It’s safe to say that 2023 proved to be a major correction for a technology industry that had become accustomed to hypergrowth. As business slowed after the COVID-19 pandemic, many tech companies started bowing to investor pressure by adjusting their forecasts, reducing budgets, and cutting their biggest cost base: headcount. This initiated a devastating domino effect that saw 260,000 tech employees laid off this year by more than 1,000 companies, according to Layoffs.fyi, a website that tracks industry layoffs.

All of this leaves engineering managers facing an uncertain future, especially as the rise of generative AI promises to shift the way they work and what they spend time working on. Here’s what you need to know heading into 2024.

Will the economic downturn spill into 2024?

No one can predict what the economy is going to do in 2024, but there are at least some signs of cautious optimism. “I expect things to get better from here, but I don't expect things to snap back,” Scott Raney, a partner at venture capital firm Redpoint Ventures, told the industry publication Runtime in November.

The wave of layoffs across the industry appears to have peaked in the first quarter of 2023, according to data from Layoffs.fyi, with 167,000 employees losing their jobs during that period. While there have been layoffs all the way through to Q4, they have been slowing to a trickle of 20,000 job losses. Now that shift has largely happened, there is a great deal of uncertainty as to what comes next.

“I feel like I'm the old man when I say this, but there are a lot of people who just haven't been around for that long who are just waiting for it to get back to where it was, and it's probably not going to get there anytime soon,” Raney said.

At the top end of the market, there were some green shoots to end the year. Speaking on the back of strong end-of-year results, Snowflake CEO Frank Slootman said, “These results reflect strong execution in a broadly stabilizing macro environment.” Analysts at the time, in late November, agreed that cloud stocks across the board had shown signs of stabilizing towards the end of the year.

Endava’s Tech Acceleration Report also found that 81% of business leaders were feeling optimistic about where the economy is headed, with 75% of businesses predicting an increase in IT budgets over the next year. 

While building operational resiliency has been a big theme this year, only 15% said operational stability was a top investment priority for next year. Analyst firm Gartner also predicts spending on public cloud services to grow by 20% to $679 billion in 2024 as companies continue to invest in modern technology like generative AI.

“Organizations deploying generative AI services will look to the public cloud, given the scale of the infrastructure required,” wrote Sid Nag, vice president analyst at Gartner. “However, to deploy GenAI effectively, these organizations will require cloud providers to address nontechnical issues related to cost, economics, sovereignty, privacy, and sustainability. Hyperscalers that support these needs will be able to capture a brand-new revenue opportunity as GenAI adoption grows.”

Away from the enterprise, startup funding largely dried up in 2023, and valuations are down for software companies that aren’t doing something with AI, limiting the opportunities for aspiring founders.

The hiring landscape

The software developer hiring landscape changed more in 2023 than any year in recent memory. A November US job trends report from Indeed showed that software development had been the hardest-hit sector for job postings this year. Also, according to data from compensation specialists Ravio, tech startups cut hiring by between 30-50% in 2023, findings that reflect the layoffs data and headlines we have been seeing throughout the year. 

“The tension is everywhere. It’s in the behavioral and survey data. It’s on social media. It’s in the misalignment between recruiter and job candidate expectations. Tech hiring has changed dramatically from 2022 to 2023,” Josh Brenner, the CEO of tech hiring platform Hired, wrote in his introduction to its 2023 State of Tech Salaries report. “We witnessed impacts from layoffs, hiring freezes, inflation, and the explosion of generative artificial intelligence (AI). We saw a turnabout from ‘work from anywhere’ policies to ‘we’re going back to the office and this time we mean it.’ As a result, we’ve seen significant shifts in the markets tech employers target and the candidates’ expectations in them.”

Generative AI is also already impacting the tech hiring market by shifting what skills are in demand. “We’ll have to wait to see the long-term effects of GenAI, but it’s clear right now that jobs related to the field are surging,” Indeed’s economic research director for North America, Nick Bunker, wrote.

This technology's impact on hiring plans in 2024, how salaries will fare in this new market, and the rapidly changing power balance between employees and employers are all trends worth watching for in 2024.

Hot technology areas and skills

Developers are also expected to have a significantly different skill mix in 2024 and beyond as a result of AI. A recent Pluralsight survey of 3,000 developers and software engineers found that 74% of developers plan to upskill in AI-assisted coding, but 45% of developers are fearful or anxious that their current competencies will become obsolete as they adapt to AI-assisted coding.

In the DevOps space, platform engineering will continue to be the hot topic as organizations look to improve the developer experience and deliver more software faster than in 2023.

Regarding programming languages worth banking on, some things never change. According to 2023's Stack Overflow Developer Survey, JavaScript has retained its crown as the coding technology most popular with developers, even as “safer” languages such as TypeScript and Dart continue to make inroads.

