The South African technology sector struggled this past year, with 5% of local software developers facing retrenchments due to the global economic downturn and large-scale tech job cuts. Furthermore, salary growth for developers has remained stagnant.
These findings are highlighted in OfferZen’s 2024 South Africa Report: State of the Software Developer Nation. OfferZen, a developer hiring marketplace, has released this report for the fifth year, offering valuable insights into the trends and challenges faced by software developers and firms hiring them in South Africa.
The analysis is based on a survey completed by over 5,000 local software developers and OfferZen’s own research. The report suggests that 2023 was challenging for the South African ICT industry as it grappled with the aftermath of tech retrenchments and economic instability.
The number of retrenched software developers in South Africa during the past year has doubled compared to the figure recorded in 2022, according to the 2024 South Africa Report: State of the Software Developer Nation by OfferZen.
The report also highlighted a slowdown in both salary band growth and yearly increases for local developers since businesses no longer have to vie for top tech talent. OfferZen co-founder Philip Joubert noted that most retrenched software developers were employed by companies with less than 50 employees, and those at large corporations remained largely unaffected by such cuts.
Evidence of a power shift in the tech job market towards favoring employers is also reflected in recent developer hiring trends. In the 2022 report, OfferZen noted a fierce competition among local and global corporations for highly-skilled local software developers, spurred on by a significant demand for IT skills.
However, since the last quarter of 2022, hiring activities across most industries, including the tech sector, have dropped by 6% month-on-month. Consequently, despite being one of the most sought-after professions globally for a decade, there has been a noticeable decline in the software development market.
In 2023, the demand for software developers, within the IT sector in South Africa, was overtaken by a greater need for business and management professionals and financial professionals. A report by CareerJunction Employment Insights reveals that software development jobs have seen the most substantial decrease in demand since 2019.
The world’s largest tech companies, including Amazon, Google, SAP, Microsoft, and Meta, among others, have seen a spike in closed job posts while new hiring positions are decreasing, leading to large-scale job cuts. Although these companies benefited from increased demand during the pandemic, with behaviors returning to pre-pandemic levels, many are witnessing a decline in demand for their services and falling share prices.
OfferZen co-founder, Philip Joubert, attributes the South African impact to global instability, a drying up of venture capital (VC) funding, and a temporary slowdown of some tech projects. Joubert points out that the South African tech ecosystem differs vastly from its US counterpart, as Silicon Valley mostly depends on VC funding.
Hence, with VC funding reduced to less than one-third compared to its peak in Q4 2021, many start-ups are unable to raise sufficient new capital, leading to layoffs. Despite the ongoing challenges, most indications suggest a slow yet steady recovery in South Africa’s tech sector over the next year.
