If FY26 was defined by caution, FY27 will be defined by a different challenge: finding the skills needed to deliver growth, transformation and resilience without blowing the budget.

Across Australia, organisations are still managing costs carefully. Yet cyber threats are escalating, AI adoption is accelerating, digital transformation programs continue to advance, demand across defence and critical infrastructure remains strong, and governments are under increasing pressure to improve service delivery.

That puts commercially minded specialists in the strongest position, particularly those working across cyber security, governance, risk, AI adoption, cloud, data, digital transformation, engineering, financial services, essential services, defence, resources, energy and government delivery.

As Joelle Beaton, Practice Lead at Talent Melbourne, puts it:

“FY27 is likely to represent a selective recovery rather than a broad-based hiring boom, with the strongest demand being for candidates who can combine technical capability with commercial impact.”

Cost pressure will remain, but capability gaps are hard to ignore

Cost versus capability will be the defining workforce challenge of FY27.

Government agencies and large enterprises are being asked to do more with less while simultaneously delivering transformation programs, strengthening cyber resilience, modernising legacy systems and preparing for wider AI adoption.

Steve Tompkins, Head of Government at Talent Sydney, expects contractor spend and procurement decisions to remain under pressure at the start of the next financial year but as he puts it:

“At some point, the conversation has to move from cost to value. Until then, we expect to see more outcome-based engagements as managers seek the security of delivery rather than trying to deliver with understaffed or under-skilled in-house teams.”

This shift towards outcome-based engagement is likely to be one of the more important hiring trends of FY27. Where permanent headcount is constrained, organisations will still need access to the skills required to deliver critical programs, creating stronger demand for contractors, consultants and project-based delivery teams, particularly in specialist areas where internal capability is limited.

Steve also notes that without an appetite to review permanent salary bandings in some areas of government, agencies may struggle to secure the expertise they need through traditional permanent hiring pathways. The result is a market where the demand exists, but the engagement model may change.

Election uncertainty will influence government hiring decisions

In New South Wales, the March 2027 state election will add another layer of complexity to government hiring and workforce planning, particularly around how it will influence agencies to think about contingent labour, procurement and delivery models.

“It will be interesting to watch how policies evolve,” says Steve. “Including the government’s current view of contingent labour hire.”

For hiring teams, this means scrutiny around contractor spend may continue early in the new financial year, but as delivery pressure increases, agencies may need to reassess how they access specialist talent, particularly for cyber, AI, governance, cloud transition and digital service delivery.

Joseph Petrovski, Account Director at Talent Melbourne, expects similar pressure shaping the Victorian market:

“Government demand won’t disappear in FY27, but the way that talent is engaged is likely to change. With headcount pressure increasing, we expect to see more reliance on contractors, consultants and project-based delivery models.”

Cyber security, governance and risk will be priority hiring areas

Cyber security is expected to remain one of the strongest areas of demand in FY27.

In NSW, Steve points to the NSW Cyber Security Strategy and related policy direction as a major driver of future hiring. The NSW Government has already mandated targeted cyber uplift for agencies, including compliance against key requirements in the NSW Cyber Security Policy and greater visibility over key risks and critical assets.

This focus is expected to increase demand for:

• Cyber architects
• Cyber security analysts
• Cloud security engineers
• IAM specialists
• Critical infrastructure security experts

And as Steve notes:

“Because there is a shortage in this space, and limited appetite to source globally, we expect to see more investment in home-grown and junior cyber talent to build capability onshore.”

For employers, the cyber skills shortage won’t be solved through senior hiring alone and deliberately investing in junior pathways, training, internal mobility and long-term capability building is becoming critical for organisations.

For candidates, cyber will remain one of the strongest areas of opportunity, particularly for professionals who can pair technical knowledge with governance, risk, assurance and stakeholder communication.

Joseph is seeing a similar pattern in Victoria, where school compliance changes and heightened security across the education sector are expected to drive demand for cyber security, governance, risk and compliance capability.

Across government, education, financial services, critical infrastructure and essential services, cyber will remain closely linked to trust, resilience and regulatory confidence.

Defence will continue to drive specialist demand in Adelaide

In South Australia, defence is expected to remain one of the clearest drivers of economic and employment growth through FY27.

Vimal Venugopal, Senior Account Executive at Talent Adelaide, explains:

“Demand for engineering and technical talent remains high. And employers are prioritising quality and capability, with greater emphasis on candidates whose skills and experience closely match the role requirements.”

As a result, the Adelaide market is becoming more selective, with employers looking for more specialised experience, such as: Project Managers with infrastructure backgrounds, Automation Testers who have built automation frameworks from scratch, and Business Analysts with Microsoft 365 experience.

For candidates, this means general experience may no longer be enough as employers increasingly look for evidence of direct, relevant delivery experience and the ability to add value quickly.

Vimal is also seeing AI capability become more important outside traditional technology teams, reinforcing one of the bigger FY27 hiring themes nationally: AI literacy becoming a broader workforce capability.

WA demand is being driven by resources, energy and critical infrastructure

In Western Australia, mining, resources, energy, utilities and critical infrastructure continue to shape hiring demand.

Edwin Foo, Principal Account Manager at Talent Perth, says:

“Traditional operations in WA, particularly iron ore and gold, are still fuelling hiring, while expansion into wind, solar and grid integration is increasing the need for critical infrastructure capability.”

Demand remains strong across technology and engineering, particularly for:

• Automation Engineers across IT/OT
• Data Science and AI Platform Engineers
• Full-Stack Software Engineers
• AWS and Azure Cloud Architects
• Cyber Security Specialists

Workforce planning is also maturing as major infrastructure and energy transition programs continue. Edwin explains:

“Large-scale infrastructure and energy transition projects are shifting workforce planning from reactive, short-term recruitment cycles into more strategic, long-term models. With major mining, resources and state government project investments running in parallel, organisations are having to rethink how they plan future workforces.”

Unlike some markets where remote capability is a stronger lever, Perth is seeing clear demand for local talent.

Hybrid office mandates combined with the integrated nature of IT/OT across mining, resources and energy mean employers are prioritising candidates who can physically work and collaborate in Perth CBD offices and local operations centres.

AI demand will become more practical and governance-led

FY27 is likely to be the year AI hiring becomes less theoretical.

In financial services, Elliott Howard, Account Director at Talent Sydney, shares:

“A key trend will be the continued rise of Agentic AI as large enterprises move from proofs of concept to deploying autonomous systems that reduce manual effort and give employees more time to focus on critical thinking and problem solving.”

This will change role requirements as AI literacy becomes an essential skill, not just a technical specialisation.

However, in government, Steve expects AI demand to take a slightly different shape:

“Government wants to implement AI at scale, but the demand we expect to see is less about experimental AI engineering and more about practical adoption, governance and assurance.”

For employers, this means AI capability can no longer sit only with technical teams but must be embedded across governance, product, delivery, risk, data and operational teams.

For candidates, the opportunity lies in AI literacy, responsible AI understanding and the ability to apply AI to real workflows that will become increasingly valuable.

Cloud transition and shared platforms will continue to create demand

Cloud transformation is expected to remain a major driver of hiring in the next financial year, particularly across government and enterprise environments managing legacy infrastructure.

As Steve puts it:

“Cloud transitions will continue across NSW Government, particularly where agencies are looking to reduce duplication and move towards shared platforms. The opportunity isn’t solely about migrating infrastructure but improving service delivery, strengthening security, improving access to data and creating more efficient ways of working.”

This is expected to support demand for:

• Azure specialists
• AWS professionals
• Enterprise architects
• Integration architects

“Cloud is no longer just an infrastructure program,” says Steve. “The people who will be most valuable are those who understand technical implementation alongside governance, interoperability, service outcomes and how to reduce duplication across complex environments.”

Business Analysts will remain critical to digital service delivery

While emerging technologies often dominate the market conversation, Steve expects Business Analysts to remain in steady demand through FY27 simply because: digital strategy still needs translation.

Government agencies are under pressure to improve service delivery and citizen experience, and that requires people who can turn policy into products, requirements into delivery plans and stakeholder needs into practical digital services.

This is a reminder that the strongest transformation teams will need BAs, product specialists, delivery leads, change professionals and architects who can connect strategy to execution.

Financial services hiring will focus on risk, data and cyber

In Sydney’s financial services market, Elliott expects hiring to concentrate around risk, data and cyber security as the sector continues to face pressure from regulatory obligations, security threats, customer expectations and productivity demands. And as AI adoption increases, these priorities will become even more connected.

Organisations will need professionals who can unlock greater value from data, govern emerging technologies responsibly, strengthen cyber resilience and improve operational efficiency.

This is expected to support demand for:

• Risk professionals
• Data specialists
• Cyber security experts
• Governance professionals
• AI-literate business leaders
• Transformation specialists who understand regulated environments

For candidates, commercial judgement will matter as employers look for people who can do more than perform a technical function. They’ll want talent that understands risk, business value and the operating realities of financial services.

Software engineering demand is being reshaped by AI

AI is both creating and changing existing demand in the software engineering space.

Joseph explains:

“AI-augmented coding is changing the shape of software engineering demand. We’re seeing less emphasis on traditional front-end development and more demand for people who understand LLMs, AI-enabled productivity and how to apply these tools effectively.”

The expectations of a software engineer are shifting, and employers are likely to value engineers who can use AI tools to improve productivity, solve more complex problems, understand system architecture and apply strong judgement to AI-generated code.

