Demand for IT professionals drops significantly in Hungary
A recent IT labour market survey provides evidence that in 2023, significantly fewer IT positions were filled in the private sector than before, while the negative trend continued in the first two months of 2024. The post Demand for IT professionals drops significantly in Hungary first appeared on 24.hu.
Last year, on average, the demand for new workforce in the Hungarian information technology (IT) sector could have decreased by 15-20 per cent compared to the previous year. Comparing January 2023 to December 2023, the decline is as high as 40 per cent. The downward trend continued in the first month of 2024, as revealed by a recent study from Bluebird International, a company specialising in IT headhunting, workforce recruitment, and software development. The survey, conducted among Bluebird’s own clientele, suggests that the primary focus of IT companies was to retain existing staff and to optimise their operations. Nonetheless, minor layoffs also occurred to save costs. Clearly, expansion was less of a goal than it was in 2022.
At many of the company’s partners, salary budgets either did not increase or increased only minimally. Salary adjustments in the IT-industry were mostly single-digit or absent altogether.
According to Bluebird, the decrease in the hiring of IT professionals can be attributed to the following factors:
- Technical recession – the sustained decline in GDP that began at the end of 2022 may have had a significant impact on Hungary’s IT labour market.
- The continuously shrinking economic performance could have reduced companies’ willingness to make new investments, including workforce recruitment.
- Additionally, the international environment was unfavourable for the industry as well. The IT sector witnessed significant layoffs worldwide, especially in the United States.
Fewer orders and a narrowing labour market
The decline in the Hungarian IT market began in July 2022, and there are now significantly fewer new IT positions to be filled than before – shared with our paper Balázs Réfi, Bluebird’s founder and leader responsible for international expansion.
During the coronavirus pandemic, the development of digitalisation received a huge boost, as a significant portion of education, work, and everyday life moved into the online space.
In the United States, the soaring of the stock market that began in 2020 also fuelled the sector, with massive headcount expansions at Big Tech companies and a surge in IT salaries due to labour market competition. However, from 2022 onwards, it was becoming apparent that there would not be as much demand for tech companies’ products as during the quarantine period. Last year, surveys indicated that around 260,000 IT jobs were cut in the USA, with significant layoffs occurring at major players such as Apple, Alphabet, and Meta. Workforce reduction continued into 2024 as well.
Codecool, one of Hungary’s leading coding schools, has recently stated to 24.hu that global crisis phenomena have only had a minor impact on Hungary. The IVSZ, Hungary’s largest association of ICT companies, emphasised that the layoffs at tech giants paint a somewhat misleading picture as they did not only affect coders.
However, the CEO of Bluebird estimates that despite the absence of major layoffs in Hungary, the demand for IT professionals has been steadily decreasing for over a year and a half.
He added that the company does not have insight into the entire market: for example, it does not have connections with state entities, but many of the largest multinational companies in Hungary have been or are among their partners. Based on client inquiries, client interest and the number of orders have significantly decreased since 2023 for companies involved in IT workforce mediation.
However, this does not mean that the market has come to a full stop; recruitment activities continue, while the needs of clients have changed. Previously, companies generally hired a mix of both senior and junior professionals, but it has now become common for companies to seek professionals for positions requiring specialised expertise – as opposed to standard positions, such as Java development jobs – with the involvement of IT headhunters. Recruiters on the corporate side are finding it increasingly difficult to find candidates for these positions, hence the need for mediators well-versed in the IT field.
A while back, demand for labour was so high that major companies would often partner with coding schools and hire even completely inexperienced applicants through them.
– Bluebird’s leader states. As before, gaining the first 1-2 years of IT experience remains crucial for junior professionals. This period can be a turning point for those undergoing retraining as well.
In recent years, it was typical for IT employers to flood the web with job postings, often receiving little response as professionals were overwhelmed with various IT inquiries. This trend has now reversed;
In addition to the general downturn, foreign IT projects have a significant brain-drain effect on the Hungarian labour market. During pandemic restrictions, there was a strong trend among IT companies to work remotely or on project contracts with foreign professionals, even those living thousands of kilometres away from the company’s office. For example, a programmer living in Szeged can now much more easily work on remote projects based in Budapest since 2020, and with strong English skills, opportunities in New York could also be considered without the need to relocate.
What this means is that the number of new job opportunities in Hungary has decreased even further compared to the number of applicants – assessed Balázs Réfi.
He expects that the current longer-term downturn will be temporary, although it is not yet clear whether the IT sector has reached the bottom of the pit. Based on global trends, such as the steady expansion of artificial intelligence (AI), there are still significant prospects ahead of the technology sector. Réfi believes that the high demand for IT professionals will remain, but the currently standard job profiles and their associated tasks will certainly change in the coming years.
The cybersecurity sector is also looking forward to significant growth. Moreover, ensuring compliance with regulations such as the Dora directive and NIS2 will bring a significant amount of projects to Hungarian IT companies as well.
However, when looking at the international scene, Hungary is not a strong player even in a regional context. Poland and the Czech Republic are ‘miles ahead of us’, while Ukraine, even despite the war, is significantly more embedded in international projects than Hungary, explained Bluebird’s leader in international expansion. It seems that many North American companies are trying to replace former Indian IT suppliers with South American or Eastern European IT companies.
Coding school nuances the picture
There is no significant slowdown in the number of applicants for the courses; interest remains high. However, looking at junior IT positions, the number of advertised positions has decreased by about 20-30 per cent compared to the level five years ago. On the other hand, the decline may have been more significant compared to the strong growth during the pandemic period – according to Szabolcs Filep, founder and co-CEO of coding school PROGmasters. He noted, however, that most junior positions – as before – are not publicly advertised because companies select the majority of candidates through recommendations, for example from schools with which they have partnerships.
After Green Fox Academy, another player on the coding school market was forced into bankruptcy – many associated the demise of online programming school CodeBerry with the overall decline of the industry. But Filep believes that the closure of the two companies does not indicate a trend in the sector, considering that there are about 30 programming schools active in Hungary. The two companies were start-up ventures that entered foreign markets with venture capital and perhaps tried to scale up too quickly. In contrast, PROGmasters is an organically growing company that will continue predictable operation to generate a profit in 2023, too – he stated.
The company’s leader refuted the notion that there has been a complete decline in demand for graduates exiting coding schools. For example, at PROGmasters’ job fair last week, more than 20 companies – including several leading Hungarian corporations – registered, indicating that there is still lively demand for junior professionals.
Regardless, software developers, testers, and other professionals should not expect job offers to be handed to them on a silver platter, as the expectations of companies have increased due to the narrowing of open positions. As a result, PROGmasters has incorporated AI education into most of its training programs and has also introduced an internship program where participants can work on real-life development projects for several months to further their professional development. The company is also restructuring its business model to facilitate the quick placement of participants: it temporarily waives the placement fee paid by partner companies for its graduates, which used to account for about half of its revenue.
As a result, those entering the profession through training programs can secure employment within a year, alongside intensive learning.
We have not yet heard of permanently unemployed IT professionals
– he emphasised.
The post Demand for IT professionals drops significantly in Hungary first appeared on 24.hu.
