Tech Is Shrinking and Growing: The 2026 Tech Job Market Explained

If you’ve been following tech news this year, you’ve probably seen two completely different stories playing out at the same time. One says the tech industry is contracting: hiring freezes, disappearing entry-level roles, mass layoffs even in Silicon Valley where tech is supposed to be thriving.

Meanwhile, the other side says the market is booming, citing millions of new jobs expected, a surge in tech hiring intent, and the ever-growing demand for skills aligned with artificial intelligence investments.

While it seems that both can’t be true, new data compiled in TechTarget’s 2026 tech job market outlook shows that the reality is far more complex.

Tech is shrinking and growing. At the same time, and in different ways. Understanding that contradiction may be the difference between getting stuck in the downturn or positioning yourself for the next wave.

According to Indeed’s 2025 Tech Talent Report, tech job postings have dropped by an estimated 36% compared to pre-2020 levels. Companies that once hired aggressively are now cautious, slower, and far more selective. The scale of layoffs has been staggering thus far. More than 178,000 tech employees were cut in 2025, with projections pushing that figure toward 211,000 by year-end.

Moreover, new grads in computer science and related fields are entering a market where entry-level roles have become scarce. Degree-holders are discovering that the “traditional” job pipeline no longer guarantees anything, as the U.S. Bureau of Labor Statistics found that one-third of the long-term unemployed are college graduates, the highest in ten years.

Job seekers would hence agree that it is a shrinking field with fewer postings, more competition, and longer interview cycles. But the short term only tells half the story.

Despite current turbulence, the broader tech sector is on track to expand significantly over the next decade. A CompTIA report recently signaled a rebound for tech hiring, with job postings up by 5%. While that may seem like modest growth, another report from the same organization paints a positive long-term outlook for tech careers.

Findings in the State of the Tech Workforce 2025 study indicate massive growth for U.S. employment in computer and IT occupations is projected, from roughly 6.09 million in 2025 to around 7.03 million by 2035.

The fastest-growing segments are exactly the ones reshaping the industry today:

• Data scientists and analysts are projected to grow by more than 400%
• Cybersecurity roles by more than 360%
• Software engineers and AI-oriented engineers are expected to see strong, sustained demand.

While companies are currently laying off in some areas, they’re simultaneously struggling to hire in others. More than 90% of organizations say IT skills shortages will affect them by 2026, with an estimated $5.5 trillion in lost productivity tied to the gap.

It’s worth noting that yes, tech is growing, but neither uniformly nor in ways that align with traditional tech workers’ expectations.

While it’s easy to assume that companies aren’t firing people because tech is dying, it’s not a lost cause for tech workers currently hunting for jobs.

Companies are firing people—but also hiring back for other roles because the skills they need have changed faster than their workforce has. With skills-first hiring, generalist roles in data science, software engineering, or IT can go from “marketable” to “outdated” in a short period if they aren’t actively learning and adapting to new demands, such as AI fluency.

As organizations prioritize certifications, projects, and domain expertise over traditional degrees, layoffs and hiring shortages happen simultaneously. Outdated roles are diminished, while high-skill, more specialized positions experience job growth. No matter how chaotic that may look from the outside, it’s simply the next stage of tech’s evolution.

The message isn’t as simple as “tech is doomed,” or that “everything will be fine.” Job-seekers, or those looking to transition into new roles, must see the nuances in this age of skills-first, AI-driven hiring.

If you’re in a legacy or generalist role, the risk is real. Companies are trimming those first. But if you’re building skills in AI, cybersecurity, data engineering, MLOps, or advanced analytics, you’re positioning yourself directly in the sector’s long-term growth lanes.

For new grads, degrees matter less than demonstrated ability. A GitHub repo, a certification, a portfolio, or a strong technical project carries more weight than ever.

And for mid-career professionals, the biggest advantage you can create is staying ahead of the skill-curve. The workers thriving in this market are the ones treating continuous learning as part of the job.

In a market reshaping itself this quickly, fear and optimism aren’t the only choices; adaptability and agility remain essential to job security.