The Most Heated Tech Job Market in History: Advice for Software Engineers
The tech job market is on fire, across the globe, for people with a few years of industry experience under their belt. This is especially true for software engineers, but other tech functions are also following.
I talked with dozens of hiring managers - from engineering managers to CTOs and CEOs - and they all shared the same perspective. Here is a typical quote from an executive at a global tech company:
Never before has it been this challenging, and in all regions. I remember seeing a heated market before in India a few years back. However, the current environment is many times magnified. We are seeing the same type of intensified competition in the US, UK, EU, NL, Eastern Europe, South America... Heck, just about everywhere. We are predicting this to last into late in the year.
This piece covers advice for tech workers to make the most out of this heated market: whether you want to make a job change or not. A market where demand for employees outstrips supply is one where employees can do well for themselves with less-than-usual effort.
This post a supplement to this week’s 🔒 subscriber-only-newsletter issue 🔒 The Perfect Storm Causing an Insane Tech Hiring Market: Advice for Hiring Managers with more in-depth analysis and advice on how to retain engineers and keep hiring in insanely hot market.
Advice for Tech Workers with Experience
Welcome to the best tech job market of probably all-time - assuming you have a few years of industry experience under your belt. Now is a perfect time to turn this employee’s market to your advantage.
Optimize for your happiness. Write down what are “must-haves” in your next position. In the current market, there is a good chance you won’t need to compromise. Be clear on tradeoffs you are comfortable with. Whether it’s the mission, the compensation, the industry or career growth that is more important for you: you’ll find more options that can match this, and are hiring, than before.
Clarify things like working hours, availability expectations, holidays, meeting culture and things that can mean different things across companies. For some people, it may not be a good tradeoff to sacrifice personal life boundaries for higher compensation. You can still earn a lot without those compromises.
If you’re unhappy with your current situation, now is a good time to do something about it. If the source of your unhappiness is non-financial: time to ask for changes. If things don’t change, you can always look around.
If your source of unhappiness is financial: now is a good time to inquire if the company plans to make compensation adjustments - perhaps by showing them this report. If it’s not planned: it’s never been a better time to get a higher offer. If you’re unhappy with your compensation: raise this, but also look around on the market.
If you’re happy with your current situation, keep in mind that there might be people around you who are not happy: and if they leave, this can impact you. Examples that can hit you could be a key member on the team leaving, or your manager quitting. I would suggest talking with your manager chain and confirm their plans on retaining people, and keep up with the market.
People leaving around you can also open up more opportunities. However, do make sure that you get recognized for stepping up, and clarify what changes you should expect if successfully stepping up: from compensation increases to promotions.
Negotiate hard if you have an offer: this is the best advice in this market. Depending on the type of offer you get, there are multiple things you can negotiate on:
- Equity. If a company issues equity as part of an offer: this is the easiest part to negotiate. Not all equity is equal: see my article on types of equity and what’s worth knowing about them. If you join a startup as a software engineer, you should get equity (and consider passing if they offer none). For Big Tech offers, you will get a sizeable amount of equity on top of a salary.
- Sign-on bonus. Large companies have always offered a one-off bonus on joining. More of the market is following. This is typically in the range of the annual bonus target.
- Salary. A higher salary used to be out of the question at Big Tech with strict salary bands. Even here, this is less true in this market. For smaller companies, salary is very much negotiable.
Leverage is something that you’ll want to have to negotiate. In the past, this could have been another offer or your current compensation. In this heated market, it’s enough leverage to tell the company that you’re considering interviewing with other ones: but you’re ready to sign for an increase in the package. For more advice, see this video on negotiation advice for software engineers I recorded.
The more senior you are - the more demand there is in the tech market for your skills as every company - from seed-stage startups through enterprises to Big Tech - is building out new teams, and scaling up their operations. The most difficult people to hire are always the senior engineering leaders.
With more seniority, the risk of moving jobs also goes up. However, in the current - insanely hot - market, the upside can be higher than most people expect. It can be a good time to either take a risk, or to secure more of the upside at your current company.
