December 21, 2022

2022 IT Industry Reflections and 2023 Predictions

8 min read

2022 was a big year for our industry – where the talent crunch, the number of New Zealand organisations delivering digital transformations and the growth in the tech sector collided with remote and hybrid working and the loss of homegrown talent to overseas experiences. All these combined had a significant impact on the industry. So, as we look ahead to 2023, it feels like a good time to reflect on what happened in the past year and predict what lies ahead in an era in which talent is leaving and entering the country and the technology needs of businesses are necessitating more staff in permanent and contractor roles.

What happened in 2022 within New Zealand’s tech sector?

2022 was the year that many of the restrictions around living with the COVID pandemic were eased or removed. The easing and removal of the restrictions extended to the borders where since 2020, we’ve had to manage without skilled immigrants looking to work and live in Aotearoa. Migration onto the cloud and other technological and digital transformations haven’t slowed – quite the opposite – which has meant demand for the volume and quality of skills has increased, and the supply decreased.

Kiwi tech professionals left to explore the world

To some, ‘The Great Resignation’ feels more like a catchphrase that peaked a year ago, but there’s no arguing with the number of qualified tech professionals leaving to explore the world. Kiwis leaving has been enabled by restrictions on travel finally loosening (and the knowledge that they’ll now be able to get back home!). Exploring the world to hone skills is valuable to professionals but costly to the local industry in the short term without the incoming talent to compensate for it. Factors outside of work opportunities and the desire to travel have supercharged this exodus somewhat, with the most popular factor being a more affordable cost of living. Despite large numbers of Kiwis heading offshore, we expect that a healthy portion of this group will return at various stages – bringing their newly acquired experience into New Zealand organisations.

The loss of talent due to travel restrictions loosening isn’t unique to the tech sector. Still, we’ve certainly felt it more than most, given the already-existing shortage in the industry predating the pandemic.

Borders reopening – enabling more overseas talent to work in NZ

While the easing of restrictions has seen those in the country depart for new adventures, it’s also seen the potential for overseas talent to come back into New Zealand. In 2020 we didn’t just see the taps turned off for new talent coming into the country but also much of the existing overseas talent left in considerable numbers to return to family before lockdowns ensued.

Work still needs to be done to estimate the full impact of the skills deficit that the reopening of the border will have. We’ve navigated an imbalance between demand and supply in this industry for many years, so we expect this development to answer only some employers’ problems. It’s not simply a matter of opening borders either; industry immigration and tourism efforts are required to position the country as a viable and attractive destination to live and work. For now, we are seeing an increase in applications from overseas talent – from those planning to move to New Zealand in the near future.

Flexibility and remote working have cemented themselves in the IT sector

Our industry has been ahead of the curve when it comes to remote working, although before 2020, this was still the exception as opposed to the rule. Contractors have long been used to hotdesking and working on the go, and busy tech professionals have been bringing their laptops home to complete work for some time. Where is our time spent during the workday? The pandemic forced all businesses to accommodate working from home as a norm. Many organisations have invested heavily in decentralising their infrastructure, pumping up security and rolling out systems that allow their team to work from anywhere in the country. In 2022 we saw this reality evolve from a necessity into a preference, with most tech professionals expecting hybrid or flexible working as the new standard offering. The benefits of remote working and hours flexibility include:

Tech Professionals

  • More control and time management on personal and work commitments
  • Removing lengthy commutes to work every day
  • Ability to focus on solo work without distractions of the workplace
  • More work opportunities outside of where you live
  • Time your work hours with when you feel the most productive

Tech Employers

  • Access to talent outside of the region the organisation is based in
  • Attractive benefit for potential hires
  • Can free up or reduce office space with fewer employees in the office at one time
  • Use more of the workplace for meetings and collaboration vs. individual work

What’s in store for 2023?

2023 promises to be a busy year for our industry. The first full year of open borders and immigration ramping up should see more employers finding the right talent. On the other hand, we could see a continuation of homegrown talent leaving amid growing costs of living and an election year that could spell change in 2024. But regardless of the access to talent, we aren’t anticipating a slowdown in demand – with innovation, digital transformation, and general IT maturity remaining a priority.

More talent arriving to help the skills shortage

In 2022 New Zealand opened back up to overseas talent, but we were slow compared to other countries, and this lag shouldn’t be ignored. As a result, we may look at a few years before we reach the same level of emigration to New Zealand as in pre-COVID times. With that said, 2023 should see thousands of new IT professionals reach our shores and be considered for permanent and contract, depending on their skillsets, visas, and where in the country they decide to base themselves.

Employers and recruiters will leverage the borders reopening in earnest throughout 2023 utilising offshore job listings and various digital advertising methods. We expect more debate and policy discussion about how the government can streamline the immigration process for skilled workers as businesses continue to struggle to acquire talent in the short term.

A focus on upskilling and developing talent into roles

In our research of IT employers and professionals this year, it’s clear that internships and junior development programmes are vastly underutilised. With such a talent shortage in the local market, we encourage the industry to consider creating more opportunities for inexperienced but enthusiastic talent with well-supported training and development plans. We see this as a win-win for both parties. The candidate gets on-the-job experience, training and connections with an internship or graduate program, and the business enjoys a new channel or relatively low-cost resource that, if managed properly, can develop into long-term IT employees.

Employers should consider incorporating an internship or development process to reduce the long-term skills shortage issues. 2023 may see many organisations piloting such programmes or refining them to make for a better experience.

Further development of IT sectors outside the main cities

We’re excited about the growth of the IT industry outside of Auckland and Wellington. Areas like the Waikato are seeing big growth in the population of IT professionals and tech start-ups. Christchurch is another fast-growing sector that offers unique opportunities for tech businesses via the industries that make up that region. In addition, 2023 will likely see more tech professionals choose lifestyle over proximity to the workplace, growing the presence of tech activity in smaller cities and towns across the country.

There’s no doubt that more tech professionals will move out of the city with less expectation to physically be in a CBD office to secure a role. Even in the leadership space, we have seen plenty of organisations open their minds to senior staff working in hybrid arrangements – the past few years have been a successful pilot for a permanent shift in workplace dynamics and employer attitudes. As more of our tech talent is present in more parts of the country, we expect to see more businesses opting for a regional office location. This might be the start of a 5-to-10-year shift where IT’s economic activity isn’t so concentrated in the urban areas of New Zealand.

Priorities on the basics

In the past, the industry’s predictions have been tied closely to innovation and the ‘new’. Whilst innovation will be part of the 2023 IT industry, talent shortages and borders reopening give us reason to believe that for many organisations, 2023 will be about securing the right talent, building structure to retain and develop that talent and creating successful teams in the process. The IT sector has experienced much turbulence in the past few years, and significant innovation must fit in around the foundational aspects of IT unless events outside the business’ control force it.

With that said, digital transformation is unlikely to slow down as part of a multi-year initiative to improve business systems and protect against security or disaster risks. Artificial intelligence is still in its infancy within most organisations, and we’d expect to see the introduction of it to solve more operational challenges for the more technologically nimble businesses. Topics such as the metaverse, which has attracted much commentary without the execution or widespread interest to match, is a space that, whilst likely where the online world will end up, will require evolution and the right mix of hardware and software for businesses to adopt a strategy around it for 2023.

Learn more about New Zealand’s IT industry

If you’re interested in reading more about our tech sector, head to the Absolute IT blog, where you can find insights about various topics, including skills in demand, pay and evolving technologies.

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