For developers, FY27 will be a market that rewards adaptability. Narrow execution-based skill sets may become more vulnerable, while engineers who combine fundamentals with AI fluency, architecture thinking, and business understanding will be better placed.

Melbourne is likely to see selective recovery

In Melbourne, Joelle expects FY27 to bring renewed momentum across IT and technology-aligned hiring:

“As the dust settles on a tumultuous FY26, we are likely to see a renewed level of momentum in the Melbourne and broader Australian hiring market through FY27, although not at the intensity seen during the post-pandemic peak.”

Population growth, continued enterprise and government investment, and demand across essential services are expected to support a gradual improvement in confidence.

Strongest demand will likely sit across:

• AI adoption
• Cyber security uplift
• Cloud and data transformation
• Digital modernisation
• Essential services

Aligning with Joseph’s predictions that energy and critical infrastructure will continue to generate demand, particularly as organisations invest in resilience, modernisation and long-term delivery capability.

For high-impact technology roles connected to transformation, cyber, data and essential services, competition is expected to remain strong in the Melbourne market.

What FY27 means for employers

Workforce planning needs to be sharper, and organisations need to be clear about the capabilities they need, the value those capabilities create and the best way to access them.

This means permanent hiring in some areas, contract or consulting engagement in others, and more deliberate investment in early-career or home-grown talent where shortages are structural.

What FY27 means for candidates

For jobseekers, FY27 will reward relevance. Employers are increasingly looking for people who can demonstrate how their skills contribute to business outcomes, whether through improving productivity, managing risk, supporting transformation or delivering better services.

The strongest candidates will be those who combine technical capability with adaptability, commercial awareness and direct experience in their field. As AI continues to reshape the workplace, professionals who embrace new tools and can apply them effectively alongside their core expertise will be best positioned to take advantage of emerging opportunities.

The bottom line

FY27 will be a selective and capability-led market.

Cost scrutiny and procurement pressure will remain, and permanent headcount will still be carefully managed in some sectors, but the need for specialist talent is not going away.

The employers that succeed will be those that move from short-term cost control to long-term capability planning, and the candidates who stand out will be those who can show not only what they know, but how that knowledge creates value.

As Steve puts it, “The conversation has to move from cost to value.”

That may be the defining workforce shift of FY27.

Local governments across the US are under increasing pressure to modernize.

Residents expect simpler digital services, agencies need stronger cybersecurity, and cloud and ERP programs are moving from long-term roadmap items into active delivery. On top of it all, AI is also now forcing every public-sector technology leader to think differently about systems, data, governance, and risk.

But modernization isn’t a technology challenge alone. For many cities and counties, the biggest barriers are:

• Whether they have the specialists in their workforce required to deliver that modernization while keeping essential services running
• The cost of modernizing and transitioning from legacy systems being prohibitively high, according to 71% of state and local government IT decision-makers, limiting their ability to innovate
• AI now overtaking cybersecurity as the number one technology priority for the first time after 12 years at the top

Despite AI rising fast, for local government, it can’t be treated as a standalone project. AI readiness depends on the fundamentals: modern systems, secure infrastructure, governed data, cloud capability, strong delivery teams, and clear risk frameworks.

As Jason Pho, Director of Technology Recruitment, at Talent New York puts it:

“AI might be the headline, but modernization is the work underneath it. Local governments need the right technology people in place before they can safely scale new tools, automate processes or use AI in a meaningful way.”

The legacy risk sitting inside local government teams

As of March 2024, local governments have 14.4 million people employed, representing 72.3% of the total state and local government workforce. And many of these agencies rely on long-serving employees who know the systems, vendors, processes, workarounds, and historical decisions that maintain service operations. This built knowledge is both extremely valuable and vulnerable, with 13.5% of federal employees currently eligible to retire and more than half (54%) of HR respondents in state and local government expecting the largest wave of retirements in the next few years.

When experienced employees retire or move on, local governments not only lose headcount but system history, vendor context, undocumented processes, stakeholder relationships, and practical delivery knowledge that may never have been formally written down.

Jason explains:

“The real risk is not just losing a person. It’s losing 15 or 20 years of knowledge about how a system actually works. That knowledge is often what keeps a modernization program moving.”

A city replacing a legacy ERP system or moving critical infrastructure to the cloud needs people who understand both the old environment and the future state. If that knowledge leaves before it’s captured, modernization can slow, cost more, or become harder to govern.

Hiring speed is now part of the modernization equation

Local government technology teams are being asked to modernize critical systems while operating with already lean internal resources. And when hiring pathways are slow, unclear, or overly complex, the workforce challenge quickly becomes a delivery risk.

Strong technology candidates in the market are used to clear briefs, timely feedback, and faster decision-making, and if the process takes too long, cities and counties risk losing the people they need before they reach interview or offer stage.

This is especially important for roles tied directly to modernization, including:

• ERP and Oracle Cloud specialists
• Cybersecurity and Microsoft security professionals
• Cloud, infrastructure and data engineers
• Business systems analysts
• Project managers and PMO specialists
• Application support and helpdesk talent

In many programs, one missing project manager, security specialist, systems analyst, or cloud engineer can affect delivery timelines and stretch internal teams even further.

Hiring speed shouldn’t mean lowering standards, but removing unnecessary drag, tightening the brief, aligning decision-makers earlier, and giving candidates confidence in the open opportunity.

For local government, recruitment is no longer just an administrative process but an essential part of how modernization gets delivered.

A new opportunity to attract talent

As AI, automation, restructures and cost reduction reshape private-sector technology teams, candidates are also reassessing what they want from work. For many technology professionals, stability has become a much stronger motivator. Benefits, work-life balance, purpose and meaningful impact are also carrying more weight, creating a timely opportunity for local governments.

While local governments might not always compete with the private sector on salary alone, they can compete on stability, benefits, purpose, community impact, and the chance to modernize systems that residents and public servants rely on every day.

This is especially relevant for younger technology professionals. Research has found that younger state and local government employees are also often drawn to public-sector roles by job security, work-life balance, health insurance and community service. But attracting this audience still takes the right approach. Many younger candidates may not naturally consider local government technology roles unless the opportunity is positioned clearly and brought to them through the right channels.

For local governments, the opportunity lies in repositioning candidate messaging from “Come work in government” to “Help modernize the systems and services your community relies on.”

Jason shares:

“The strongest candidates aren’t only looking at compensation. Stability is playing a much bigger role, especially for technology professionals who have seen how quickly the private market can shift. Local government has a stronger story than many agencies realize, and that story needs to be positioned properly.”

For a cloud engineer, that means improving infrastructure behind essential local services. For a cybersecurity analyst, it means protecting resident data and public trust. For an ERP project manager, helping a city move away from outdated systems that slow service delivery.

What local governments should prioritize now

Modernization requires both project and workforce planning and cities and counties should be asking:

• Which roles are critical to delivery?
• Which internal employees hold the most legacy system knowledge?
• What knowledge needs to be captured before those people leave?
• Which skills are missing from the current team?
• Where would contract talent reduce delivery risk?
• How can we make the hiring process faster without lowering standards?

For some government agencies, the answer will be permanent hiring. For others, contract talent may be the faster and lower-risk way to support a critical phase of delivery, particularly around ERP migration, cybersecurity uplift, cloud transformation, infrastructure upgrades, or post-go-live support.

The key is to connect recruitment strategy directly to modernization risk.

City of Durham: Keeping an Oracle Cloud transformation moving

The City of Durham was replacing legacy technology with Oracle Cloud and needed specialist IT contractors who could support the program fast.

The transformation was business-critical, time-sensitive, and dependent on finding local technology talent with the right mix of Oracle, Microsoft security, and project delivery experience. Without the right people in place, the risk was clear: timelines could slow, internal teams could be stretched further, and the wider modernization program could lose momentum.

Talent worked quickly to identify local candidates who met the technical brief and were available within the required timeframe.

The result:

• Relevant local candidates identified within seven days of briefing
• Candidates available to start within two weeks
• 15 interviews carried out
• Three placements made across Oracle Technical, Microsoft Security Administrator, and Oracle Project Manager roles

This example reinforces the workforce challenge behind modernization. When specialist roles stay open, delivery risk increases, and when the right people are found, qualified and engaged quickly, modernization can keep moving.

The workforce will decide the pace of modernization

Modernization will not wait for local government hiring processes to catch up, and technology transformation will always depend on people.

For cities and counties, the next step is making sure workforce planning is built into modernization from the start. That means understanding where specialist capability is needed, where internal knowledge needs to be protected, and where faster access to technology talent can reduce delivery risk.

Local governments have a strong story to tell technology candidates, and the opportunity now is to make that story clear, move with purpose, and bring in the people who can help turn modernization plans into progress.

Your modernization plans depend on the people behind them.

As Government IT recruitment specialists, we help cities, counties, and public sector organizations secure the technology talent needed to modernize systems, protect critical services, and deliver progress for the communities they serve.

If you are planning your next phase of IT transformation, let’s talk about the people who will make it happen.

If you only followed the headlines, you’d think the financial services sector is being driven by large-scale AI transformation. It’s not.

Across Australia, banks, insurers and fintechs are navigating a mix of regulatory scrutiny, cost-cutting, evolving cyber threats, fragmented transformation programs, and targeted investment in areas like data, cyber and platform modernisation. While AI is part of the conversation, it has yet to materially reshape organisations at scale.