Advice for Less Experienced Tech Workers
Unfortunately, it is not a hot market for everyone in tech. People with little to no professional experience - also referred to as entry-level engineers or juniors - are struggling to find positions.
The compensation for less experienced people has not increased during this tech hiring frenzy across most of tech. This is confirmed through both anecdotal sources, and the compensation data from Djinni - the largest tech marketplace in Ukraine - shows the same:
Remote work is the main root cause for entry-level folks not experiencing a heated market. Companies want to hire seniors, because they don’t know how to onboard and train juniors in a fully remote setting. Working in the office this was less of a problem, as juniors had access to the team the whole day. They got mentorship and guidance most of the day, and picked up speed much quicker.
Teams and companies will have to find ways to hire and onboard more entry-level engineers. If you’re a hiring manager, I suggest biting the bullet and starting to hire and onboard people with little experience. An engineering director at a full-remote startup shared:
We hire less experienced engineers with high potential. We onboard with lots of pair programming sessions, and ensure communication is seamless. Remote onboarding and supporting those people is something we’ve been learning to do well for years, as we’ve been full-remote before COVID.
More entry-level engineers on to the market is a secondary cause. More and more people are realizing how tech offers an attractive, and high-paying career. Bootcamps are signing up students, promising that with little time and money investment, anyone can become a highly paid engineer. At the same time, a large portion of new grads - both from universities and bootcamps - are struggling to get their first job.
My advice for engineers with less experience on the market - those with less than a few years of industry behind their back - is this:
- Know that it will be hard. Bootcamps oversell how easy it is to get job in tech: because they need applicants to come, so they make money. Success stories from people getting jobs without experience both have survivor bias, and those are usually stories from years ago, when the job market was not so hostile to entry-level engineers.
- Join a support group if you don't have one in your network already. Look for new grad Discord channels or communities with low fees like Scrimba and other, similar ones. It's easier to figure out what works, and what doesn't, and get motivation as part of a group.
- Aim wide when applying. Don't only apply to the best-known companies, or ones offering full-remote. Find smaller, lesser-known companies. These can be startups who are struggling to find any applicants, and businesses who will not spend the budget to advertise on job boards like LinkedIn, but you can find job adverts on job aggregators like Indeed.
- Apply to less competitive places. Look for local, non-tech companies, and ones who are not offering full-remote positions. Not only do these positions get fewer applicants: if they are onsite or hybrid, they'll also hire more juniors. This is because they can onboard junior people better.
- Apply to consultancies/developer agencies - especially ones that are more quality ones. The software consultancy business model requires hiring and training junior developers. They also give exposure with different environments and technologies. Agencies are a great stepping stone into the industry, and one many people move onto higher paying opportunities a few years later. Be aware that some agencies have poor working practices: if you land in one of these, try to move on, instead of being stuck for too long.
- Tailor your resume to each position you apply to. If you don't have a job, you request a copy of my book, The Tech Resume Inside Out for free. More than 1,000 people have done so: I approve all non-spam requests.
- Build your experience while you are job hunting. Which person is more likely to be hired the next 12 months: one who spends 12 months applying nonstop, or the one who spends time applying, but also built a side project that anyone can try out, contributed to an open-source project, and did a contract gig on one of the popular freelancer marketplaces? It will be the latter. Balance time between applying, and between making your profile stand out more.
- Open source contribution. Most people you compete with will have similar, non-production-grade projects on their resume. Those who contribute to popular open source libraries used by thousands of people and companies in production really stand out. Look for projects like Awesome First PR opportunities and explore open-source projects you use. This route will be hard: much harder than just applying to jobs all day. This is why you stand out from other applicants if you persevere, and start contributing.
- If you only have one offer: take it. You'll read advice about how to negotiate compensation between different offers, and how hot the market is in tech. Ignore this: as most of this applies to people with much experience behind their back. I've personally had a pretty good career, eventually making it to places like Skype and Uber: but, when starting out, I just took the first job that I was able to get. It's more important that you get started over getting a perfect start. You can course adjust as you go.
- Read and apply How to Be a Kickass New Software Engineer from bootcamp grad turned senior engineer Raymond Gan.
