IT job market faces mixed signals with rising unemployment
The IT job market right now is weird. More job postings, yet unemployment is rising. That tells us one thing—companies aren’t hiring as fast as they’re looking. The data backs this up. CompTIA reports IT unemployment jumped from 2.9% in January to 3.3% in February, marking the second straight month of increases. Janco Associates puts it even higher at 5.4%, though that’s slightly down from January’s 5.7%.
This isn’t a skills shortage problem. It’s a hesitation problem. Businesses are holding back on hiring despite clear demand, likely waiting for better economic signals. It’s a cycle that slows everything down—tech innovation, hiring velocity, and company growth. If you’re running a company, you need to ask yourself: are you preparing for an uncertain future, or are you just waiting for it to arrive?
Economic uncertainty slows IT hiring
Hiring freezes and layoffs in tech are due to macroeconomics. Inflation, tariffs, global conflicts, and stock market swings are making companies hesitate. They see risk and hit pause. This is happening at a larger scale now, affecting both startups and enterprise IT teams.
Victor Janulaitis, CEO of Janco Associates, points out that 9,100 IT jobs were lost in early 2025. That’s not a small dip. It means real projects are getting shelved, and real talent is sitting idle. The introduction of the Department of Government Efficiency (DOGE)—which is scaling back government IT spending—is another factor hitting demand. If you’re leading an IT org, the question is simple: do you scale back with the market, or do you position yourself to capture the talent that others are letting go?
AI skills remain a bright spot amid hiring decline
Not everything in IT hiring is slowing down. AI is growing fast. Companies may be cutting back on general tech hiring, but they’re ramping up AI investment. AI is the foundation for operational efficiency, automation, and strategic advantage.
AI-related job postings jumped 116% year-over-year, and hiring for AI-specific roles increased by 79%, according to CompTIA’s latest data. Kye Mitchell, head of Experis North America, notes that overall tech hiring is down 6%, but AI remains a priority. The logic is simple: companies are focusing on automation and efficiency, especially in uncertain times.
“If you’re not building AI talent in-house, you’re handing your competitive edge to someone else.”
Decline in IT hiring affects multiple sectors
Not all industries are reacting the same way. Traditional tech companies are cutting back, but other sectors—healthcare, finance, logistics—are still hiring IT talent. That’s the shift happening right now: core tech firms are consolidating, while industries that rely on tech are expanding their digital capabilities.
Tech sector companies shed 11,514 jobs in February, while non-tech industries added 177,000 IT positions. At the same time, retail and manufacturing are slowing down significantly. Retail management job demand dropped by 16%, and wholesale/manufacturing fell by 20%, according to the latest hiring data. Ger Doyle, US country manager for ManpowerGroup, says job demand is down 6% overall, driven by drops in consumer confidence.
For business leaders, this means tech talent is moving. If you’re in an industry outside of traditional tech, now is the time to build your IT workforce.
“If you’re in tech, you need to think beyond the standard hiring playbook. Talent is shifting where it’s needed most.”
Government IT jobs in decline amid workforce reductions
The federal government is shrinking its IT workforce. The Department of Government Efficiency (DOGE) is eliminating contracts, cutting projects, and forcing reductions across agencies. For government IT professionals, this creates instability. For private sector companies, it means a growing pool of experienced IT talent looking for work.
This isn’t happening in a vacuum. Government employment is trending down as President Donald J. Trump’s administration pushes for a leaner federal workforce. Elon Musk, overseeing DOGE, is driving these reductions with a focus on eliminating inefficiencies. The result? More skilled IT professionals on the market and fewer new hires in government roles.
If you’re running an enterprise, this is an opportunity. Highly skilled IT professionals, previously locked into government jobs, are now available. The smart move? Hire top talent while others are hesitating.
Shift toward skills-based hiring over degree requirements
The way companies hire is changing. Degrees matter less. Skills matter more. That’s the new reality. More businesses are focusing on what candidates can actually do, rather than what’s on their diploma.
CompTIA data shows that nearly 50% of IT job postings no longer require a four-year degree. Some roles, like network support specialists (85%), tech support specialists (71%), and computer programmers (57%), are even more flexible. Tim Herbert, chief research officer at CompTIA, notes that this is a major shift toward skill-based hiring, allowing companies to tap into a much broader talent pool.
For executives, this is a game-changer. Hiring based on skills, not degrees, opens up access to a larger workforce, speeds up hiring, and reduces unnecessary barriers. If your company is still filtering candidates by their college credentials instead of their capabilities, you’re missing out on top talent.
Final thoughts
The IT job market isn’t collapsing, but it’s shifting fast. Hiring is slowing, yet AI demand is surging. More job postings don’t mean more hires, and companies are holding back—due to uncertainty. At the same time, government downsizing is putting experienced IT professionals back into the private sector, and skills-based hiring is opening new doors for candidates who don’t have traditional degrees.
For executives, this is the time to move. The companies that adapt—by doubling down on AI, rethinking hiring strategies, and capitalizing on talent shifts—will come out ahead. The market isn’t broken, but it is evolving. The only question is whether your company is evolving with it.
