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To say that 2020 changed the world would be the understatement of the century. The COVID-19 pandemic changed lives, businesses, countries, and economies at a scale never before seen in our lifetimes. Some tech companies flourished in the suddenly-digital world, while others paused to feel out the uncertainty, which had a profound impact on developer hiring trends.
At a macro level, the shift to WFH and lockdown life spurred organizations to accelerate their digital transformation plans. We witnessed significant software engineer hiring growth across the gaming, delivery, and financial services sectors, while hospitality was getting hammered.
Historically speaking, the Fall tends to be the busiest time of year for hiring developers. We are accustomed to seeing relatively consistent interview volume over the first half of the year. The seasonal fluctuations between Q1 and Q2 were within a few percentage points of each other in both 2018 and 2019.
During Q2 2020, the height of the COVID-19 economic downturn, however, interview volume was much more volatile and fluctuated by sector before rebounding across the board in Q3.
Companies in COVID-19 resilient industries actually accelerated hiring, conducting about 30% more interviews in 2020 compared to 2019, while companies in sectors that were negatively impacted conducted about 15% fewer technical interviews.
This was especially true in sectors like gaming that saw a boon from school closures and lockdowns. We saw a 92% increase in interview volume from gaming companies compared to the year prior.
One unfortunate-but-often-true approach to recession layoffs is for companies to let go of low or moderate performers. But if past economic slowdowns helped organizations slim down, the Spring of 2020 cut to the bone, flooding the job market with high-performing software engineers.
In 2019, 26% of all candidates Karat interviewed scored in our top two performance tiers (which almost always garners an invitation to the next interview round). Q1 of 2020 was nearly identical, at 27%.
Then in Q2, at the height of the first wave of COVID-19, that number jumped to 41% before normalizing at 34% in Q3 and Q4.
These cuts were particularly noticeable in the travel and hospitality industries. One organization in the travel-tech sector with an elite-hiring-bar (i.e. greater than 70% of engineering candidates with experience at this organization achieve top scores on Karat technical interviews) cut a quarter of its global workforce.
We had the opportunity to interview many of those developers as companies from the most resilient economic sectors quickly jumped in to bolster their own engineering ranks. 94% of the candidates we interviewed from that company achieved top scores (which is a huge percentage compared to the 27% of top candidates we see historically).
That means that virtually every software engineer in that round of layoffs was a top-tier developer.
With more top-tier candidates in the labor pool, organizations had the opportunity to be more selective with their hiring decisions. We encountered a number of candidates that had hiring panels with unanimous “yes” votes that were still rejected because the role had been filled by an even stronger candidate.
Even with more talent on the job market, close rates (the percentage of candidates who accepted job offers) didn’t change much year over year, up just one percentage point to 53% compared to 52% in 2019.
But, the rates varied significantly between higher- and lower-performing candidates. Top candidates were significantly less likely to accept job offers, likely due to hesitation to make a career change in the middle of a pandemic. This was especially acute in Q2 where the close rate for top performers was 12% lower than the previous year.
Meanwhile, the close rates for our lower-performing candidates improved by 6% compared to 2019, suggesting fewer opportunities due to a crowded job market and more urgency to secure employment.
Additionally, candidates were significantly less likely to drop out of the hiring process in 2020. We saw a 25% decline in dropout rates from 2019 to 2020. This is a sign that there were fewer competing options taking candidates away from their interview loops.
The good news for developer mobility is that by the end of 2020, close rates on top candidates had started to increase again, signaling that more top programmers are now feeling comfortable exploring news opportunities once again. Q4 saw the highest close rates of the year, especially with our top-performing candidates.
The events of 2020 didn’t just hit developer hiring at a macro level, they also had a profound human impact. We saw this echo in our interview data throughout the year.
On May 25, the world witnessed the murder of George Floyd and reacted. People mourned. They rioted. They watched the scenes unfold on TV.
There were strikes and protests, and that impact carried into the workplace. At Karat, we had many company-wide discussions about race and equity, and understandably, some business processes got put on hold. Hiring was one of them, and in the four weeks following May 25, we saw a 23% drop in interview invitations compared to the previous 4 weeks.
If you take nothing else away from this story, please leave understanding that interviews don’t happen in a bubble. Candidates’ performance, availability, and mental health can all be impacted by outside factors, and it’s more important now than ever to hire with empathy and equity.
The lasting effects of 2020 will impact the world. The increase in remote hiring seems to be here to stay, but as vaccine rollouts encourage office reopenings, the hiring landscape will remain fluid.
Shannon Hogue will be delving deeper into the developer hiring trends and lasting effects of 2020 next month. She’ll host a pair of live webinars with top technical recruiters from Databricks, MongoDB, Better.com, and Freedom Financial Network. Registration information available below.
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