Recent market volatility and tech layoffs have created a unique landscape for companies hiring top tech talent. Industries that were previously the top choices for job-seeking software engineers have been hit hard; while large enterprise non-tech companies have become increasingly desirable destinations. This has resulted in a discernible shift in the job market and a reshuffling of industries that are hiring top software engineers. Four industries have been identified from Karat’s database of over 300,000 software engineer interviews as benefiting from the influx of high-performing candidates. This article examines the shifting landscape and some potential talent strategies for the path ahead.
To understand how market trends are influencing hiring outlooks, we focused on a Karat metric “Average score to get an offer”: the coding score out of 100 that the typical candidate needs to achieve in order to receive an offer in a given industry. Through shifts in average candidate performance, we can see which industries are attracting top talent, which helps us answer: which industries are best poised to hire right now? And which should consider regrouping and re-strategizing for the future?
Industries gaining ground
Software
- Average score to get an offer: 60 (+24% vs 2021)
- In the second half of 2022, software companies were able to raise their hiring standards. We observed increases in both overall candidate scores and average score to get an offer, while hiring efficiency metrics actually got slightly worse. What this tells us is that software companies have chosen to be more selective with the large supply of talent in the job market right now, resulting in offers being extended to candidates with higher coding scores than before.
- Strategy: Smaller software companies that are still hiring now have access to a deeper pool of talented candidates than any time in recent memory. Consider revisiting top-performing candidates who may have declined previous offers from your company to work for one of the tech giants.
Retail
- Average score to get an offer: 53 (+14% vs 2021)
- Historically an industry with a relatively low coding bar, retail companies have been market winners, taking advantage of conditions to up-level engineering quality. Close rates in Retail also rose steadily throughout 2022, from 52% in the first quarter to 72% in the fourth quarter.
- Strategy: Retail companies may find it easier than ever to hire top talent, with both candidate performance metrics and close rates reaching new peaks for the industry in Q1 2023. This may be an opportunity to lure top-talent from the organizations that are reducing team sizes while driving a return to the office, especially if compelling benefits such as remote/flexible work are still on your roadmap.
Industrials (Oil, Gas, Manufacturing)
- Average score to get an offer: 51 (+5% vs 2021)
- Industrial companies have boosted their efficiency, reducing technical interviews by 41% per job offer in 2022 compared to the previous year. This vertical has leveraged large candidate pools and 14% higher close rates to extend more offers and make more hires. Meanwhile, the average score to secure an offer has seen a small increase. This is a good example of how different industries can take advantage of market conditions in different ways. Industrials have focused on efficiency, leveraging their stronger employer brand to close more candidates, while software companies (as noted above) have focused on higher coding scores per job offer to raise their engineering performance.
- Strategy: While there hasn’t been a big surge in candidate performance, top candidates have been more likely to accept offers from this sector, implying that Industrial companies can afford to be more aggressive recruiting tech talent than in the past.
Financial services
- Average score to get an offer: 46 (+5% vs 2021)
- Similar to the industrials segment, financial services companies are hiring more and hiring more efficiently. Offers extended to candidates grew by three times year over year, as financial service companies took advantage of fintech layoffs to close top candidates in the financial sector. Financial services (such as banking and wealth management) candidate performance overtook that of fintech (such as crypto, mobile payments, and trading platforms) in Q4 2022 for the first time in at least four years.
- Strategy: With financial service engineering candidate close rates above 70% and record highs in candidate performance metrics, now is the time for financial services companies to close the candidate quality gap by aggressively hiring SWEs.
Industries regrouping for 2023 and beyond
Fintech
- Average score to get an offer: 67 (-10% vs 2021)
- Amidst the Crypto Winter and wider fintech downturn in 2022, candidate performance significantly declined as top candidates started seeking out industries more resilient to market dynamics. Fintech both saw hiring slow (offer volume fell by 72%) and had a much harder time attracting top talent in the second half of the year, resulting in lower scores to secure job offers.
- Strategy: Fintech companies who are still hiring need to be highly strategic with their offers while setting expectations that hiring will be around two times less efficient than it was during the boom days of 2021. Ensuring correlation between interview signal and job performance with a much smaller volume of hires will be vital to weathering current market conditions.
Insurance
- Average score to get an offer: 51 (-18% vs 2021)
- Insurance companies have seen significant drops in average scores to get an offer as well as overall candidate performance. Companies may have difficulty replacing voluntary departures, which have been more common in the Insurance industry. But there is a silver lining – close rates in Q4 reached a record high of 73% (up from 47% in Q4 2021). Seeking stability, candidates are far more likely to accept offers.
- Strategy: Insurance companies should audit and optimize their tech assessment coding bar to ensure the right candidates are getting through their hiring process quickly. While this isn’t the time to raise the coding bar, it is the time to greatly improve the cost to hire.
Real estate
- Average score to get an offer: 50 (-23% vs 2021)
- In 2022, real estate was hit hard across the board and SWE hiring was no exception. The average coding score to nab an offer plummeted, while the total volume of offers fell even more (-85% year over year).
- Strategy: Audit your hiring process and tech screen stage during these slower times to remove bias and increase efficiencies. As the housing market rebounds, having an optimized talent pipeline will be vital to ensure cost to hire doesn’t balloon.
To learn more about how the top companies hire tech talent, check out our most recent tech hiring trends report.
Glossary:
- Coding score: Karat represents coding interview performance as an integer score out of a maximum of 100 points based on the relative performance of candidates’ coding proficiencies compared to the market. This score takes into account several factors, including optimality, completeness, level of guidance required, and complexity. Different companies have different coding bars depending on role requirements, sourcing strategies, and hiring goals.
- Average score to get an offer: The average coding score among candidates who were extended an offer.
- Close rate: The percentage of candidates who accepted an offer, among those who received an offer. Also known as “Offer acceptance rate”.
- Hiring efficiency: The number of candidates interviewed per extended offer.
Patrick Wu