Predictions for the 2024 job market—and what they mean for you

The last year in tech was a rollercoaster. As Formation navigated the unpredictable currents of tech industry trends, we’ve been right in the heart of the industry’s ups and downs.

In a recent post, Michael shared the trends we saw at Formation in 2023 and the broader trends in the tech industry that impacted our people. A tough job market made competition fierce, and the technical bar remained high for those seeking placement.

Today, let's explore what 2024 might hold. Here are our predictions for next year and what they mean for software engineers searching for jobs.

There will be continued growth in early-stage investments, but only for the strongest companies

Over the past few months, investments in new, early-stage companies have seen a noticeable increase. We’ve seen some lukewarm or even cold IPOs, and many investors are shifting their attention from late-stage companies to seed-stage companies due to the volatility and markdowns of the later stage market. While there’s more money available, there’s a key difference between what’s happening now and the investment trends of a few years ago. Investors are being more prudent, focusing on sustainable business models and strong, innovative ideas rather than growth at all costs.

This means it’s actually a pretty exciting time to look at jobs in smaller companies. It’s easier now to spot the ones that are setting themselves up to succeed in a big way. The market's really tight, meaning that the companies that are still getting funded are usually the ones that have something truly extraordinary—they have exceptional teams and solid business plans, and they're in it for the long haul.

While there are some tradeoffs, like less structure and smaller pay than what’s typical at a larger organization, a small startup might be the perfect place for you to grow your career.

Companies successfully building out their AI programs will hire more rapidly than those that don’t

Companies excelling in AI are expected to grow their teams more quickly than those that aren't. For example, Meta and Microsoft are making significant strides and investments AI.  They’re getting ahead in the race, and their recent hiring trends reflect that. They will likely expand their teams aggressively in 2024 to maintain and advance their lead.And the hires won’t all require AI-specific skills.

While the underlying AI models require deep AI expertise, most of the engineers on the team and most of the open recs are product engineers building the interfaces and product features that the user will be interacting with.

We’ll see conservative leveling during the hiring process

Company valuations were adjusted throughout 2023—often decreasing from previous highs. This means they need to change their financial strategies to accommodate for the loss. When a company's valuation is high, it has more leverage and capacity to pay its employees well, often leading to competitive salaries and benefits to attract top talent. When the valuation falls, it can impact everything from the organization’s ability to raise capital to the perception of its future growth potential.

This decrease in valuation can lead to tighter budgets and a need to reduce costs, including labor costs. But, reducing salaries isn't straightforward due to established pay bands and the desire to maintain fair and competitive compensation. We’ve seen this play out in several ways over the last year. Companies might reduce their workforce or reassign employees to lower levels or positions. We’ll see this continue through 2024 with conservative leveling for new roles. If you’re hired in with skills that are borderline, you’ll likely be assigned a level below the one you could stretch into. This isn’t necessarily a bad thing. It’s often better to get hired at the position you are truly suited for because that way, you can make an impact immediately, build up a reputation, and set the trajectory for quicker promotions and raises throughout your tenure.

What this means for SWEs in the job search

These predictions have several implications for software engineers looking to navigate the job market and advance their careers in 2024:

Now might be a good time to consider a startup. Startups that have weathered recent economic challenges and secured funding are likely to be innovative, stable, and growth-oriented, providing a dynamic environment for engineers to work on cutting-edge technologies, take on varied responsibilities, and potentially have a significant impact on the company's growth.

Get familiar with trends in AI. As companies continue to invest in AI, there will be a growing demand for engineers who can contribute to AI projects. This doesn't mean every engineer needs to have technical skills in AI, but familiarity with familiar with the AI product landscape, use cases, AI concepts, data science, and machine learning tools could make a candidate more attractive.

Maintain strong core software engineering skills. Despite the buzz around AI, the fundamental need for solid software engineering skills to build and maintain products persists. This means that even as they adapt to new technologies, software engineers should continue to hone their core skills in coding, system design, problem-solving, and other areas critical to developing robust software.

Continue to network and hone your interview skills. The intermittent hiring bursts predicted for FAANG companies suggest that software engineers should remain flexible and responsive to the job market. Staying informed about when these companies are actively hiring and being prepared to apply and interview quickly will be important. Don’t wait until hiring definitively opens back up to start. If you’ve already had an interview that stalled or made a connection within an organization, try to stay top of mind with recruiters by occasionally reaching out to let them know you’re still interested. Continue networking, practicing interviewing skills, and applying for roles now and throughout the first few months of the year to set yourself up for more success as headcount opens up.

Better together in 2024 and beyond

Looking back at 2023, I'm blown away by everything we've accomplished at Formation. It's been a tough year, but together, we launched a cutting-edge AI job platform, celebrated our first patent, and joined hands with giants like Netflix and Waymo to empower talent from underrepresented communities.

I’ve laid out my predictions for 2024, but they’re just that—predictions. One thing I’m sure of, though, is this: we’ll navigate whatever 2024 brings together. As we step into another year of exciting innovation and growth, I'm dedicated to breaking down barriers and ensuring the tech world is accessible to all.

Here's to a future where everyone has a seat at the table!