Why Tech Layoffs And Talent Shortages Are Happening At The Same Time

May 14, 2026
Authored by
Pete Thompson

Tech hiring feels confusing right now. Every week there’s another headline about layoffs, hiring freezes or cost cutting. At the same time, companies are still struggling to hire certain types of engineers and tech specialists. Candidates are saying there are no jobs. Hiring managers are saying there’s no talent. And honestly, both are true.

From what I’m seeing, the market hasn’t really collapsed. It’s split into two very different realities.

A few years ago, tech companies were hiring aggressively. Growth was the priority, capital was cheap, and a lot of businesses scaled teams faster than they probably should have. Now the focus has shifted. Companies want leaner teams, stronger performers and people who can create more impact with fewer resources. AI is accelerating that shift as well. Smaller teams are now capable of delivering much more than they could even two or three years ago. That’s changing the way companies think about hiring.

The roles that are still hardest to fill tend to be areas like:

  • AI and machine learning
  • cloud and platform engineering
  • cyber security
  • data engineering
  • senior product-focused developers
  • people with strong communication and commercial skills

Good candidates in those areas are still moving quickly.

At the same time, junior and more generalist candidates are finding the market far tougher than before. A lot of companies want people who can contribute immediately, which makes it difficult for less experienced talent trying to break into the industry. That’s probably the biggest concern long term. The industry still needs senior talent, but seniors don’t appear out of nowhere. If businesses continue reducing graduate and junior hiring, eventually the experience gap becomes a much bigger problem.

Another thing that’s changed is remote work. Remote hiring opened up opportunities globally, but it also increased competition massively. Companies aren’t just comparing local candidates anymore. They’re often comparing talent from multiple countries at once. That raises the bar.

Technical skills still matter, but companies are placing much more value on adaptability, communication, ownership and business impact than they used to. The candidates standing out right now are usually the ones who can combine strong technical ability with commercial thinking and the ability to work effectively in fast-moving environments.

I also think we need to stop talking about “the tech market” as if it’s one thing. Right now there are multiple markets happening at the same time. Some companies are reducing headcount because they overhired or need to become more efficient. Others are investing heavily in AI, automation and digital transformation and can’t hire fast enough in the right areas. That’s why we’re simultaneously seeing layoffs and talent shortages.

The market hasn’t disappeared, it’s just become far more selective. The easy hiring market is probably gone for now. But for candidates who continue building relevant skills, adapting to new technology and developing strong commercial awareness, there are still a lot of opportunities out there. The challenge is that the definition of “valuable talent” is changing faster than most people expected.

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