Why tech talent has been in such high demand, what the major hiring and layoff cycles have looked like, and how that shapes the market founders recruit in today.
The Tech Talent Shortage
Historically the tech industry has had a high supply of jobs and not enough employees to fill the demand — candidates have typically held the power.
Growth of jobs typically outweighs the supply of engineers.
This is known as the Tech Talent Shortage — a quick Google search will show hundreds of studies, reports and articles which mention this phrase.
The top end of this talent pool commands huge salaries, stock, benefits, perks and they're treated like superstars.
The knock-on effect is that their expectations have risen drastically — it's now expected that companies make a significant effort to hire them and treat them exceptionally well.
This is reflected in hiring practices: pressure for shorter interview processes, better candidate experience and salaries rising faster than the rest of the economy.
Compare this to an industry with the opposite setup — for example Investment Banking in the ~90s — where high pay came with long hours and tough interviews, and the banks held the power.
The supply at the very top end of the market remains constrained. Elite institutions graduate cohorts in the low-hundreds per year.
The closest comparison at the top end of engineering would be recruiting for elite sports teams, where a single hire is so important that significant resources are put into securing the right person.
Even when you add joint programmes (Maths & CS, Philosophy & CS, etc.), the annual output is still small relative to the global demand for top-tier engineers.
Deloitte finding
Employment in technology has grown 5.5 times faster than overall US employment since 2001.
In practice, this means candidates in the tech sector have had more options than ever: joining one of thousands of startups, entering Big Tech, moving into high-paying finance or crypto roles, or pursuing entrepreneurial paths via programmes like Entrepreneur First and Y Combinator. The expansion of remote work has created global competition for talent — a startup in Europe may now find itself competing with fully remote teams based in Silicon Valley, London, or New York, where salaries are considerably higher.
All of this has given top candidates an unusual degree of choice. Historically they have been in high demand, and — except in rare moments of large-scale layoffs — candidates, not companies, have typically held the power.
Hiring / Layoff Cycles
Excluding downturn years tied to the dot-com crash (2001), the Global Financial Crisis (2009), and the COVID-19 shock (2020), the number of tech jobs has grown consistently. Here's how the major cycles have played out.
1999–2001
Tech bubble burst
~168,000 announced tech job cuts in 2001 alone
A major event in the early years of the computing and tech industry as we know it today.
At the time the bursting of the bubble was seen as catastrophic — people talked about the death of the tech industry as a whole.
2003/04
Delayed impact
~228,000 tech layoffs
The broader economy was still weak and geopolitical uncertainty (Iraq War) dragged on.
The worst of the layoffs lagged the initial crash, just as it would in later cycles.
2008/09
Global Financial Crisis
~68,000 tech jobs lost in 2008
Another wave of layoffs as the overall economy crashed.
Compared to other parts of the economy, the tech sector was far more sheltered than in previous crashes.
2010–2020
ZIRP era & hypergrowth hiring
Near-continuous growth for over a decade
Interest rates were close to zero (ZIRP: Zero Interest Rate Policy), and cheap capital drove valuations sky-high.
Startups could raise billions with little pressure to show profits.
Hypergrowth hiring became the norm, with companies doubling headcount year after year.
Many engineers only ever saw stability and career growth during this period.
2020
COVID-19 shock
~83,000 job losses in the immediate aftermath
Uncertainty froze hiring and funding rounds.
Like previous shocks, the deepest impact came with a lag rather than instantly.