Instead, hiring is being influenced by a series of overlapping shifts:

• Heightened regulatory scrutiny and risk accountability
• Ongoing restructuring to fund transformation and reduce cost bases
• Smaller teams expected to deliver broader, more technical outcomes
• AI embedding into workflows rather than driving standalone transformation

We sat down with our in-house Financial Services specialists to unpack what they’re seeing across risk, cyber, infrastructure, software and AI and how it’s shaping hiring.

Regulation is driving more work

The most consistent driver across the market right now is regulation.

According to Chris Huggett, Practice Director – Financial Services at Talent Sydney:

“There’s a lot more pre-emptive work happening right now around risk and governance, but not all of it is directly driven by AI. Previously, it was reactive, particularly post-Royal Commission. Now organisations are trying to get ahead of issues before they happen.”

That shift is being reinforced by public scrutiny.

Ongoing issues with the ASX have triggered intense regulatory pressure around operational resilience and governance standards.

“That level of scrutiny inevitably drives transformation, particularly around resilience and risk culture,” says Elliott Howard, Account Director.

At the same time, AI-enabled fraud is becoming more sophisticated and scalable from deep fakes and voice cloning to synthetic identities and large-scale loan scams.

What this means for hiring: Demand is increasing for governance, resilience and risk capability, embedded within broader programs rather than standalone initiatives.

AI is being contained, not scaled

AI is being adopted in controlled, low-risk environments.

“We’re seeing smaller-scale initiatives in niche pockets with specific use cases,” says James Bertollo, Account Manager. “They’re what you’d consider minor implementations like customer service, internal automation, agent-based workflows, but nothing like enterprise-wide transformation.”

The constraint is risk.

“For banks, using AI on private customer data is still a major concern,” James adds. “There’s a real fear of making a mistake that is both costly and leads to regulatory consequences.”

The caution is being reinforced by a combination of factors:

• Increasing regulatory scrutiny around data handling and decision-making
• The potential for AI-driven errors at scale
• A lack of clear, consistent frameworks for AI governance

As a result, organisations are taking a segmented approach. Rather than pursing a single, enterprise-wide AI program, most are:

• Deploying AI within specific business units
• Ringfencing higher-risk data environments
• Building internal guardrails as they go

“I don’t think you’ll see one singular transformation program around AI,” says Chris. “It will sit within different areas of the business, with different levels of control depending on the risk.”

What this means for hiring: Steady but fragmented demand for AI capability, creating pockets of hiring rather than large-scale workforce shifts.

AI’s immediate impact is at the operational level

While AI isn’t driving enterprise transformation, it is already reshaping day-to-day execution.

“In cyber, what used to take one or two days can now be done in 30 minutes using AI agents,” says Elliott.

This pattern is consistent across functions: faster analysis, reduced manual effort and compressed delivery timelines. And it’s already changing expectations of output, speed and team structure.

What this means for hiring: Expectations of output are increasing and teams are being designed around speed and efficiency, raising the bar for individual capability.

Hiring demand is concentrating at the execution layer

The clearest signal of change has been an increasing demand of talent at the execution layer.

According to James:

“Over the past two years, we’ve seen very senior AI roles put in place to set strategy and frameworks and kick off initiatives. In a lot of cases, those roles have been brought in externally, while the middle layer—product owners, project managers—has largely stayed the same and been upskilled.

Where we’re seeing the highest demand, and the most volume, is at the doing level. These are the engineers and practitioners who are actually building and implementing AI. That’s consistent across banking, financial services and insurance. Those are the roles we’re seeing come through most frequently.”

At the same time, AI capability has become a baseline expectation.

“Every role now has ‘AI’ as either a nice-to-have or a must-have,” says Chris.

Roles are being redefined:

• Engineers are expected to work end-to-end
• Technical roles require stronger business engagement
• Pure specialisation is declining

“You won’t ever hire a pure Python developer anymore,” says James. “You need someone who can design, build, implement and engage with stakeholders. With specialisations like coding becoming less central, the core defining skill required of an end-to-end software engineer is now what our clients call a ‘solution mindset’.”

What this means for hiring: Highest demand for hands-on, end-to-end practitioners who can deliver outcomes not just define them.

Cost pressure is reshaping team structures

With budgets tightening, teams are becoming leaner.

Over the past 12–18 months, major financial institutions have reduced headcount significantly.

Elliott explains:

“Last year, we saw one of the biggest years in redundancies and cost-cutting across the banks, probably since the GFC. Whether that’s translating into continued investment in tech transformation, it’s more likely a cost-cutting exercise and what’s now widely described as ‘AI washing’.”

As a result, organisations are being forced to do more with fewer people, emulating the operating models and ways of working of technology companies.

“We’re seeing smaller teams and higher expectations,” says Chris. “People are being asked to cover multiple functions.”

This means combining roles that were previously separate, such as:

• Project Manager / Product Owner = Project Manager + Business Analyst + Tester
• Engineer = Engineer + Tester + UI Designer + sometimes Business Analyst
• Scrum Master = Project Manager + Business Analyst

But this introduces delivery risk.

“If you’re asking someone to test their own work, it creates risk and ultimately sets the program up for failure,” Chris explains. “But ultimately, it comes down to cost constraints.”

What this means for hiring: There’s greater demand for multi-skilled individuals holding higher accountability, but also increased risk where separation of duties is lost.

Some roles are already in decline

Not all roles are being affected equally. Some are already in clear decline.

Project Managers, Business Analysts, Agile Coaches, Scrum Masters, and layers of middle management.

“It’s a very challenging time to be a Project Manager in the market right now,” says Elliott. “We’re seeing hundreds of applicants for a single role. We recently had a general Project Manager role receive 200–300 applications within 48 hours, and many of those candidates have been looking for work for months.”

This reflects a shift away from large, program-based transformation towards smaller, incremental initiatives delivered within existing product and engineering teams.

“Agile isn’t a standalone role anymore,” says Chris. “It’s just part of the job.”

What this means for hiring: Roles focused on coordination, governance and process are being absorbed into more technically capable, end-to-end positions.

The offshore delivery model is coming under pressure

AI is also beginning to challenge traditional offshore delivery models.

Historically, offshore teams have been used to handle repetitive developer work and high volume support tasks. The same areas where AI is now most effective.

“There are conversations happening about whether AI reduces the need for offshore models,” says Chris. “Because that type of work is increasingly automatable.”

While this shift is not fully realised at this stage, it is becoming a recurring theme in how organisations are thinking about future operating models.

If this direction continues, the implications are significant:

• Reduced reliance on offshore execution capacity
• Greater emphasis on onshore, higher-value roles
• A shift from production-based work to orchestration and oversight

It has the potential to reshape how work is distributed across global teams.

Hiring strategies are diverging across subsectors

Not all financial services subsectors are responding to these pressures in the same way.

Different subsectors are taking materially different approaches to growth, cost and risk, and this is flowing through into how they hire.

In banking, the focus remains on consolidation, cost control and internal efficiency.

“Banks are focused on consolidating,” Chris shares. “It’s more about optimising what they already have.”

This means tighter headcount control, more selective hiring and a focus on roles that directly support priority initiatives.

In contrast, super funds are still actively pursuing growth through M&A and market expansion.

“We’re seeing more movement in the super space,” Chris notes. “There are still opportunities for growth and acquisition.”

This is creating demand in areas tied to integration, transformation and scaling capability.

Meanwhile, fintechs are operating with a different set of constraints. After a period of rapid expansion post-COVID, the focus has shifted towards sustainability.

“Fintechs are being much more measured now,” says Elliott. “It’s less about expansion and more about maintaining cost base and growing sustainably.”

As a result, fintech hiring is more cautious, with fewer speculative hires, greater emphasis on immediate value and tighter alignment to commercial outcomes.

Across all three, the underlying pattern is consistent: Hiring has become more targeted, more deliberate and more closely tied to business priorities.

Hiring is becoming more disciplined

Despite shifts across technology, regulation and operating models, the core drivers of hiring in financial services remain consistent.

“Transformation initiatives, regulatory pressure and remediation following failure. Those core reasons for hiring aren’t going away any time soon,” says James. “What changes is the lens and right now that lens is AI.”

While AI is influencing how work is delivered, how teams are structured, and what is expected from individual roles, it is not replacing the underlying reasons organisations hire.

What has changed is:

• Greater scrutiny on where value is created
• Higher expectations of individual capability
• Less tolerance for roles that do not directly contribute to outcomes

Instead of a completely new hiring model, the result is much more disciplined one where every role is expected to deliver measurable value.

The bottom line

AI may be changing how work gets done, but it’s not what’s driving hiring.

Across financial services, hiring is being dictated by risk, cost and accountability.

Organisations are becoming more selective, roles are being redefined, and expectations of individuals are increasing.

For leaders, the implication is clear: Hiring decisions are now more closely tied to measurable value than at any point in the past decade.

If you’re navigating cost pressure, regulatory change or shifting expectations, our Financial Services recruitment specialists can share what’s happening across the market. Reach out to discuss how these shifts are impacting your hiring priorities.

Over the past year, a pattern has been emerging across global businesses: teams are getting smaller, but the pile of work isn’t.

Artificial intelligence is changing how organisations operate, and companies are beginning to redesign their workforces around it.

For the past two years, conversations about AI and jobs have sounded the same. Some argue artificial intelligence will replace workers at scale, other insist the fears are overblown and AI is “simply another productivity tool”.

A third perspective is now emerging: Some employers are using AI as a catalyst to trim the fat and restructure their workforce.

