Capital One Job Cuts Signal Trouble for IT Labor Market

Technology sector employment overall has remained stable, but job postings for future tech hiring have declined for the second consecutive month, according to IT trade group CompTIA. Companies across industries hired 137,000 tech workers in December, compared with 130,000 the month prior, CompTIA estimates based on an analysis of U.S. Labor Department data.

“Notable layoff announcements inevitably have a psychological effect that may cause some companies to reassess or pause their hiring plans,” said

Tim Herbert,

CompTIA’s chief research officer. “The Capital One announcement is surprising given the company’s tech hiring activity over the past six months.”

Capital One’s agile group focused on a software development methodology that uses more rapid and flexible processes. The McLean, Va.-based bank said in a statement Friday that instead of having “distinct roles focused on agile delivery,” its existing engineering teams and product managers will “share accountability for agile ceremonies, routines, and practices.”

A spokesperson said the eliminated positions include agile portfolio and delivery leads, agile coaches, and agile support roles. Affected workers can apply for hundreds of open jobs at the company, and Capital One is actively hiring product managers and engineers focused on cloud, data, machine learning, and cybersecurity, the spokesperson said. The company employed 55,100 people at the end of September.

News of the job cuts was reported earlier by Bloomberg.

In 2021, Capital One said it planned to hire more than 3,000 technologists by the end of year, partly to support its migration to

Amazon.com Inc.’s

cloud platform and its increased investment in artificial intelligence. The addition of those workers would have increased the bank’s total technology head count to about 14,000. It has, for years, relied on its own engineers to build new software and applications.

A tougher economic environment has put greater pressure on chief information officers to cut costs while continuing to drive IT projects forward. For example, while investment in cost-saving tools like automation remains in place at

Tyson Foods Inc.,

the company “may be dialing down in some other areas” like travel IT budgets or replacing staff computers, said Chief Technology Officer

Scott Spradley.

Until now, cost-saving measures haven’t included cutting IT staff, though some CIOs said they are focused on finding ways for their existing teams to be more productive.

David Burden,

the CIO of software company

ForgeRock Inc.,

said new staffing models like job sharing, rotations, and contractors will “become the norm as we look for ways to keep people engaged and successful in their work.”

Fewer job postings, and cuts in enterprise technology staff, might further signal that companies are increasingly looking for outside help to handle IT, said

John-David Lovelock,

distinguished vice president at IT research and consulting firm

Gartner Inc.

“Enterprises are recognizing that they are no longer the employer of choice and that more IT will have to be done by external resources,” Mr. Lovelock said.

In the year ahead, Gartner estimates global spending on internal IT staff will increase 3.0% from 2022, while spending on third-party IT consulting is set to rise 11.9%. 

Some employers might be shedding the additional technology workers they hired to ramp up remote-work capabilities during the early days of the Covid-19 pandemic, said

Mark Muro,

a senior fellow at Brookings Institution. But, he added, the past few months have seen a widespread slowdown in IT recruiting. 

“Digital layoffs may reflect both broader demand slowdowns, and a sharpened desire by managers to prepare for leaner times,” Mr. Muro said.

Most businesses are also still contending with an IT skills shortage in areas like cloud, security, data analytics, and automation, said

Gina Smith,

research director in IT education and skills at International Data Corp. “What remains to be seen is whether the workers being laid off have the right skills to fill some of these vacancies,” Dr. Smith said.

— Isabelle Bousquette and Angus Loten contributed to this article.

Write to Belle Lin at [email protected]