IT Job Market Shrinks for First Time in Over Two Years

Until January, roles in IT had mostly been protected from the sweeping layoffs at major technology companies like Amazon.com Inc. and

Alphabet Inc.

and even firms outside the tech sector like chemicals company

Dow Inc.

and industrial and consumer products maker

3M Co.

Capital One Financial Corp.

last month laid off about 1,100 employees in the “agile” group within its technology department, which had focused on a software development methodology that uses more rapid and flexible processes. The McLean, Va.-based bank said those roles would be absorbed by its existing engineering teams and product managers.

IT positions that continue to be cut or become automated are those in data center operations and telecommunications, and technology leaders are looking to cut “nonessential” managers and staff, not workers with technical skills like engineers, said

Victor Janulaitis,

the chief executive of Janco.

Still, employment in the overall technology sector hasn’t wavered, according to IT trade group CompTIA. And despite the IT jobs slowdown, Janco found that over 109,000 IT jobs remain unfilled due to a lack of qualified candidates, reflecting the IT skills gap in areas like cybersecurity and software development. 

“There is excess demand for IT labor, which will continue to be in favor of those looking for IT employment,” said

Christopher Gilchrist,

a principal analyst at

Forrester Research Inc.

That demand generally means that IT workers also will remain less exposed to layoffs than employees in other departments, Mr. Gilchrist said.

Some chief information officers say that the competition for IT talent is still as fierce as ever—and recruiting new talent is a priority even as some companies are implementing cost-cutting measures.

“The war for talent is very real,” said

Sriram Sitaraman,

the CIO of semiconductor software maker

Synopsys Inc.

Mr. Sitaraman said that developing and engaging talent is a priority, though the company plans to do so “with reduced recruitment costs.”

Other tech leaders like

Jason Conyard,

the CIO of software giant

VMware Inc.,

said they are focused on training current staff with new skills like machine learning and automation, a trend that companies across sectors have leaned into amid a tight labor market.

“The skills that got us to where we are today are not the skills that will get us where we are going,” Mr. Conyard said.

Though some businesses are shedding staff, Mr. Gilchrist said technology leaders in particular “do not need to be too aggressive with short-term cuts that inevitably will force them to play catch-up in the long run.” They can instead “reposition” their current staff to focus on business strengths, he said.

Monica Caldas,

the CIO of Liberty Mutual Insurance Co., said that while the Boston-based insurer has developed internal training programs in areas like cloud computing and software development, it is still focused on hiring engineers and those with data and cybersecurity skills.

“Not only do we need to provide capabilities to propel the business forward, but we need the best engineering tools, modern architectures and people in the right roles to respond to changing market conditions,” Ms. Caldas said.

Write to Belle Lin at belle.lin@wsj.com