Our view? None of these explanations are mutually exclusive. What we’re seeing across industries is likely a combination of all three.

The result is something more structural than a wave of mass layoffs. Instead, we’re at the beginning of a workforce reset shaped by human-AI collaboration.

The signals are already appearing

The last 12 months saw a growing number of companies linking major restructures directly to AI adoption.

Australian logistics software giant, WiseTech Global, recently announced plans to cut 2,000 staff from its global workforce as it integrates AI across its operations and software platforms.

Atlassian also announced approximately 1,600 layoffs in early March as part of an ongoing restructuring tied to AI and operational efficiency.

Globally, similar patterns are emerging. Amazon has cut tens of thousands of roles across multiple rounds of layoffs, while simultaneously investing heavily in AI-driven products and infrastructure.

Other organisations, including Citi, eBay and Meta, have also announced workforce reductions while reallocating investment towards AI and automation.

Individually, these can be seen as cost-cutting decisions but viewed together, they suggest something else:

Organisations are rebalancing their workforces around a new operating model.

As Thomas Mackenzie, Director of Client Services at Scale by Avec, puts it:

“AI isn’t stealing jobs, but it is reshaping them. We’re seeing smarter, leaner teams and a new operating model defined by human and machine collaboration.”

This is simply capital reallocation

Most coverage and public discussion have framed these recent layoffs as a reaction to AI disruption but, in many cases, organisations are making deliberate investment decisions.

When new technologies dramatically increase productivity, companies often rebalance resources to reduce effort in some areas while increase investment elsewhere.

Thomas draws a parallel with financial markets:

“When investors anticipate structural change, they liquidate certain assets and redeploy capital into areas with greater potential. We’re seeing something similar with human capital as organisations adapt to AI.”

In other words, the workforce changes happening today are signs of reallocation.

Capital freed up from traditional workflows is being reinvested into areas such as:

• AI infrastructure
• Data platforms
• Product innovation
• AI-enabled services

And many organisations making cuts today are simultaneously hiring in completely different capability areas.

Where AI is changing work fastest

The early impact of AI on work isn’t evenly distributed, and the roles most affected tend to share similar characteristics:

• High repetition
• Structured workflows
• Process-heavy tasks
• Large operational scale

These are all areas where AI can quickly deliver productivity gains.

Take software engineering.

Historically, large development teams spent significant time writing routine code, testing functionality and maintain systems. Today, generative AI tools can produce and review code at a dramatically faster speed.

This capability is what led WiseTech’s chief executive to state:

“The era of manually writing code as a core act of engineering is over.”

Importantly, this doesn’t wipe the need for engineers but instead changes the nature of their work as productivity tools improve.

Instead of spending most of their time writing code, developers will increasingly focus on:

• System design
• Architecture
• Problem solving
• AI oversight

Another emerging impact is being felt earlier in the talent pipeline.

Early-career roles, particularly graduate and junior positions, are among the first to be affected as AI reduces the need for large numbers of entry-level workers performing repetitive or structured tasks.

Based on Talent placement data, entry-level hiring has declined by 19% in the last two years.

Over time, this creates a structural risk for organisations. If fewer early-career professionals are entering the workforce and developing experience, the pipeline of mid-level and senior talent available in five to ten years may be significantly smaller.

Put simply: if organisations shrink the base of the talent pyramid today, they may struggle to fill the top of it tomorrow.

The new workforce will favour AI-native talent

Organisations are rebuilding around different capabilities and employees who understand how to work effectively with AI systems are becoming significantly more valuable.

Thomas summarises the shift:

“AI may not take your job, but someone who knows how to use it effectively will.”

While this doesn’t mean every worker needs to become an AI engineer, AI literacy is quickly becoming a core professional capability like how digital literacy became essential two decades ago.

People who can design workflows around AI, interpret outputs and combine machine insights with human discernment will increasingly sit at the centre of modern organisations.

Some companies will inevitably overcorrect

Periods of technological change rarely happen smoothly, and history shows that productivity breakthroughs often trigger cycles of over-correction and adjustment.

Some organisations cut too deeply, and others move too slowly but eventually, capability gaps become clear and hiring will rebound.

One emerging example of this dynamic is what some observers are calling the “AI layoff boomerang.”

Swedish fintech Klarna provides one example. After aggressively promoting AI-driven efficiency and reducing headcount, the company later acknowledged it needed to rebuild human capability in key areas after the cuts went too far.

And this pattern may be more common than many assume. A Careerminds survey from February 2026 found that 32.7% of organisations that conducted AI-led layoffs had already rehired between 25-50% of the roles they initially eliminated.

Another 35.6% reported they had already rehired more than half of the roles that were cut.

In other words, the labour market may already be seeing the early stages of an AI layoff boomerang.

Thomas believes the same pattern may emerge during the current transition:

“AI is a powerful tool, but it won’t replace people entirely. Some organisations will realise they’ve cut the capability they still need and will find themselves needing to rebuild it.”

If history is any guide, the current wave of restructures may eventually be followed by new hiring cycles focused on different skills.

What this means for organisations

The important question for leaders is: How do you design work in an AI-enabled world?

Three priorities are becoming increasingly clear.

1. Redesign work, not just roles

AI changes tasks first before changing entire jobs. Instead of asking ‘which roles can AI replace?’, organisations should ask:

How should work be structured so humans and AI each contribute their strength?

2. Invest in AI-native capability

Future teams will rely on a blend of technical and human capabilities:

• AI literacy
• Critical thinking
• Systems thinking
• Leadership and collaboration
• Resilience
• Adaptability

And the organisations that invest in these capabilities early will move faster than their competitors who are still adapting.

3. Think more strategically about workforce design

AI adoption also creates an opportunity to rethink how teams are structured.

Not every requirement needs to be filled through a permanent hire. In some cases, the work may be better delivered through specialist contractors or project-based expertise.

Blended workforce models can combine the stability of permanent teams with the flexibility of external specialists. This approach can help organisations scale skills up or down as demand changes, while still maintaining control of intellectual property and reducing operational risk.

The conversation moving forward

It isn’t enough to keep focusing on the single question, ‘Will AI replace workers?’

The bigger shift already underway is the redesign of the workforce itself.

Future organisations are likely to operate with fundamentally different workforce models, combining permanent employees, project-based contractors and AI-augmented teams working together to deliver outcomes.

These blended teams will allow organisations to scale capability and productivity more fluidly as demand changes, reducing the need for the large-scale redundancies that often follow rigid workforce structures.

However, this evolution also places greater responsibility on leaders to think more carefully about workforce design before building out their teams.

Organisations that can plan for flexibility by building contingency and adaptability into their workforce strategies will be better positioned to navigate technological change without repeatedly cycling through major layoffs when market conditions shift.

The question is no longer whether AI will reshape work. It’s whether organisations are designing their workforce to adapt to that reality.

The hiring market may be stabilising in parts of the economy, but for young people trying to enter the workforce, it feels anything but steady.

Entry-level opportunities are shrinking, graduate programs are scaling down, and confidence is fragile.

Talent placement data has shown entry-level hiring has dropped by 19% compared to two years ago and on the ground, that decline is palpable.

“With unemployment in New Zealand at its highest level in years, it’s hard not to lose confidence,” says Shanelle Partridge, Youth Program Manager at our social enterprise Rise by Talent. “There just aren’t many entry-level roles being advertised. For rangatahi, it’s really hard to navigate right now.”

And the challenge isn’t limited to any particular demographic. It spans school leavers, graduates, and young people coming through skills-based programs.

“It’s hard for everybody at the moment,” Shanelle explains. “But it’s especially hard for diverse communities where that door wasn’t fully open before and it’s certainly not wider now.”

Is the first rung disappearing?

For decades, entry-level roles acted as the first rung of the career ladder. It was a time and space to learn, experiment, and build capability.

And today? That rung is thinning.

A combination of tight budgets, cautious hiring and AI-driven productivity gains has changed how organisations think about junior roles. Many are prioritising experienced hires who can “hit the ground running” rather than investing in capability building.

“There’s a shift happening,” Shanelle says. “We’re seeing grad programs being cut back, and more emphasis on skills-based hiring over formal qualifications. It’s not just about having a degree anymore. Employers are asking: can you think critically? Are you curious? Can you solve everyday business problems?”

That shift isn’t necessarily negative. But it does raise a bigger question: what happens when organisations expect “next-level” capability without creating the pathway to get there?

AI: Opportunity and anxiety

AI is definitely part of this conversation but not exactly in the ways the headlines suggest.

Young people are, in many cases, ahead of the curve on the tech front.

“Rangatahi are already AI-literate,” Shanelle says. “They’re using it to plan workflows, build bots, create presentations, tell their story. They’re not scared of it.”

In Rise programs, storytelling exercises often involve AI tools from day two.

“They’re experimenting confidently — often before organisations have even rolled out AI literacy internally.”

But literacy doesn’t automatically mean discernment.

“There’s still a huge education piece needed,” Shanelle adds. “Young people might recognise AI content quickly, but do they always apply a critical lens? That’s something we still need to build.”

And there’s a deeper layer for Māori and Pasifika communities.

“There’s fear around what AI means for our communities and entry-level roles. We’re slower to get AI literacy into those spaces and that’s something we need to address.”

The pressure to be “job-ready”

One of the most significant shifts in the early-career landscape is employer selectivity in a candidate-saturated market.