- If you're a bootcamp grad: know that some of the "learn to code in X months" bootcamps don't do a good enough job in giving you the skills needed to get a software engineering job. Consider programs like Launch School that take much longer than a bootcamp, is not a bootcamp-like approach, but their graduates get offers even in this heated market.
How Long Will This Employee's Market Last?
The market is hot for tech workers with experience. But how long will it last?
Most of the root causes for the heated hiring market are longer-term forces. However, with lockdowns easing and hybrid work becoming more of a norm, more companies are expected to hire entry-level engineers, removing the drive to overpay for senior talent. Also, the pent-up demand from 2020 is unlikely to repeat for 2022.
I expect this heated market to last until early 2022, and the unmet demand for senior software engineers to slowly revert back to the pre-Covid-19 times over 2022. There will still be great career opportunities for senior engineers, but fewer overall positions, not as intense competition. More engineers with little experience will be hired overall, though it will remain competitive to get a job with no experience.
I do expect the market to permanently move up with senior compensation ranges by 2022 . I don't expect salaries or compensation packages to go down as long as the demand for tech keeps growing, as software eats all industries and the demand to build complex and scaleable solutions keeps growing.
Differences to the Dotcom Boom
The most common comparison of today’s insane tech market is to that of the Dotcom Boom. This was a time when demand for software developers spiked, as a large amount of capital entered the market. However, I would argue that the Dotcom Boom was different in several ways.
1. Root cause. The Dotcom Boom was caused by excessive speculation from some groups on the growth and impact on the internet - and the bubble burst when it became clear that this growth was not there. In contrast, the demand curve is caused by all parts of the industry, because companies know they need to invest more in tech for the coming decade. Read more about the six different underlying causes hitting at once, the current perfect storm.
The root cause of the Dotcom Boom was hype: the current demand curve is caused by global demand. This also means it’s unlikely we’ll see a bubble burst, similar to the Dotcom Boom.
2. Impact. The Dotcom Boom impacted the US much more heavily than most other countries. It also impacted a lot fewer people: simply because the tech industry was smaller. In comparison, today’s hiring situation impacts all regions across the globe - and will do so for the foreseeable future.
3. Hiring without experience. Another important distinction was how people with no experience were hired in droves during the Dotcom Boom. People with no experience were snatched up on the market, thrown into teams where they learned on the job. This aspect is completely missing from today. People with no experience are struggling to find positions and remote is a root cause. Breaking into the industry with a non-traditional background is becoming increasingly more challenging.
4. Remote. The hiring frenzy of 2021 also goes beyond the demand for software engineers skyrocketing. It goes hand-in-hand with the rapid rise of remote work, which brings global competition to every company’s footsteps as many employees are a Zoom interview away from switching jobs.
5. Proven business models and sizeable revenue for most companies. Tech is no longer a vision hype phase with the exception of a few markets such as crypto. The majority of companies are scaling up rapidly, expecting their investment in tech to pay off with high certainty. During the Dotcom Boom, there was no such certainty.
6. More emphasis on cash compensation and total compensation packages over stock upsides. The market is flush with cash, and startups are competing with big tech in compensation packages - something that has been unheard of before. Candidates are evaluating compensation packages at current valuations for the first year. For example, Stripe, Lyft and Instacart have moved to one-year stock grants with a fixed value, over multi-year grants with potential upside. During the Dotcom Boom, most of the emphasis was on stock upsides after a rapid public market offering.
This post a supplement to this week’s 🔒 subscriber-only-newsletter issue 🔒 The Perfect Storm Causing an Insane Tech Hiring Market: Advice for Hiring Managers, which post covers:
- Observations on what is happening in the tech hiring market, with quotes from hiring managers and job seekers.
- Root causes as I see them on why the tech market is hotter than ever before, even more so than during the Dotcom Boom.
- Numbers on what this all means for compensation and demand for senior tech talent pay increases. Many of these numbers are approximations, but they give an idea of where we are.
- Advice for hiring managers on how to stay afloat. How to retain your staff, and what to do if you want to hire, and also the sensible approaches of companies which keep growing in this environment.
Subscribe here to read the full article.
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