Janco Associates looked at the jobs data I reported earlier this week, and reports that the unemployment rate in the information technology sector has risen significantly, climbing from 3.9 percent in December to 5.7 percent in January. This equates to an increase in unemployed IT workers from ninety-eight thousand to one hundred fifty-two thousand. The rise is attributed to the growing influence of artificial intelligence, which has led to job eliminations in routine tasks while many companies are opting to automate functions instead of hiring new staff. The overall job market added one hundred forty-three thousand jobs during the same period; however, job postings for software development roles have decreased by eight point five percent year-over-year. Experts note a bifurcation in job opportunities, where white-collar positions are experiencing less demand compared to in-person skilled labor jobs.
Why do we care?
A jump from 3.9% to 5.7% in a month is a significant shift. This data is higher than CompTIA’s analysis I reported on Monday.
Routine IT jobs are being automated rather than replaced, meaning many displaced workers won’t find equivalent roles elsewhere. This supports the broader trend of AI streamlining workflows and reducing headcount in traditional IT functions.
I’ll offer that the current slowdown may be a temporary market correction following the over-hiring of 2021–22. If AI augmentation rather than full automation becomes the norm, demand for higher-skilled IT professionals may rebound. May. Companies still need AI engineers, cybersecurity experts, and cloud specialists—just not as many traditional software developers.
For IT Professionals: Upskilling is now critical. Traditional coding jobs are shrinking, and the focus is shifting to AI integration, cybersecurity, and cloud automation.
For IT Service Providers: Expect increased demand for AI-driven efficiency solutions as businesses seek to cut labor costs. However, pricing pressure may intensify as companies reduce IT budgets.