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A Look at the Future of Tech Hires in LatAm During a Recession

By Nuria Cristo Puig - UTOPICODE
Co-Founder and CEO


By Nuria Cristo | Co-Founder and CEO - Wed, 02/01/2023 - 11:00

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The global economy is expected to go through a massive recession in 2023. Global GDP growth is estimated to be only 1.7% this year, which is the lowest in almost three decades. 

The macroeconomy is under heavy pressure and there are many factors contributing to it: 

  • Firstly, US central bank interest rates have risen to a whopping 4.5% compared to 0% in March last year. Analysts say it might even go to 4.9% in the next interest rate announcement in February. 

  • The end of the long economic expansion in many countries, which has led to a natural slowing of growth. 

  • The impact of the COVID-19 pandemic, which has severely affected the global economy, resulting in reduced economic activity, increased healthcare costs, and disruption of supply chains. 

  • The large amount of debt accumulated by countries, companies and individuals. 

  • The increasing economic inequality and lack of access to basic goods and services for a large portion of the population, which is reducing the overall ability for people to consume and drive the economy. 

All of these factors have contributed to the current economic downturn, which is often referred to as a recession. 

Over history, there have been several major world economic recessions, some of which have had significant global impact: The Great Recession of 2008, the dot-com bubble of the early 2000s, the Asian financial crisis of 1997. 

The dot-com bubble of the early 2000s was fueled by the excessive investment in internet-based companies that were not profitable. It led to a significant drop in stock markets and a slowdown in the global economy. 

Focusing on the immediate aftermath of the dot-com recession, in the 2000s there was a sharp decline in demand for tech talent across many industries, as companies reduced their budgets and scaled back their operations. This led to widespread layoffs and a large number of people in the technology industry losing their jobs. Additionally, as many companies were focused on cost-cutting measures, investment in research and development and innovation was also reduced.

However, over time, as the economy began to recover, demand for technical talent began to pick up again. In particular, certain technical skills, such as those related to data analysis, cloud computing and artificial intelligence, became more in-demand, as companies continued to adopt technology to improve their operations and gain a competitive advantage. 

Additionally, the technology sector has been affected differently than other sectors and has been a net creator of jobs during the recovery, especially in the digital area. As a result, the overall unemployment rate for tech professionals has remained relatively low, compared to other industries. 

Generally speaking, evidence suggests that during a recession, the job market tends to be more challenging, with increased competition for available positions. Companies may also become more cautious in their hiring practices, focusing on filling critical roles and reducing costs, rather than expanding their workforce. 

In the tech industry, there may be a slowdown in the hiring of new employees, but the demand for certain technical skills will remain high. Companies may prioritize filling roles that are essential to their operations, such as data science, cybersecurity and cloud computing, to maintain their competitiveness and protect their assets. 

In the future of technical hires during a recession, it’s likely that companies may be more selective in their hiring, prioritizing candidates with a proven track record of delivering results, even in a challenging environment. Many workers may lose their jobs, which can lead to an increase in the number of people looking for work. This may result in an oversupply of qualified candidates, which can lead to a decrease in salaries and benefits. 

It’s worth noting that the causes, consequences and potential recoveries of this recession might differ from other recessions and depend on the country and region as well. The effects on tech talent and hiring will greatly vary as well. Depending on the country, region and specific industry, some places or positions might not have been affected as much as others. The current situation also differs from the previous recession in many aspects as the impact of the COVID-19 pandemic in the tech labor market and the way companies are adopting technology have shifted the demand for talent in certain directions and have different consequences than the previous recession. 

When comparing the current situation with the dot-com recession, the demand for technical talent in Latin America is likely to be more resilient. 

In recent years, Latin America has experienced significant growth in the technology industry. The region has become a hub for software development, data analysis, and other technical fields. In 2023, it is expected that this trend will continue, as the use of technology continues to grow and more companies seek to expand their operations in the region. The increasing popularity of digital services, cloud computing and artificial intelligence is likely to lead to even more demand for technical talent in the near future. It’s important to note that the current economic situation in many countries in Latin America is not ideal, with high unemployment and currency fluctuations, which can make it more challenging for companies to attract and retain tech talent. The decreasing attractiveness of certain countries in Latin America for the tech industry in the short term might have an impact on the future of technical hires. 

During the dot-com recession, the technology industry was heavily affected, with many companies going bankrupt and many people losing their jobs. However, the technology industry in Latin America is relatively less mature compared to countries such as the US and China, meaning that it is less likely to be affected by global economic downturns. Additionally, many of the technology companies in Latin America are focused on servicing the domestic market rather than the global market, which makes them less vulnerable to economic downturns in other countries. 

In conclusion, the future of technical hires may see a slowdown in hiring and increased competition for available positions. Companies may focus on filling essential roles, while prioritizing candidates with a mix of technical skills and soft skills, and remote working experience. 

In Latin America, the future of technical hires looks promising in 2023 despite the current economic uncertainty, with a growing demand for technology professionals in the region. However, the attractiveness of certain countries and the availability of talent might be affected by the current economic situation. The technology industry in Latin America is likely to be more resilient to economic downturns than it was during the dot-com recession. 

Photo by:   Nuria Cristo Puig

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