North Carolina’s tech industry pulls back on hiring amid coronavirus slowdown
North Carolina’s tech sector, which has long been one of the state’s fastest-growing sources of jobs, is pulling back on hiring because of the economic downturn caused by the coronavirus pandemic.
The number of tech job openings listed in North Carolina fell 5.7% in March compared to the same period last year, according to figures provided by the North Carolina Tech Association.
However, that decline is likely just a preview of a more severe drop in hiring to come.
March will likely only provide part of the picture, said N.C. Tech Association President Brooks Raiford, as most companies didn’t start cutting back until the middle of the month.
April, he added, will likely be much worse as the tech industry seems to have felt the shock of COVID-19 later than industries like restaurants and retail, especially as most tech workers can work remotely.
“The pullback in hiring is starting to show,” Raiford said in an interview with The News & Observer. “I am expecting that April is going to tell the tale.”
When broken down by the metro areas, places like Durham and Charlotte saw larger declines than the rest of the state. The Durham-Chapel Hill metro area saw a 20% drop in IT job openings, while Charlotte saw a 9% decline.
The Raleigh area saw a 4.6% decline in the number of IT job openings.
A mid-April poll of North Carolina tech companies by the tech association shows that many companies are beginning to feel the heat from the slowdown.
In that poll, 38.6% of respondents said the coronavirus has decreased demand for their company’s products. The poll was sent to around 300 tech companies operating in North Carolina, and had about a 50% response rate, Raiford said.
Additionally, 46.2% of companies have frozen hiring entirely — and nearly 10% have implemented or are exploring job reductions, furloughs and pay decreases.
However, in a sign that the tech industry is more resilient than a lot of other industries, Raiford said, some companies are seeing an increase in demand.
Nearly a quarter of tech companies polled have seen an increase in demand, and 44.1% are still hiring.
Recently, companies like Raleigh-based Bandwidth, which supplies communication technology used by Zoom and Google, has seen a surge in demand. Bandwidth said this month that it plans to hire more than 1,100 new employees in Raleigh over the next eight years.
Other tech companies, like Raleigh-based software maker Red Hat, have said the pandemic is causing them to be more cautious.
In an interview with The N&O earlier this month, new Red Hat CEO Paul Cormier said the virus has forced the company to re-evaluate its hiring plans for the coming months. While it still plans to add workers, it will be more focused and selective.
“I would say over the last five years, we’ve probably hired 1,000 to 1,500 [new employees] a year,” Cormier said. “We have had a huge hiring plan. Now we’re re-evaluating it. I mean, none of us knows what’s going to happen in three weeks, let alone three quarters, right?”
Cormier ventured to guess, though, that there will be a significant decline in the number of young tech startups hiring — and maybe even a surge in layoffs.
“To tell the truth,” he said, “I think it’s gonna be a tough couple of years for the startups. ... I think there’s probably going to be a lot of startup people and talent available.”
The tech association poll also revealed that most companies believe that a noticeable economic recovery won’t begin until after September. When asked when they expected to see a measurable economic improvement, 31.9% said they expected it to be later than September, while 22.2% believed there would be improvement by September.
Raiford is hopeful that hiring will kick back up before then.
“For tech sector workers I am somewhat optimistic because I don’t think the stay-at-home order will last much more than late spring or the summer period,” he said. “Then we will see more enthusiasm and hiring.”
This story was produced with financial support from a coalition of partners led by Innovate Raleigh as part of an independent journalism fellowship program. The N&O maintains full editorial control of the work. Learn more; go to bit.ly/newsinnovate
This story was originally published April 21, 2020 at 5:15 AM.