“With some job postings attracting 1,000 applications in a few days, organisations can be extremely picky,” Shanelle explains. “If you’re not one of the first CVs through the door, it’s hard to even get seen.”

High application volumes don’t necessarily translate to better opportunity either. Instead, they’re raising the bar for what “entry-level” means.

Organisations are asking for:

• Immediate contribution
• Strong interpersonal capability
• Commercial awareness
• Confidence and initiative

All without necessarily investing in structured development.

And for rangatahi Māori and Pasifika, additional pressures compound the challenge.

“Family is central,” Shanelle says. “If young people need to contribute to rent, mortgage or bills at home, they’ll take any job they can get. Tech might not feel accessible straight away if the door isn’t clearly open.”

That tension between economic necessity and long-term career aspiration is felt within these communities.

Why cutting entry-level roles is short-sighted

In our latest salary guide, we highlight a growing gap where short-term cost discipline risks long-term talent shortages.

This early-career squeeze is a clear example.

“If we don’t create those pathways now, who manages the business later?” Shanelle asks. “We need young people in the system so we can future-proof leadership.”

The solution doesn’t have to be large-scale graduate programs. In fact, in a tighter market, more agile approaches may be more effective.

“We’re seeing organisations rethink what entry-level looks like,” she says. “Project-based roles. Breaking down tasks within existing roles. Asking: is there something here that a junior person could own?”

Some Auckland-based employers are now reviewing every vacancy and asking a simple question:

“Is there any part of this role that could be carved out for entry-level talent?”

If yes, they create space for it with intention and to proactively future-proof their workforces.

So, what can businesses do now?

Practical starting points include:

• Identifying project-based entry opportunities
• Earmarking a small number of roles each year for junior talent
• Partnering with organisations like Rise to align training with industry need
• Reviewing roles to carve out structured development tasks

“We created Rise to bridge that lag between what industry needs and what education delivers,” Shanelle says. “Tech changes fast. Waiting three or four years for a pipeline to come through uni doesn’t work anymore.”

And bridging that gap responsibly is now critical.

The long game

The early-career squeeze isn’t just an issue isolated to just young people trying to get their foot in the door. It’s now a workforce strategy issue.

When organisations reduce entry-level intake, they may ease short-term cost pressure but they also narrow their future leadership funnel.

And when the market tightens again — as history suggests it will — that pipeline gap becomes expensive.

Young people aren’t lacking ambition or adaptability. In many cases, they’re more technologically fluent and agile than the environments they’re trying to enter.

The question now is whether businesses are willing to meet them halfway.

Explore how capability gaps are reshaping hiring in our More than Money Salary Guide, including insights into early-career trends and long-term workforce planning.

If the last few years were about building, 2026 is about selling.

The Digital hiring market across the US has regained momentum, but venture-backed businesses are no longer hiring on ambition alone. Consultancies aren’t scaling delivery teams ahead of demand, and every hire is being measured against revenue impact and time-to-value.

As Jason Pho, Director of Technology Recruitment in our New York team, puts it:

“After a slow 2024, we saw an uptick in 2025 and it’s been trending up since then. The market feels more stable now. There are still good local candidates looking, and there’s opportunity out there. You just need to filter through the noise.”

Revenue first: GTM and sales demand accelerates

Over the past couple years, funding was being poured into product development, scaling engineering teams, and expanding roadmaps.

Now, the pressure has shifted downstream.

“In the startup space, the last few years were about building and now it’s about selling,” says Jason.

Go-to-market and sales hiring has become one of the most active areas in the Digital ecosystem and, beyond growth, companies are fighting for clear differentiation in a saturated AI market.

“There are so many new AI tools now that a lot of companies are honestly confused about how they get real ROI from them,” Jason explains. “You can roll out a new tool, but if you don’t change the process around it, it just creates more noise.”

This is where proven sales professionals with a track record of new business development, complex deal cycles and pipeline generation are in high demand across startups and consulting firms alike.

And we’ve found that smaller boutiques are also benefiting in this market.

“Smaller firms can compete with the Big Four now,” Jason has observed. “Tech is cheaper, delivery can be faster, and clients want more flexibility and customized solutions instead of ‘this is how we do it’.”

In today’s market, agility is an edge.

AI hiring: proof over potential

If the last two years were about experimentation, 2026 is where it gets real.

“Companies are moving past ‘AI in theory’ and pushing for proof you’ve actually done it,” says Jason. “Where have you implemented something? What changed? What was the net positive outcome?”

The interview questions are sharper:

• What went live?
• What improved?
• What was the measurable business impact?

“A lot of candidates get unstuck because they’re still speaking in hypotheticals and proof-of-concepts rather than outcomes.”

At the same time, AI has complicated the hiring process for both sides.

Jason explains:

“AI-written resumes, AI screening tools, automated outreach. It can actually make it harder to identify genuinely strong candidates. I think the big differentiator in the hiring process is still communication; how candidates are treated and the human interaction. People ultimately remember how the process felt.”

In-house capability is rising

Another defining trend in 2026, not just limited to the Digital space, is the shift towards internal capability building.

“It’s about price and control,” says Jason. “The consulting market is crowded and competitive but, more than that, a lot of organizations want the IP and capability in-house.”

Especially in traditional sectors like manufacturing and government, more end-user organizations are building internal Digital teams rather than outsourcing entirely.

As a result, permanent hiring has become the preferred route for core AI and platform capability, while contract demand is more selective and often tied to defined programs of work rather than open-ended transformation mandates.

“People don’t see full-time as ‘stable for life’ the way they used to,” Jason shares. “And employers still like the flexibility contractors bring.”

True career contractors remain outcome-driven: enter, deliver, exit, repeat. While employers are being more deliberate about where they lock in long-term capability versus where they flex.

Compensation has also largely stabilized year-on-year as the market becomes more predictable and employer-leaning. But proven, revenue-aligned talent will continue to command a premium, particularly those with real AI implementation experience.

Engineering for outcomes, not output

AI has also reshaped workforce design with some startups asking: can we hire fewer AI-enabled engineers rather than scaling traditional dev teams?

But Jason warns that speed without alignment is risky:

“Before, you needed a team decision on what to build. Now, anyone can spin something up quickly. But is this what the business actually needs? Does it fit the product? The strong engineering candidates in today’s market are the ones who can decisively say: here’s what the business needs, here’s what we should build, and here’s the return we’ll get.”

In other words, leverage and the need for judgement has increased.

More than just technical capability, expectations also include commercial awareness, product alignment, and the ability to collaborate effectively across stakeholders. As build cycles accelerate, decision-making quality becomes the real differentiator.

And that’s where environment starts to matter.

High-performing teams don’t just rely on individual outputs, they rely on shared context, fast feedback loops, and strong communication. In an AI-enabled world, how teams work together is becoming just as important as what they build.

The 2026 reality

Growth has returned, funding is flowing more steadily, and consulting pipelines are strengthening. However, unlike previous cycles, hiring is being driven by outcomes rather than ambition alone.

AI has accelerated build cycles and expanded what small teams can achieve, but it’s also raised the bar. Candidates are expected to prove production impact, engineering leaders are prioritizing alignment, and commercial teams are being hired to convert innovation into revenue.

At the same time, workforce design is becoming more intentional. Organizations are deciding where to lock in long-term capability, where to flex with contractors, and how to structure teams around performance rather than headcount.

In 2026, the market is sharper and the organizations that win will the be the ones that hire with clarity.

Explore the latest AI and Digital permanent salary and contract rate benchmarks in our More Than Money Salary Guide to ensure your hiring strategy is aligned with today’s market realities.

In 2026, the Microsoft hiring market has become sharper.

Last year, we reported a surge in demand across Microsoft Biz Apps, Cloud and Data as organizations reignited delayed transformation projects and this year feels like another step-change.

As Dylan Cohen, Director of Microsoft & Cloud Solutions in our New York team, puts it:

“AI’s now at the point where companies are putting it into production, not just experimenting or piloting it.”

This production versus proof-of-concept distinction is what’s defining the market this year.

From experimenting to real-world results

Twelve months ago, many organizations were still experimenting by testing and running pilot; giving users access to tools like Copilot, Claude and ChatGPT. Consultancies and Product companies were offering a taste of AI, demonstrating different use cases and offering proof of concepts, and as soon as those 2-8-week engagements would end, many companies found themselves stalling from taking the next step.

Now, the conversations are different, and AI hiring has matured quickly.

“The thing that’s changed is moving away from companies solely looking at user adoption with AI, to hiring AI Architects who’ve actually put AI into production,” Dylan explains. “Clients want to speak to candidates who’ve delivered end-to-end, full life cycle AI projects.”

The key questions in interviews today are:

• Did it go into production and is the company using it today How so?
• What was your role in delivery?
• Was it proof of concept or live deployment?
• How is the business benefiting?

“What we’re uncovering is there’s a lot of proof of concepts, but limited real-world experience in actual production and outcomes,” says Dylan. “Candidates who’ve deployed AI in production should be screaming from the rooftops about it. They’re a small subset compared to the rest.”

AI spend: readiness vs build

With a better understanding of what’s capable with AI between now and this time last year, companies have a more focused strategy with their AI hiring.

According to Dylan:

 “The strongest clients are starting with getting their foundations right: data cleansing, governance and clear alignment on the end goal before they ‘go crazy with AI’. The big change versus this time last year is confidence. Now they understand what they need to do and they’re putting real roadmaps and project plans behind it.”

Across consulting, the era of endless pilots is fading fast.

