UK Tech Job Market Outlook 2025 – An Alternative Perspective

For many businesses, candidates, and recruitment companies operating in the tech sector, 2024 was a year of significant challenges. A combination of economic pressures, geopolitical uncertainty, and industry-specific concerns created a tough environment for hiring and growth. The headlines painted a grim picture:

• Economic uncertainty: The UK’s GDP growth flatlined in Q3 2024, grew by only 0.1% in November, and the OECD downgraded its annual growth forecast from 1.1% to 0.9%.
• National Insurance (NI) increases: Fears of rising employer costs added to hesitancy in hiring decisions and spoked the market.
• Geopolitical instability: The potential for US tariffs following recent elections added to concerns.
• Shrinking recruitment industry: According to Recruiter Magazine, an estimated 600 recruitment businesses closed in the past 12-18 months, and the recruitment consultant workforce shrank by 32%.
• Declining job vacancies: Reed reported a 13% reduction in UK vacancies in October-November 2024 and a 26% year-on-year decrease, further fueling recession fears.
• AI-related concerns: Some worried that AI advancements would lead to job losses in the tech sector, compounding the uncertainty.

This backdrop created what some described as ‘the great stay’, where candidates opted to remain in their roles rather than risk a move in such an uncertain environment.

An Alternative View: Reasons for Optimism

While the broader sentiment has been cautious, there are plenty of reasons to feel optimistic about the tech sector as we enter 2025. Beneath the surface of negative headlines, there are encouraging trends that highlight the resilience and potential of the UK’s tech ecosystem:

• AI Investment Booms: Since July 2024, the UK has attracted over £14 billion in private AI investment, averaging £200 million daily, and creating an estimated 13,000 new jobs nationwide. (Source: gov.uk)
• Confidence from Big Tech: Microsoft announced a three-year plan to invest £2.5 billion to expand its AI data center infrastructure in the UK, including sites in London and Cardiff. Google committed $1 billion to build a data center outside London, enhancing its infrastructure for cloud and AI services.
• The UK’s Thriving Tech Ecosystem: The UK tech sector was valued at $1.1 trillion (£784 billion) at the start of 2024, making it Europe’s leading tech ecosystem. (Source: Tech Nation) According to CompTIA’s 2024 report, the sector employed 2.1 million workers in 2023, with employment expected to increase by nearly 2% in 2024. Tech job postings reached 2 million, the highest of any UK job sector, defying broader market fears. (Source: Tech Nation)

Corecom’s Perspective on Hiring Trends

At Corecom, we’ve observed a mix of caution and opportunity among our clients. While external challenges have influenced hiring trends, there are also positive developments worth noting:

• Client Sentiment: Many of our clients planning low hiring volumes in 2025 had already anticipated slower growth, independent of incoming National Insurance increases. Demand for skills remains strong, and we’ve seen AI creating roles rather than replacing jobs in most cases (at least so far).
• Increased Hiring Activity: In January 2025, Corecom recorded a 57% increase in average monthly job vacancies compared to Q4 2024. This included a 34% growth in contract requirements and a 66% growth in permanent roles. These roles span multiple industries, including retail, telecom, healthcare, construction, professional services, finance/fintech, insurance, manufacturing, and energy. The pipeline for Q1 2025 looks strong, indicating continued demand.
• In-Office Working: A notable shift in client requirements towards in-office or hybrid roles suggests a changing dynamic in workplace preferences.
• IR35 shift: In January 2025, 84% of the contract requirements we’ve been instructed on have been assessed as outside IR35, versus only 66% in the same period in 2024, indicating a more business-friendly approach to engaging contractors in tech.

Conclusion: A Sector Poised for Recovery

There is no denying that fears around the UK economy and job market will persist in 2025. Headlines about underwhelming GDP growth, recruitment industry contractions, and geopolitical uncertainty add to the cautious sentiment. However, it is crucial to separate the tech sector from the wider economy. The UK’s tech ecosystem operates with its own dynamics, and the data points to a sector that remains resilient and innovative.

From Corecom’s perspective, the signs are promising. While our insights are based on a specific client base, the trends we’re observing—increased demand for tech roles, strong pipelines across industries, and skills-driven hiring—are consistent with a sector on the path to recovery.

2025 offers a real opportunity for growth, particularly in high-demand areas like AI. After a challenging 18 months, the tech recruitment sector appears to have weathered the worst and is now on an upward trajectory. While challenges remain, the foundations for a respectable year of growth are firmly in place for both the UK tech and tech recruitment sectors.

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Written by Rick Hughes, Director @ Corecom

This article was written to provide an impartial analysis of the tech job market outlook for 2025. For business leaders and candidates navigating this landscape, staying agile and informed will be key.