Tech hiring trends in 2026: inside the two-speed tech job market

What's happening with hiring in the tech industry right now? Are companies expanding their teams, or staying cautious?

For People Leaders and talent teams, understanding hiring trends is essential for workforce planning, budgeting, and staying competitive in the talent market.

So, to help, let's take a look at the latest data on tech hiring rates from Ravio's 2027 Compensation Trends report – and then expert viewpoints on the two-speed market shaping tech hiring this year.

What is the tech hiring rate in 2026?

The hiring rate across European tech in 2026 is 21.8% (source: Ravio Compensation Trends 2027).

This refers to the percentage of new hires in the workforce in the last 12 months (to Q3 2026), compared to the average headcount in that time.

That's down from 28.6% in 2025 and 29.0% in 2024 – continuing a decline from 2023, when the hiring rate was 34.0%.

Hiring hasn't dried up completely, but the 2021-2023 frenzy is clearly over, and both companies and candidates are more cautious.

Michelle Cheng, European Talent at Bessemer Venture Partners, sees this as a correction rather than a collapse.

"There's been a bit of a hiring correction over the last two years. After the first LLMs came out in 2023, companies saw an opportunity to slow hiring, but that hasn't fully come to fruition," she says.

"Now it's clear that you still need humans to run the last mile."

Hiring is also taking longer. "It’s a softer hiring market, and I’ve also seen time to hire increase recently – which is mostly down to approvals, with headcount decisions being made at a level higher than they were two years ago," says Marie Kanellopulos, CEO of DONE!Berlin.

Hiring rates per country (Europe)

Hiring fell in every market this year, ranging from 13.0% in Sweden to 23.6% in Germany (source: Ravio Compensation Trends 2027).

Germany was the one market bucking the slowdown in 2025, but that has reversed this year (-21%) as it converges with the rest of the market – though it still has the highest hiring rate of the six. Hiring has been particularly slow in Sweden (13.0%) and France (15.8%).

What is the hiring rate in the UK?

In the UK, the tech hiring rate in 2026 is 22.6%, down from 31.8% in 2025 – slightly above the European average of 21.8% (source: Ravio Compensation Trends 2027).

Hiring rates per job function

Sales and Relationship Management has the highest hiring rate (25.0%), while Engineering and Product have the lowest (both 16.3%) (source: Ravio Compensation Trends 2027).

Sales was the only function whose hiring rate grew in 2025, before falling back this year (-28%). Engineering and Product's low hiring rates match their low attrition – employees in these teams are staying put, so there are fewer roles to backfill.

In Engineering, AI is also changing how companies think about headcount. "A lot of companies aren't growing their software development teams anymore. They're keeping the team they have and increasing efficiency through AI instead," says Petra Skoglund, Strategic HR Advisor.

Not everyone sees it that way. "For some companies, AI isn't leading to a pullback on engineering hiring – it's an accelerator. If I can make every engineer 25% more productive, I should have more of them, because then I'll get more done," says Leah Sutton, Chief Portfolio Talent Officer at Balderton Capital.

And within Engineering there's one clear exception to the slowdown: AI skills, where competition for talent is still intense – more on that below.

Hiring rates per funding stage

Early-stage companies have the highest hiring rate of any funding stage this year (25.0%), while growth-stage and late-stage companies have seen the biggest drops – though rates are now broadly similar across all stages (source: Ravio Compensation Trends 2027).

How competitive is the tech hiring market?

A slower hiring market doesn't automatically mean an easier one – especially if that slowness is down to employees being reluctant to move.

Most companies (53%) describe hiring conditions this year as moderately competitive, with some roles harder to fill than others – and just 9% describe the market as employer-favourable (source: Ravio Compensation Trends 2027).

When we look at trends within this data, 42% of late-stage startups and 40% of cybersecurity companies call the market very competitive.

Marie Kanellopulos, CEO of DONE!Berlin, isn't surprised that late-stage companies are feeling it most.

"They don't hire for potential anymore, they hire for someone who's already done that job at scale, and that's the scarcest part of the offer," she says.

"Plus, they have the least flexible offers: fixed bands, plus equity candidates now discount heavily because there's no visible IPO window."

So whilst overall conditions are moderate, the difficulty is concentrated in a few places. It's a two-speed market: cooler for most roles, but with intense competition for AI, cybersecurity, and senior engineering talent – and for exceptional salespeople.