“Proofs of concept were the story of last year,” he says. “This year, companies are confirming budget, agreeing on business value and moving from prototypes into production.”

Financial services, insurance and healthcare are industries leading the charge, and product-led firms are attracting private equity on the back of real and tangible AI deployment.

D365 demand: Copilot changes what “good” looks like

Hiring demand across Dynamics 365 remains strong.

“All three areas, F&O, Business Central and CRM, are busy,” says Dylan. “Enterprise budgets have reset and we’re seeing clear uptick in F&O alongside continued strength in CRM.”

But Copilot is what’s raised the baseline.

“It’s no longer enough to simply know Power Platform,” he explains. “Now the expectation is: can you build Copilot-ready workflows? Do you understand AI agents? Can you speak to readiness and use cases in a practical way?”

CRM in particular has seen one of the biggest shifts:

“Functional and technical CRM consultants are expected to understand Copilot readiness and how AI fits into the solution. That doesn’t mean deep AI engineering expertise, but the need to be able to speak to it with confidence.”

And the candidates who stand out are the ones who proactively prove it.

“We’ve seen candidates who go out of their way to demo what they’ve built with Copilot in interviews. And nearly every candidate who’s brought something tangible into an interview has landed the role.”

Permanent vs contractor shifts

Last year, companies were racing to secure contractors for AI-specific initiatives and this year, the hiring trends have shifted.

“In the Microsoft space, especially within consultancies and product companies, the bias toward permanent hiring is stronger,” says Dylan. “If they find someone strong, they want to lock that capability in long term.”

Talent who can genuinely deliver are being treated as a strategic hire for businesses.

End users are more mixed; often leaning on consulting partners for roadmap and production delivery, then supplementing with embedded contractors for validation or oversight.

And interestingly, career contractors are even adapting to this demand.

According to Dylan:

“Some high-end contractors are saying they’d move to permanent if it’s the right company. Meaning that strong product ambition, smart teams, and real ownership are becoming important factors to these candidates.”

All signs are pointing to a hiring market that finds value in long-term retention of high-value capability, not just in the AI space.

Decisive hiring wins and hybrid still wins

The best leaders are focused on building world-class teams.

In an employer-driven hiring market, many organizations are holding out for the mythical 100% fit. But in a limited candidate pool where delivery experience is scarce and time-to-value is increasingly important, this strategy can backfire.

“I recommend that 80% fit,” says Dylan. “The last 20% can be trained but while you wait, your team and business are suffering. If you’re sitting on the fence trying to find that perfect candidate, reflect on: How long has the role been open? How many candidates have you actually vetted? If you’ve spoken to 20 aligned candidates and still can’t decide, you’re either not ready to hire or you’re being too selective.”

Whether it’s hiring for a sales, consulting, or engineering role, the strongest employers are defining outcomes early, aligned on success criteria, and move quickly once they find the right candidate.

Strategic working models are also playing a significant part in candidate decisiveness. Despite high-profile return-to-office pushes in recent years, hybrid continues to win in the Microsoft ecosystem.

“Five days onsite still hurts attraction,” Dylan notes. “Hybrid just keeps working.”

The firms insisting on full-time onsite, particularly in non-metro areas, are shrinking their talent pools unnecessarily.

In short: the organizations winning in 2026 are clear on outcomes, realistic on profile expectations, and flexible enough to attract the talent capable of delivering.

What’s next: the end of time-and-materials?

Looking ahead, there are murmurs of another structural shift emerging.

Dylan explains:

“This time next year, we’ll be talking about how consulting firms moved away from time-and-materials and toward deliverables and outcomes.”

With AI accelerating build cycles, traditional 2,000-hour project models are under pressure and effort becomes less sellable than the project’s impact.

“If AI is doing what used to take weeks of programming time, companies still provide value. But how do they monetize that in an outcome-based model?”

The 2026 reality

The AI hype of previous years has given way to maturity for the Microsoft hiring market.

AI is no longer a slide in a strategy deck or an experiment run by an innovation team. It’s embedded into delivery roadmaps, tied to budgets, and increasingly measured against real business outcomes.

And that shift is raising the bar.

Candidates are being asked to prove production impact over theoretical exposure, consultancies are being pushed to demonstrate end-to-end capability, and organizations are evaluating partners on governance, adoption, and time-to-value rather than technical ambition.

At the same time, hiring strategies are becoming more disciplined. Companies are locking in long-term AI capability where it matters most, reassessing workforce structures, and aligning roles directly to measurable outcomes.

For leaders shaping their Microsoft workforce strategy: prioritize production experience, move decisively, and build teams that can both design and deliver real impact.

Explore the latest Microsoft, Dynamics 365 and AI salary and rate benchmarks in our More Than Money Salary Guide 2026.

If you’re waiting for the telecommunications hiring market to “heat up” again, you might be looking for the wrong signal.

Because in 2026, the market is less “hot” and more focused.

As Steve Dybacz, Account Director and in-house telco expert at Talent Sydney, puts it:

“Two years ago there was a lot of vanity hiring. Now it’s about one question: can you actually deliver this programme without drama?”

This mindset shift is what’s defining telco hiring right now; more accountability and a much sharper lens on capability.

From hype to optimisation

12–24 months ago, 5G dominated the conversation. Today, the narrative has evolved.

“Fibre is still busy. 5G has moved from hype to optimisation,” Steve explains. “And we’re seeing far more spend on resilience and compliance than on flashy innovation.”

The build phase is far from over. Fibre rollout continues at pace as copper networks are decommissioned, while optimisation of existing infrastructure is now front and centre. Coverage, private networks and uptime are commercially critical — not just headline projects.

“Fibre and core network capability remain critical because the build is still happening — and copper is dying. That transition hasn’t slowed.”

At the same time, regulatory pressure, cyber risk and infrastructure funding cycles are shaping investment decisions.

“Resilience is no longer optional,” Steve says. “It’s a board-level issue.”

The skills that matter most this year

Hiring demand across telecommunications is clustering around a core set of high-impact capabilities:

• Network Engineering
• Fibre Optical Network Engineering
• RF Engineering
• Telecommunications Project Delivery
• Field Network Operations & Maintenance
• Network Operations (NOC)

RF engineering, in particular, is seeing renewed importance.

“RF matters more than the headlines suggest,” says Steve. “Coverage, optimisation and private networks are commercially important right now.”

And as budgets tighten, delivery risk is under scrutiny.

“Project people are in demand because budgets are tighter and failure is expensive. Organisations can’t afford programmes that drift.”

Meanwhile, operational roles are under relentless pressure.

“NOC and field capability doesn’t get the spotlight, but uptime is brutal and SLAs are unforgiving. That pressure isn’t going anywhere.”

This is not a speculative hiring cycle. It’s capability-led and operationally grounded.

The talent that’s hardest to find

While overall salary growth has stabilised, structural shortages remain in specific areas.

“The hardest profiles to secure are senior engineers who’ve actually designed the solution and then stood on site to deliver it,” Steve says. “That combination is rare.”

Candidates with the right clearances also remains particularly scarce.

“Cleared talent is a tiny pool — and everyone’s fishing in it.”

And there’s a noticeable thinning of the mid-market layer.

“Solid mid-level engineers who don’t need hand holding are surprisingly scarce. The market has thinned out in that middle layer.”

These gaps reflect a broader theme we explore in this year’s More than Money Salary Guide; skills and capability depth is becoming more important than job titles and headcount.

AI in telco: Evolution, not replacement

AI is increasingly present in telecommunications but not in the way headlines might suggest.

“It’s in optimisation, fault prediction and ticket triage,” Steve says. “It’s not replacing engineers but making average teams better and exposing weak ones.”

Organisations investing in AI are pairing it with strong engineering fundamentals and governance. It’s about augmentation, not substitution — a theme echoed in our broader Capability Gap insights.

“The organisations getting value from AI are the ones pairing it with strong engineering fundamentals, not using it as a shortcut.”

Leaner teams, sharper expectations

One of the clearest structural shifts in 2026 is how telco teams are being built.

“We’re seeing lean core teams, with specialists bolted on for programmes. Nobody’s carrying excess headcount.”

Permanent capability is focused on critical continuity and governance. Specialist contractors are brought in for defined programmes and complex delivery.

“Everyone’s wearing two hats now: technical delivery plus stakeholder management. Purely technical roles are becoming rarer.”

Stakeholder capability, commercial awareness and communication skills are now as important as deep technical expertise.

Salaries: Flat overall, premiums in pockets

Broadly speaking, remuneration has stabilised across much of the telco market, but premiums remain in specific segments.

“Salaries are broadly flat, but there are clear premiums for fibre design, RF optimisation, cleared roles and proven programme leads.”

In-demand specialists are still moving quickly when the right opportunity appears.

“Speed wins offers. The best engineers still move quickly when the right opportunity comes along.”

And employer behaviour is still critical to success.

“If you treat good engineers like commodities, you’ll lose them. The top performers know their value.”

The biggest hiring mistakes

Despite a more balanced market, some hiring behaviours haven’t caught up.

“Slow hiring processes are still the biggest obstacles,” Steve says.

And there’s also a tendency to over-specify.

“Unrealistic wish lists don’t help. If you’re looking for someone who can design, build, secure and commercially lead a programme, you’re narrowing the field dramatically.”

And high application volumes can be misleading.

“There’s still a tendency to assume supply equals suitability. High application volume doesn’t mean high capability.”

This mirrors what we’re seeing across sectors: volume is up, but genuine capability remains scarce.

