The picture is uneven. Overall vacancies are still moving, and the largest volume increase recently came in professional, scientific and technical activities, which rose by 5,000 according to the ONS Vacancies and jobs in the UK bulletin. Yet businesses stayed cautious through a subdued 2025, with clear demand hotspots for specialist skills including AI, data, enterprise applications and cyber security as Computer Weekly's tech recruitment outlook notes.
The sector itself is large and defined more tightly than it used to be. The updated Digital and Technology sector definition contains 107,082 companies, representing 5.2% of all UK companies per GOV.UK Digital and Technologies Sector Economic Statistics. That scale sits alongside a sharp squeeze at the junior end, which is where regulated markets are quietly rewriting hiring plans.
That squeeze is real. The UK tech sector cut graduate jobs by 46% in the past year, with a further 53% drop projected according to Institute of Student Employers figures reported by The Register. Adzuna has seen a 30% drop in UK entry-level job postings since ChatGPT launched, leaving graduates facing the toughest market since 2018 as techUK reports. So where is the demand going?
Demand is climbing where rules bite hardest. In financial services, recruitment was generally for higher-level RQF 6+ roles rather than RQF 3 to 5 positions according to the GOV.UK Temporary Shortage List Stage 2 report. In plain terms, that means degree-level and above: firms want people who can carry regulatory judgement, not just write code.
Defence is a second engine. The defence sector saw surveyed recruitment grow by 17.8% in 2022 per GOV.UK, and more than 1,700 new jobs are being created following at least £1.4 billion in foreign direct investment committed since July 2024 according to GOV.UK. MOD expenditure with industry supported 272,000 direct jobs in 2023/24, an 11% rise on the prior year per MOD supported employment estimates, up from 239,000 in 2022/23 as earlier MOD estimates show. Much of that work is software: secure systems, data platforms and cleared engineering.
Cyber security ties it together. There are roughly 143,000 people in the UK cyber security workforce, with growth accelerating from 2% in 2022 to 5% in 2024 according to GOV.UK Cyber security skills in the UK labour market 2025. And the way teams build junior talent is shifting: apprenticeships rose from 3% of AI hires in 2020 to 19% in 2025 per the DSIT AI Labour Market Survey 2025. When compliance raises the bar, employers grow their own specialists rather than compete only at senior level.
Start with the regulation, not the job title. Write the brief around the standards the role must meet, whether that is financial conduct rules, defence clearances or security frameworks. That focuses the search on people who can evidence compliance experience, which matters because 76% of engineering employers already struggle to recruit for key roles, with technical and specialist skills topping the list according to the IET.
Then move quickly and keep two pipelines open. The KPMG and REC UK Report on Jobs continues to track a tight, fast-moving market as the KPMG and REC UK Report on Jobs sets out, so slow processes lose the best specialists. Run a senior search for immediate regulatory need, and build an apprenticeship or graduate route for the skills you can grow. That mix protects you against the entry-level squeeze while filling the RQF 6+ roles the market is chasing now.
Finally, screen for judgement as well as code. In regulated work, the costly mistakes are not syntax errors, they are decisions that breach a rule. Ask candidates to talk through a compliance trade-off they have handled. It tells you far more than another whiteboard test.
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