"Recruiting has slowed down across the board – except for anything with AI integrated, which is where most of the hiring is actually happening right now," says Andreea Lupu, Compensation & Benefits Architect at Meaningful.

Which roles and skills are most in demand?

Software Engineer is still the most-hired role in European tech, accounting for 12.2% of all hires.

But hiring volume isn't the same as demand – the clearest signal of where competition is fiercest is how much more companies pay to land new hires (source: Ravio Compensation Trends 2027).

Of the five most-hired roles, Direct Sales commands by far the biggest new-hire premium (10.7%) – more than double Software Engineering's (4.0%).

This may be a result of a shift in sales, wherein selling AI products is a new and in-demand skill.

"Selling an agentic product is very different to selling traditional software, and only a small proportion of salespeople have actually done it before, so they're in-demand," says Dennis Eriksson, Talent Director at Northzone.

Similarly, Ben Newsome, VP Talent & People at Cherry Ventures, sees AI labs and well-funded AI companies pulling sales talent out of the wider market.

"There's a lot of salespeople out there, but there's not a lot of amazing ones. Anthropic, OpenAI, other labs and heavily VC backed AI companies are aggressively acquiring sales talent, creating scarcity downstream," he says.

"We're seeing large new-hire premiums for top sales talent across our portfolio."

When we look at new hire pay premiums across all roles, not just those with the highest hiring volume, Engineering Management tops the list (+16.8%).

This might be a result of a shrinking pool of experienced engineering managers – Engineering has the lowest attrition and longest tenure of any function, so fewer proven managers are on the market, and some experienced leaders – even former CTOs and VPs – are choosing hands-on IC work over managing teams (more on that below).

Companies hiring for proven experience at scale is likely playing a part too – as Marie Kanellopulos explains above, that's the scarcest part of the market.

Demand for AI and ML talent in 2026

When we asked Reward Leaders which roles or skills they're actively paying a premium to hire, AI/ML engineering came out on top at 27% – more than 4x the next most common answer (source: Ravio Compensation Trends 2027).

Late-stage startups are the most likely to pay for it, where 46% pay a premium for AI/ML roles. On the other hand, public companies (18%) are the least likely to.

Employees at AI-first companies also earn 9.7% more on average than those at non-AI companies, for the same role, level, and country.

"There's a small amount of skilled talent available, and they know their worth," says Ben Newsome, VP Talent & People at Cherry Ventures.

Amongst a hiring market that’s slow overall, this is the pocket of high demand – but these AI companies are more focused on a small number of exceptional hire, so it really it a small pocket of exceptional demand amongst the wider job market.

Franky Roberts, Head of Talent & Community at Evantic Capital, calls this a focus on talent density.

"We're seeing a real focus on talent density – a willingness to pay more for a smaller number of exceptional people, specifically for IC work rather than leadership," says Franky.

"We're seeing those who have been CTOs or VPs choosing to work as an IC, because right now the most compelling work is building itself, not the scope of managing others."

What's happening to entry-level hiring?

Entry-level hiring is under the most pressure. In Ravio's survey, 29% of companies say AI adoption is impacting entry-level roles across all functions, and Engineering (78%) and Product (60%) are the functions most affected by AI overall (source: Ravio Compensation Trends 2027).

Leah Sutton thinks that's a short-term view.

"We're still seeing less junior hires too," she says. "It's short-sighted: if we don't hire early-career people, who's going to be working here in the future?"

What companies hire for is changing, too. "As AI makes producing output faster and cheaper, human judgement becomes more valuable," says JooBee Yeow, Director of People & Organisation at Notion Capital.

"The differentiator is no longer simply 'can you produce something?' but 'can you tell whether it's the right thing?' That means building judgement, critical thinking, systems thinking and commercial understanding into the capabilities you hire and develop for."

What are companies planning for hiring and headcount in the next 12 months?

The hiring market looks set to stay similar next year.

42% of companies plan to maintain their current hiring rate and 32% will only replace leavers – while 22% plan to increase hiring (source: Ravio Compensation Trends 2027).

How to compete for talent in a two-speed hiring market

A cooler market overall, with intense competition for a few skillsets, creates a specific challenge for Reward teams: how do you win the hires that matter without breaking your compensation structure?