The telco organisations who will succeed in 2026

Rather than aggressive expansion, telecommunications in 2026 is about resilience, optimisation and delivery.

Organisations that succeed will:

• Secure specialist capability early
• Structure teams intentionally
• Pair AI adoption with strong engineering fundamentals
• Move quickly when the right talent appears

The market may not feel “hot”, but it is demanding.

And in a sector where uptime is brutal and SLAs are unforgiving, focused hiring may prove more powerful than hype ever was.

To benchmark telco salaries, contract rates and in-demand skills across Australia and New Zealand, explore our More than Money Salary Guide 2026, including our latest Key Trends shaping capability investment in 2026.

If you’re hiring right now, it might feel like the market has finally slowed down; attrition is down, roles are attracting strong application volumes, teams look stable on paper…

However, beneath the surface, a different story is playing out. Instead of loyalty or engagement, these choices are likely to be shaped more by market uncertainty, caution, fatigue, and financial pressure.

Enter ‘job hugging’. Coined last year on TikTok, it isn’t a trend that exists in isolation. Closely intertwined with other deeper issues shaping the workforce right now, it’s created one of the biggest blind spots employers face heading into 2026.

Staying doesn’t mean thriving

A Talent survey of over 1,800 professionals paints a confronting picture of how people are actually feeling at work.

Only 1 in 8 corporate workers describe themselves as genuinely happy in their role. And nearly two-thirds (68%) say they feel burnt out, stuck or unhappy — often driven by a combination of cost-of-living pressure and a difficult job market.

This employee dissatisfaction is also more widespread than most realise.

More than three-quarters (76%) of workers say they’ve felt close to burnout in the past six months. And over half perceive their workplace culture as either “toxic” or “declining”, while a minority of 15% believe their culture is genuinely thriving.

While many are staying, it’s no direct indication to engagement.

Burnout shows up long before resignations do

Signs of burnout appear much earlier in reduced engagement, lower discretionary effort, and declining performance. And when workers talk about cultural decline, they consistently point first to high turnover and low morale, followed by poor communication and lack of recognition.

By the time people reach burnout or leave, the damage has already been done.

Instead of a downstream people issue to be addressed after attrition spikes, signs of burnout and disengagement should be treated as early leading indicators of risk.

The false comfort of low attrition

Job hugging and burnout together can create a false sense of security for employers.

When people aren’t moving, it’s easy to assume they’re settled and engage. But, in reality, many are simply waiting. In our survey, 7 in 10 workers say they would leave their role if they could, while 65% report staying put due to financial constraints rather than commitment.

Confidence in employers and business leaders is also fragile. Over two-thirds of workers don’t believe their employer would fight to keep them if they resigned, and the disconnect suggests many employees don’t feel valued or invested in.

As Matthew Munson, Managing Director at Talent Sydney, has observed:

“People aren’t moving, but that doesn’t mean they’re engaged or confident about staying long term. That creates a real blind spot for employers who assume low attrition means low risk.”

When confidence returns — and history tells us it always does — all this pent-up movement can be swift and disruptive.

Why salary alone won’t fix this

While it’s tempting to respond to disengagement with pay adjustments or short-term incentives, data suggests this is a problem that runs deeper.

Among the small group of workers who say they are happy, that happiness consistently comes with conditions: flexibility, supportive managers, autonomy, and trust. For some, it means working for themselves. Across ANZ, LinkedIn data shows a 43% 12-month increase in self-employment, a pattern historically linked to periods of market uncertainty and constrained job mobility.

This is less about perks or surface-level engagement initiatives and about how work is experienced day to day.

As Tom Mackintosh, Managing Director at Solve by Talent, puts it:

“There’s often a lot of focus on fixing talent acquisition when engagement drops, but that usually just exposes the real issue. In many cases, it comes back to leadership capability and whether organisations are genuinely invested in learning, internal mobility, and long-term career growth.”

The compounding risk for 2026

Heading into 2026, the risk isn’t that people are leaving in droves but that many organisations are mistaking their people’s endurance as engagement.

Burnout suppresses productivity and job hugging suppresses mobility. Together, they delay the warning signs leaders would normally rely on — until the market shifts and attrition accelerates all at once.

In our latest More Than Money Salary Guide, we identified confidence, culture and leadership capability as core elements of the broader Capability Gap as direct influences to how resilient an organisation will be when conditions change.

What employers should be doing now

The organisations best positioned for the next cycle aren’t waiting for confidence to return before acting.

Instead, they are:

• Investing in leadership capability and workload sustainability
• Creating visible development and internal mobility pathways
• Treating engagement as a strategic risk indicator, not an HR metric
• Strengthening EVP before competition intensifies again

Because when the market turns, the difference between stability and resilience will be clear.

To explore how confidence, burnout and capability gaps are shaping the year ahead — including regional insights and emerging trends explore the full More Than Money Salary Guide, and dive deeper into The Capability Gap and Key Trends driving hiring decisions in 2026.

AI is already in the hiring room

AI is no longer knocking on the door of recruitment, it’s already inside.

From CV screening and sourcing to scheduling interviews and analysing candidate data, AI now touches huge parts of the hiring process. And while plenty of organisations are leaning in, others are quietly uneasy. The real question isn’t whether AI belongs in recruitment anymore. It’s how far should it go, and where do humans need to step back in?

To unpack the dilemma, we put it to our experts. Jack Jorgensen, General Manager – Data, AI & Innovation at Avec  argues the case for AI as a powerful enabler, while Georgia Hynes, Senior Talent Partner at Talent Wellington takes the opposing view, cautioning leaders against over-automation in a human-led profession.

Here’s where they landed.

The case for AI: smarter shortlists, less burnout

Jack’s position is clear: AI shouldn’t replace recruiters, but ignoring it would be a mistake.

“AI is already being used by candidates,” he explains. “If you don’t use it, you’re putting yourself at a disadvantage.”

From a candidate perspective, Jack sees real value. Many capable professionals struggle to articulate their experience and write a strong CV, especially those with non-linear career paths.

“There are people who can do the work but can’t sell themselves, AI helps level that playing field.” He says.

On the recruiter side, Jack argues AI can significantly reduce manual workload, particularly in high-volume markets.

“If you’ve got 200 applicants for a role, going through every CV isn’t a human experience either, AI can help surface the top 30% so recruiters can spend their time where it matters, qualifying properly.”

He also challenges the idea that AI creates dishonesty.

“People have lied on CVs for years. That problem didn’t start with AI, it just evolved.”

Used correctly, Jack sees AI as an enabler in supporting better recruitment, not making the final call.

The case against AI: recruitment is still human work

Georgia agrees AI has its place, but draws a firm line when it comes to decision-making.

“My job as a recruiter is knowing who will work out in a role and who won’t, that’s not something a machine can do.” she says.

From a client perspective, her biggest concern is over-reliance. When every CV looks polished (because AI helped write it), it becomes harder to spot what actually matters: a. can this candidate really do what their CV says they can do b. transferable skills, context, the ‘why’ behind a career move and the nuances that experienced recruiters see instantly.

“Humans can read between the lines. AI filters based on keywords. That’s where great candidates get lost.”

She’s also sceptical that AI can replace intuition, one of the most valuable tools an experienced recruiter has. “I can hear uncertainty in someone’s voice. I can hear when something’s off, even over the phone. AI doesn’t have intuition. It never will.” she explains.

Georgia also raises the risk of bias at scale. “AI learns from historical data. If past hiring was biased, you’re just repeating it at scale.”

And when it comes to video-based AI assessments?

“Honestly, abhorrent,” Jack adds. “Trying to simulate recruiter judgement through facial cues and voice analytics is a terrible experience for everyone.”

Georgia agrees “We’re not recruiting robots. Humans should not be filtered out by machines.”

The verdict: a mixture of both

Ultimately, this debate doesn’t land with a simple “yes” or “no”.

AI isn’t breaking recruitment, but misusing it can.

Used well, AI can help reduce recruiter burnout, improve focus, and help teams move faster through the early stages of screening. Used poorly, it strips nuances, amplifies bias, and filters out great people.

For leaders, the takeaway is clear: AI should support recruiters, not replace them. And human judgement must remain at the centre of every hiring decision.

The future of recruitment isn’t human or AI. It’s human with AI, used carefully, intentionally, and with experience leading the way.

Key takeaways

1. Candidate activity is rising fast as job ads remain at low levels
Applications per job ad have jumped sharply as Kiwis search for higher wages amid cost-of-living pressure. With job ads still below pre-COVID levels, TA teams are managing heavier shortlisting loads even as the overall market feels quieter.

2. Hiring conditions are showing early signs of a 2026 turnaround
The economy is beginning to lift, business investment is returning, job ads have ticked up, and most regions reported growth last month. New Zealand is shifting out of stagnation into slow but steady recovery.

3. AI is reshaping skill expectations, but NZ businesses are still early in adoption
Demand for AI-related skills has surged, especially in IT, marketing, and strategy. While only a small share of NZ jobs can be fully automated, most will see tasks change, elevating the importance of capability building and realistic early-career hiring.

Introduction

After two unsettled years for Aotearoa’s labour market, marked by rising unemployment, declining job ads, and cautious business confidence, leaders are looking for clarity to effectively plan for 2026.

To help map this out, we’ve combined our recruitment experts’ on-the-ground insights with SEEK’s latest market data from our recent webinar with Senior Economist, Blair Chapman, to unpack what the macroeconomic indicators can tell us about what to expect as we head into the new year.

