Embracing the Future: How 5 Sector-Wide Changes are Reshaping the Tech Job Market in Canada
Change is the only constant in life, and nowhere is this more evident than in the dynamic landscape of the tech world. Over the last few years, we have witnessed an unprecedented wave of transformations that are redefining the tech job market as we know it. From massive tech layoffs to the pervasive integration of Artificial Intelligence, these sector-wide changes are poised to have a profound impact on the future of tech talent. Join us as we delve into the forces shaping the tech job market and explore the exciting opportunities and challenges that lie ahead.
Every major North American and European market has been bracing for a recession over the past three quarters. As a contrast, Canada’s economy has shown resilience. It grew in the first quarter with employment numbers repeatedly beating expectations, suggesting that the labour market is still going strong. We’ve been watching tech hiring and layoffs with great interest over the past 12 months and we’ve seen a number of changes that we believe will impact the tech job market for the foreseeable future.
1) The Impact of Massive Tech Layoffs
While we recognize that there are faces and people behind every laid-off employee, Elon Musk’s massive “X” (formerly Twitter) layoffs have resulted in reverberations across tech companies. When Musk took over Twitter, the company stood at a headcount of 7,500 employees. Today, it is down to 1,300 and only 550 are engineers. This was not only the first in a series of mass layoffs at the major tech companies, but also a recognition that tech companies had been overhiring. The overhiring trend was seen throughout the pandemic and in late 2022, we saw founders and CEOs openly admit that they over-staffed and were too optimistic. Musk’s very public cuts were the first in a series of many tech layoffs, from which even Canadian companies have not been immune.
2) Talent Squatting and the Dual Impact on the Job Market
At the same time, with reflection – perhaps we can admit these cuts have been necessary. Silicon Valley and tech companies in general have been notorious for fighting the talent wars by overhiring. Canadian entrepreneurs are generally more conservative and risk averse, and have been less likely to engage in tech talent gamesmanship. Our U.S. counterparts however, threw money at tech talent throughout the pandemic. They hired to excess and created lavish incentives which had the dual benefit of securing talent for their team, while also ‘talent squatting’ – essentially preventing this same talent from working at their competitors. Now with more tech talent on the market, it seems the employers once again hold some of the cards.
3) Leveraging AI for Increased Efficiencies
The third change that will impact the tech job market is AI. While there are so many claims that AI will take over all of our jobs, the data shows that is not quite the case – the reality is that the tech workers that leverage AI will be more efficient in their output and will grow their value to their organizations as a result. So what we can expect, is a gradual replacement of those who don’t use AI by those who do. A Stanford and MIT study demonstrated that AI boosted worker productivity by 14%, citing tech support agents who used AI, with an even more pronounced improvement for “novice and low-skilled workers” who were able to get their work done 35% faster.
During the Industrial Revolution, the introduction of mechanization, mass production, and automation brought about seismic changes in the manufacturing and labour sectors. Similarly, the advent of AI has ushered in a paradigm shift, particularly affecting information-rich industries. With rapid adoption rates, exemplified by ChatGPT amassing one million users within just five days, the observed productivity trends outlined in the Stanford and MIT study indicate that changes in hiring requirements may be inevitable.
As a nascent and growing industry, AI is bound to reshape the employment landscape, demanding organizations to adapt and navigate these evolving trends. It will also create new job opportunities. Companies that adopt, harness the potential of AI, and strategically hire talent to meet these emerging needs will gain a distinct advantage. Just as the farmers who installed innovative equipment and hired skilled operators outpaced their competitors, today's organizations that proactively embrace AI will have a similar advantage.
4) The Rise of Skills-Based Hiring in the AI Era
Early adopters in the hiring landscape face unique challenges as they navigate new roles that have previously never been required, such as Prompt Engineers, which may not have a direct correlation to traditional four-year post-secondary degrees. To address this, companies are increasingly embracing ‘skills-based hiring’ and removing the emphasis on formal credentials. This growing trend is evident in the 21% increase in job postings on LinkedIn that prioritize skills over qualifications, with notable companies like Google, IBM, Tesla, Okta, and Airbnb removing their previous degree requirement for candidates. According to McKinsey, this approach is five times more predictive of performance and success in a job compared to a focus on educational background.
5) Canada’s new Tech Talent Strategy
Canada is doubling down on the global talent wars. For decades, we have watched on the sidelines as we have lost countless people through the ‘brain drain’ into the U.S. However, the country is not sitting on the sidelines anymore. In June, Canada's Minister of Immigration, Refugees and Citizenship, Sean Fraser announced new schemes to attract global tech talent to Canada. And the results were unprecedented. On July 16, Canada launched a fast-track work-permit targeting non-citizen tech workers in the U.S. to relocate in Canada. Those who met eligibility requirements would be granted permanent Canadian resident status on an expedited basis, within six months. In just 48 hours, Canada poached 10,000 tech workers from the U.S.
Change, though a constant, has historically not been easy. There are faces and lives behind every downsized employees and every job that changes. That said, every change in the job market also brings forth remarkable opportunities for those companies and individuals who possess the willingness to embrace the unknown while approaching the future with a sense of cautious optimism.
MT❯Ventures provides the legal smarts and strategic counsel that startups need to grow and focus on the vision. If you have any questions about AI, the tech talent economy, and the impact on your business, please reach out to Aliya Ramji, partner & co-founder, MT❯Ventures, or Leah Brighton, an MT❯Ventures strategic advisor.