directors, this despite the fact that key uncertainties in this area are listed as:
- cybersecurity and privacy concerns;
- ethical considerations;
- regulation and compliance;
- copyright ownership and protection;
- environmental impact; and
- inaccuracies.
Taken together this does seem to suggest that whilst continuing to hire firms generally have moved from the initial experimentation, piloting and planning stages to implementation and scaling.
Also interesting is the continuing growth in job postings connected to Electrification / renewables when compared against the wider negative trend. It is possible that this reflects not only business interest in the transformative potential of such technologies, but also government policy choices for continuing and active investment in this area globally.
Digital trust and cybersecurity
Slightly surprising is the decrease in job postings in the digital trust and cybersecurity area. However, only 25% of the companies surveyed report not actively investing in this area (this number also being slightly surprising given current threat levels) and the report also highlights the fact that this short-term decrease has not changed the fact that demand for relevant skills “generally outpaces supply” with a significant talent gap.
The dearth in skilled resource here is particularly pronounced in connection with risk analysis, identity theft and, interestingly, regulatory compliance. The last perhaps driven by the efforts to improve key sector resilience in the US and EU.
Finally, worth noting is that research continues apace in the areas of robotics and bioengineering. And while these areas have not been spared when it comes to a reduction in job postings the continuing vigorous research activity as well as investment seem to signal that they are likely to be key areas for innovation breakthroughs in the future. The potential for application of AI to drive breakthroughs in both areas is considerable.
Much more detail and illuminating intelligence is available in the report, which is highly recommended reading.