Staying on the frontend, Kate Holterhoff, an analyst at Redmonk, sees Facebook’s React and Google’s Angular continuing to go toe-to-toe in the JavaScript framework wars in 2024. Still, indie, open-source frameworks like SolidJS and Eleventy (11ty) will stay popular with developers and big tech companies looking to attach themselves to the hot new thing.

“Folks are still going down the React route, because it's got that large Meta backing, or Angular, which has some really exciting features and are finally catching up, so there's been a lot of hype around Angular recently,” Holterhoff said. “Then if you have a greenfield project, a lot of folks are looking at smaller, more indie frameworks.”

“There's such a culture around the frontend. You have all these sort of indie frameworks, which leads to the excitement of it, there's all these podcasts that you can keep up on it on the newest framework. One of the things that a lot of these big companies are doing is attaching themselves to these front-end frameworks in order to access that excitement,” she said. However, as we move into 2024, the swiftly evolving nature of these partnerships will be a source of anxiety for developers who have invested in these frameworks, as funding has already been drying up as the industry enters a downturn.

On the backend, Redmonk analyst James Governor fears that generative AI will draw attention away from simplifying foundational technologies that companies have invested heavily in over the past decade.

“I was at AWS ReInvent last week and sat down with infrastructure leaders from Amazon and a bunch of analysts and they literally spent 55 minutes and didn't once mention Kubernetes, everything was AI,” he said. “As an industry we still have not made Kubernetes easy enough to use, we've still not done the work required to take advantage of that API surface. We're still asking questions about developer complexity, and just how we make this operationally more effective.”

“I'm concerned the bright shiny object of AI will prevent us from doing the hard work required to become effective enough to use it.”

The impact of generative AI on software development

The impact of generative AI coding assistants on individual developer productivity, manager effectiveness, and how teams’ roles and responsibilities are distributed are only starting to be felt as we move into 2024.

“AI assistants will evolve from basic code generators into teachers and tireless collaborators that provide support throughout the software development lifecycle. They will explain complex systems in simple language, suggest targeted improvements, and take on repetitive tasks, allowing developers to focus on the parts of their work that have the most impact,” Amazon CTO Werner Vogels wrote optimistically in his annual predictions blog post.

This trend of AI as a teacher or study partner has already been embraced by education companies like Khan Academy, to help more junior developers get up to speed quickly.

“Any engineering team that is not thinking about how we as an organization can make new entrants or people that have worked in other spaces to join our teams and be effective, is doing a bad job,” Redmonk’s Governor said. “AI is potentially a way in which folks that don't have that level of experience can be really effective. I think that's both an opportunity and a challenge for organizations. And one of the things we'll see play out over the next couple of years.“

The other big concern for engineering managers will be the safety of these tools, both from an accuracy, security, and legal perspective. OpenAI is already making moves to enable safer enterprise use of its ChatGPT tools, and GitHub has similarly focused its attention on enterprise-safe deployments of its massively popular Copilot AI coding assistant.

The assault on DEI

The various shocks to the tech industry in 2023 led to a notable effect on corporate diversity, inclusion, and equity (DEI) programs. The United States felt this most acutely, where the Supreme Court ruled in late June that race can no longer be considered as a factor when choosing who to admit to university – known as affirmative action – a decision that could still have massive ramifications outside of higher education. 

Just a month after the decision was handed down, the Attorney Generals of 13 Republican states were emboldened to send letters to the CEOs of Fortune 100 companies, warning them that factoring race into hiring decisions was unlawful according to the Supreme Court.

“Post-George Floyd there had been a serious uptick in chief diversity officers and diversity officers being hired. What we've seen is it peaked somewhere in 2021, early 2022, and now the numbers are definitely going down for corporations,” engineering leader and DEI expert Jossie Haines said.

The immediate effect here will likely be a regression in the diversity of the hiring pool for engineers, which is notoriously already lacking in diversity. “That's going to have an impact on our ability to improve the diversity of our corporations long term,” Haines said.

Engineering managers can still do good work here, though. Haines says this starts with continuing to educate colleagues about the importance of DEI, focusing on outcomes, and doubling down on the inclusion part of the equation.

“We really need to be shifting again to more intentional DEI initiatives,” Haines said, by setting a comprehensive strategy tied to metrics and engagement survey results. “It’s important to be linking DEI investments to business and financial outcomes. The research shows that if you increase diversity and inclusion, you're going to be more likely to thrive in a recession. You're going to produce more innovative products.”

With hiring slowing in 2024, it is also an opportunity for engineering managers to rethink their approach and avoid what Haines called the “revolving door” that saw developers “hired into an environment that didn't support them,” she said. “How do you create a culture of belonging and inclusion so that everybody from all backgrounds feel like they can participate? How do we make sure that we slow down our thinking when biases occur during the hiring process? Be much more intentional about it, instead of checking the checkbox with once-a-year training.”