New Zealand’s hiring landscape: National trends to watch for in 2026

Growth is returning after two slow years

After a soft and uneven economic period, New Zealand is finally moving back into growth. GDP is expected to return to pre-COVID norms, supported by stabilising inflation, easing mortgage pressures, and a lift in discretionary spending. This momentum will feed into employment over the next 6-12 months, setting the stage for stronger hiring conditions.

Inflation is easing and business confidence is improving

The RBNZ’s single focus on inflation has paid off: prices are stabilising, mortgage rates have eased, and wage pressures are cooling. With labour costs returning to normal levels, businesses are becoming less hesitant to hire, reversing the uncertainty seen over the past two years.

Job ads remain low, but early signs point to a turning market

New Zealand experienced a much sharper drop in job ads than Australia, but the tide is shifting. Most regions reported job ad growth last month, and ads are beginning to climb across key industries. While this is still below pre-COVID levels, this uptick signals that hiring demand is starting to return.

Surging applications per job ad, driven by local and offshore talent

Applications per ad have risen significantly, but the increase isn’t coming from Kiwis alone. TA teams are seeing a substantial volume of offshore candidates applying for New Zealand roles, adding to already larger shortlists. As a result, hiring teams are processing heavier pipelines even as overall hiring activity remains modest.

Wage growth is easing, reducing hiring hesitation

Wage growth has fallen back to around 2%, and as labour costs stabilise, employers are becoming more confident about adding headcount and planning. With candidates still sensitive to pay, salary benchmarking remains essential while businesses do have more breathing room than they did at the peak of wage inflation.

Consumer spending is lifting again

New Zealand households are beginning to open their wallets, with discretionary spending recovering. This is a positive signal for industries that tend to hire ahead of broader economic recovery, like retail, hospitality, tourism, and logistics.

AI is reshaping skill demand, but NZ adoption is still early-stage

References to AI skills in NZ job ads have surged, particularly in IT, marketing, and consulting. While only a small share of roles can be fully automated, most will see task-level change. Employers are beginning to redesign roles around augmented workflows, but many still lack the internal capability to define what “AI readiness” looks like. With this shift, structured early-career pathways and realistic skill expectations will matter more than ever.

Regional breakdown: Where hiring conditions are shifting most

National snapshot

New Zealand’s labour market recovery is uneven, and the pace varies significantly by region. After a year of rising unemployment and falling job ads, most regions have now recorded an uptick in hiring activity, signalling the early stages of a national turnaround. Employment movements have been mixed, with some areas stabilising while others continue to soften, and the impact of the downturn hasn’t been felt equally across the North and South Islands.

A few regional patterns to note:

• Canterbury/Christchurch: Employment has edged down, but job ad growth suggests recovery is underway.
• Southland & Otago: Both trending towards stabilisation, though not yet fully recovered.
• Central North Island: Some regions such as Taupō saw unemployment ticking down, showing surprising resilience.
• Taranaki: A regional outlier not showing recent job ad growth.

Against this backdrop, Auckland and Wellington sit at the centre of this shift, each with its own drivers: Auckland shaped by broader economic softness and cost pressures, and Wellington shaped by public sector contraction and policy-related hiring freezes. Other regions such as Canterbury, Central North Island, and parts of the South Island are also beginning to show signs of lift, while a handful like Taranaki remain slower to recover.

With this national picture in mind, here’s what employers need to know about the two markets where we see the strongest shifts and the greatest implications for hiring in 2026.

Tāmaki Makaurau / Auckland

Auckland has experienced the sharpest rise in unemployment and one of the biggest drops in employment over the past year. Job ads fell significantly from their post-COVID highs, and hiring demand has been subdued across professional services, construction, retail, and public-facing sectors.

But the turning point is beginning. Early indicators such as a lift in job ads and a gradual return of discretionary spending all point to stabilisation. As mortgage pressures ease and business investment improves, demand for talent is expected to slowly rebuild.

As Kara Smith, New Zealand Country Manager, puts it:

“Auckland has taken some of the biggest hits this past year, but it’s also where we’re now seeing the earliest signs of recovery. Job ads are lifting, spending is picking up, and more movement from employers. With Auckland driving approximately 38% of the country’s GDP, New Zealand as a whole will also benefit.”

For 2026, expect a steady, early-stage recovery with stronger demand in IT, logistics, consumer services, construction and professional roles once activity picks up.

Te Whanganui-a-Tara / Wellington

Wellington’s labour market has been shaped heavily by public sector contraction. Government pullbacks have driven job losses, increased unemployment, and reduced hiring appetite across many adjacent industries.

Even so, Wellington recorded employment growth over the past year. As public sector hiring stabilises and business confidence improves, the private sector is expected to lead the next phase of demand. Candidates remain active and competition for secure roles is high.

In the new year, there will be a cautious rebound driven by consulting, IT, policy-adjacent roles and private sector expansion as government hiring levels out.

Nik King-Turner, Managing Director at Talent Wellington, adds:

“New Zealand absorbed the economic shock of COVID earlier and more sharply than Australia. The view is now that Australia may soon experience some of the same pressures we’ve already worked through, and that could slow the flow of Kiwi talent heading offshore. If that happens, Wellington employers could benefit from greater talent stability at a time when public sector hiring is beginning to level out.”

What employers should prioritise in 2026

With hiring conditions beginning to turn, employers should be preparing now for a more competitive and fast-moving 2026.

Rebuild hiring confidence and capability

As growth returns and job ads lift, competition for talent will increase again, especially in IT, professional services, logistics, construction and health.

Manage surging application volumes

High application numbers mean more administrative pressure on internal TA teams. Streamlined screening, clear criteria, and fast communication will be essential to avoid losing quality candidates.

Refresh early-career pipelines

AI-related roles are evolving quickly, and demand is outpacing supply. Cutting junior pathways only widens the capability gap, and businesses need structured graduate and early-career programs to build future-ready teams and long-term sustainability.

Upskill for AI-enabled roles

Most NZ jobs won’t be automated, but many will be augmented. Employers should focus on practical AI tools, workflow redesign, and building comfort and familiarity with new technologies across teams.

Be realistic about salary dynamics

While wage pressures have eased, candidates remain salary-driven due to cost-of-living pressures. Competitive benchmarking and transparent ranges will help secure talent without inflating budgets.

Plan regionally

New Zealand regions are recovering at differing paces. Tailor hiring strategies, salary positioning, and timelines to local market conditions.

Moving forward

After a challenging few years, New Zealand’s labour market is finally shifting back toward growth. The recovery will be gradual, but the direction is clear. With rising candidate activity, early job ad growth, and easing wage and inflation pressures, 2026 is shaping up to be a more positive year for both employers and jobseekers.

As you plan your workforce strategy, having a clear view of market movement and salary expectations will be essential. Our online More than Money Salary Guide offers searchable rates and salaries to support confident, data-driven hiring decisions across Auckland, Wellington, and beyond.

New Zealand’s infrastructure and energy pipeline is booming but the people needed to deliver it are in short supply. With record numbers of skilled Kiwis moving overseas, and Australia’s own talent shortage intensifying, organisations here face unprecedented competition for technical and project delivery expertise.

This isn’t just a numbers issue. It’s a race for knowledge, capability, and experience.

The great Kiwi outflow

Over the past year, almost 72,000 Kiwis have relocated overseas — more than half (58%) heading to Australia. For sectors like energy, utilities, and infrastructure, this isn’t a marginal shift. Every engineer, project manager, or digital specialist leaving the workforce takes with them years of institutional knowledge and practical experience.

Even more challenging, the migration overlaps with an ageing workforce. A large portion of technical talent is nearing retirement, leaving gaps that can’t be filled by headcount alone. More than just “hiring”, organisations must think strategically about knowledge transfer, capability rebuilding, and workforce renewal.

Australia’s market pressure

Australia is facing similar talent supply issues, particularly in high-voltage energy, specialised civil engineering, and digital infrastructure. Organisations there are competing fiercely for people with Transmission Extra High Voltage (EHV) experience — skills that are scarce in both countries.

And when Australian employers can’t find talent locally, New Zealand becomes a “hunting ground” for engineers and specialists. Beyond that, consultancies are increasingly tapping Singapore, Malaysia, and the Philippines to support regional projects. For New Zealand, this adds both opportunity and risk: demand for skilled talent is now regional, not local, and competition is growing fast.

Skills scarcity isn’t sector-specific

The convergence of multiple industries competing for the same skill sets is creating a national talent pressure point. Energy, utilities, telco, transport, and water infrastructure projects are all vying for engineers, digital specialists, and project managers.

It’s no longer enough to focus on sector-specific pipelines and companies are competing across industries and borders for the people who can make projects happen. This highlights the importance of strategic workforce planning, capability development, and early talent engagement.

The opportunity: plan for capability, not just headcount

While the pressures are real, they also create an opportunity to rethink workforce strategy. Organisations that proactively capture knowledge, upskill existing teams, and design career pathways will be better positioned to navigate both the local and regional talent landscape.

By viewing workforce challenges as a strategic issue, New Zealand can move from a reactive hiring approach to building sustainable capability that ensures projects are delivered efficiently, safely, and to future-proof standards.

Learn more about the talent shaping New Zealand’s delivery future and download our Infrastructure & Utilities Snapshot for insights on workforce trends, cross-sector competition, and the skills needed to meet the country’s infrastructure ambitions.