Here's what Reward Leaders we've worked with recommend:

• Don't bake a temporary premium into base pay. "In my experience, with shifts in demand like we’re seeing for AI, the market almost always spikes and then settles down – that market premium doesn’t last forever, but the consequences of baking it into your payroll costs via a higher than desirable base salary do," says Jenny Packer, Senior Reward Consultant at Gallagher. Instead, build flexibility into your bands – for example, a pre-defined market premium for business-critical roles that's reviewed (and can be reversed) each year. More in our guide to competing for in-demand jobs without breaking your compensation structure.
• Benchmark emerging roles against the closest existing role. For new roles like AI Engineers, where market data is still thin, start from a proxy role with a similar scope (such as Software Engineer), cross-check several data sources, and apply a market-driven differential rather than building a whole new structure. "Creating a completely new structure from scratch for a new role is rarely necessary," says Alistair Fraser, Compensation Consultant and Founder of Justly. And don't chase every movement: "Market data is one input – not a mandate." More in our guide to benchmarking emerging AI roles.
• Compete on total compensation, not just salary. Sign-on bonuses (with clawback if someone leaves early), equity, and learning budgets can close the gap on a competitive offer without a permanent cost commitment.
• Don't forget the people you already have. "Retaining existing talent who are seeing job adverts with salary ranges much higher than their own is equally (if not more) important," says Katie Cook, Reward Consultant at Gallagher. If you're paying a premium for new AI or sales hires, check what that means for existing employees in the same roles.
• Design teams around impact, not headcount. AI-first startups run with leaner teams and pay each person more – investing in a small number of high-agency "super ICs" for the roles that matter most. The lesson for everyone else isn't to copy that playbook wholesale, but to hire against specific business goals rather than headcount targets. More in our analysis of AI-native hiring.
• Redesign entry-level roles rather than cutting them. Some junior hires bring valuable AI skills while still developing in other areas – "it might be that they’re a P1 in terms of scope and communication, but a P4 in terms of technical depth," says Alistair Fraser, Compensation Consultant and Founder of Justly. A skills-based approach to levelling and pay lets you recognise that, rather than defaulting every junior hire to the bottom rung. More in our guide to early career hiring.

FAQs

What is the meaning of 'hiring rate'?

Hiring rate refers to the percentage of new hires in the workforce in a given period, compared to the average headcount in that time. For example, a 21.8% hiring rate means that new hires represented 21.8% of the average headcount during that period. According to Ravio's 2027 Compensation Trends report, the hiring rate across European tech in 2026 is 21.8%.

What is the formula for calculating hiring rates?

The formula for calculating hiring rate is: (Number of new hires / Average headcount) × 100. This gives you the hiring rate as a percentage, showing what proportion of new hires there were compared to the average workforce size during that timeframe.

Is the tech job market getting better?

Not significantly. The hiring rate across European tech fell to 21.8% in 2026, down from 28.6% in 2025, and most companies plan to hold hiring steady next year – 42% plan to maintain their current hiring rate and 32% to replace leavers only. The exception is AI talent, where competition and pay premiums are still rising.

Which tech jobs are most in demand?

Software Engineer is the most-hired role in European tech (12.2% of all hires), followed by Direct Sales, Customer Support, SDRs, and Customer Success. In terms of competition for talent, AI/ML engineering stands out – 27% of companies pay a premium to hire it – and Engineering Management commands the biggest new-hire premium of any role (+16.8%).

How do you stay up to date with hiring trends?

Staying up to date with hiring trends requires access to real-time market data and reliable industry insights. Compensation tools like Ravio provide live compensation benchmarks and talent market insights from hundreds of thousands of employees across European tech companies, enabling People teams to track hiring rates, salary trends, and talent market shifts as they happen. Regular industry reports, talent acquisition data, and networking with other People Leaders also help maintain a current view of the hiring landscape.

How can startups stay ahead of tech hiring trends?

Startups can stay ahead of tech hiring trends by leveraging real-time compensation benchmarking data from trusted providers like Ravio. Ravio's platform provides live market insights on hiring rates across different funding stages, job functions, industry types, and locations – helping startups make informed decisions about when to hire, which roles to prioritise, and how to structure competitive compensation packages.