The Rise and Fall of Software Engineering Job Postings: Trends, Causes, and Impacts on Job Seekers in 2025

The software engineering job market has undergone a dramatic transformation over the past five years. Once seen as one of the most lucrative and stable career paths, the field has experienced a sharp decline in job postings, reaching a five-year low in 2025. According to Indeed's aggregated statistics, software engineering job listings have plummeted to 65% of their February 2020 levels, with a staggering 3.5x fewer vacancies compared to the mid-2022 peak. This essay examines the trends behind this decline, explores the underlying causes, and discusses the implications for job seekers in 2025.

Trends in Software Engineering Job Postings (2020–2025)

The trajectory of software engineering job postings can be divided into three distinct phases:

1. Pandemic Boom (2020–2022): At the onset of the COVID-19 pandemic in 2020, demand for software engineers surged as companies rapidly digitized operations and expanded online services. By mid-2022, job postings peaked at 350% of February 2020 levels, fueled by aggressive hiring practices in Big Tech and startups alike. Engineers often juggled multiple high-paying jobs during this period, taking advantage of the unsustainable hiring boom.
2. Recalibration and Decline (Late 2022–2024): The hiring frenzy slowed as companies began recalibrating their workforce after over-hiring during the pandemic. By April 2024, job postings had dropped to 72% of their February 2020 baseline, marking a significant contraction. Layoffs further exacerbated the downturn, with over 300,000 tech workers laid off in 2023 and an additional 130,000 jobs cut in 20242.
3. Five-Year Low (2025): As of February 2025, software engineering job postings are at just 65% of their February 2020 levels -- a five-year low. This decline is more severe than in other tech-adjacent fields like marketing (-19%) and banking/finance (-7%), highlighting unique challenges within software development.

Causes of the Decline

The downturn in software engineering job postings can be attributed to several interrelated factors:

1. Widespread Adoption of AI Tools: AI-powered coding tools like GitHub Copilot have automated routine coding tasks, enabling smaller teams to achieve higher productivity. Companies like Salesforce report a 30% productivity increase due to AI tools while maintaining flat headcounts. Approximately 75% of engineers now use AI assistance, reducing the need for large engineering teams.
2. Economic Recalibration: The end of pandemic-era stimulus measures and rising interest rates have forced companies to adopt more conservative hiring practices. Startups are avoiding "hyperscaling" and opting for leaner teams, while Big Tech has slowed recruitment significantly.
3. Outsourcing and Globalization: Many companies are outsourcing software development roles to lower-cost regions such as Latin America, India, and Eastern Europe. This trend has further reduced opportunities in traditional markets like the United States.
4. Section 174 Tax Changes: In the U.S., new tax regulations requiring software development costs to be amortized over five years have discouraged domestic hiring. Although this is not the primary driver of global declines, it has had a noticeable impact on U.S.-based companies since its implementation in early 2024.
5. Market Saturation: The influx of new graduates and laid-off engineers has created an oversupply of talent. Junior engineers now compete with mid-level and senior professionals for limited roles, intensifying competition across experience levels.

Impact on Job Seekers in 2025

The contraction in software engineering job postings has profound implications for job seekers:

1. Increased Competition: Junior engineers face unprecedented competition from more experienced candidates who have been displaced by layoffs or outsourcing. Entry-level roles have become scarcer despite a reported increase in demand for such positions between late 2023 and early 2024.
2. Lower Salaries: The oversupply of talent has led to downward pressure on salaries. Many engineers report taking pay cuts of up to 30 - 40% compared to pre-2023 levels.
3. Geographic Shifts: Job seekers are increasingly looking beyond traditional tech hubs like Silicon Valley or Chicago to regions with growing opportunities, such as Australia or emerging markets in Asia and Europe.
4. Skill Evolution: To remain competitive, engineers must adapt to the changing landscape by acquiring skills in AI integration, automation testing, and emerging technologies. Employers now prioritize candidates with expertise in leveraging AI tools rather than those focused solely on traditional coding tasks.
5. Career Diversification: Many displaced engineers are transitioning into adjacent fields such as data analytics, product management, or DevOps roles that remain relatively stable or are experiencing growth.

Broader Economic Implications

The decline in software engineering jobs also raises questions about the broader tech industry's future:

• Innovation Slowdown: Fewer developers may lead to slower innovation cycles as companies rely more heavily on automation and smaller teams.
• Economic Inequality: The high-paying nature of software engineering roles has historically contributed to upward mobility for many workers. A prolonged downturn could exacerbate economic inequality within tech-dependent regions.
• Shift Toward Automation: As AI tools continue to evolve, businesses may increasingly rely on non-developers using low-code or no-code platforms to create software solutions.

Conclusion

The decline in software engineering job postings from their mid-2022 peak to a five-year low in 2025 represents one of the most significant contractions in recent tech industry history. Driven by factors such as AI adoption, economic recalibration, outsourcing trends, and market saturation, this downturn has created a challenging environment for job seekers.

While these challenges are daunting, they also present opportunities for those willing to adapt. Engineers who embrace emerging technologies and diversify their skill sets will be better positioned to thrive in this evolving market. As history shows, tech industry cycles are inevitable—and those who weather this storm may find themselves at the forefront of future growth when stabilization occurs.