Sydney market overview

The first half of 2025 has been mixed with some industries showing signs of recovery but others still facing challenges. Recruitment activity is on the rise in certain sectors, but the growth outlook has stagnated. The combination of Federal elections and geopolitical uncertainty created elsewhere have tempered our expectations on what will happen for the remainder of 2025

We are still seeing large volumes of applications across Project Services, Support, and Corporate Services. It is not unusual for us to still receive 750-1500 applications per role. Responding to this volume of applications is hard for agencies and employers and so the levels of candidate service is suffering, leading to a lot of frustration in market. Recruitment agencies and internal recruitment teams continue to operate very lean with a laser focus on productivity. At Talent we have maintained our full teams, as we take a long-term view and are prepared for when the market turns.

Permanent hiring remains stagnant with some salaries on some roles returning to levels not seen since 2019. We continue to see redundancies and a move towards “profitable growth”. We experienced the cooling of salaries across many job families, although hard to find niche talent will always test the top end of what the market has to offer. We have yet to see the true impact of AI. Companies hiring for Software Engineering and Data roles are now expected to have experience in or an understanding of Generative AI, LLM’s or Machine Learning.

Despite all this, there are some green shoots as the macroeconomic outlook shows moderate growth. Economic growth surpassed market expectations with GDP growing in the final quarter of the financial year. The RBA has again cut the cash rate, and further cuts are projected. Inflation is predicted to be 2.9% by the end of 2025, which sets us up for a brighter start to FY26.

Business critical projects can only be postponed for so long, so the need to invest in technology & transformation combined with some positive signs the economy is finally improving, suggest that investment and hiring is starting to recover. With a high volume of candidates still competing for jobs, the advice to candidates is to be flexible and think holistically around what matters most when considering an opportunity. Companies are becoming fussier with an expectation of an 80%-90% match to the job profile, whereas throughout the COVID period, candidates with a 60%-70% match were being hired. Advice for clients would be that the best candidates are still hard to attract. There is a reservation to jump ship in a market as unpredictable as ours, so when you find a great candidate make your offer competitive and move fast to secure them.

The NSW Government continues to look to make savings through contingent workforce cuts. This does seem to be slowing down with some departments (especially in IT), at breaking point so hopefully will bottom out over the next 3-6 months. In Labors first term, inflation was been the dominant challenge so the government’s room to maneuver on policy was been constrained. With the recent more positive inflation figures the risks that will be most front of mind will be different: namely now the risk of a slowing economy and the need to maintain stability and confidence, particularly given what else is happening in the world should come to the forefront of Labors actions. Hopefully now they can look to releasing some funds for projects which will have the need and appetite for the expertise of the white-collar contingent labor market.

While the re-elected Labor government has promised contingent workers better access to benefits this has yet to eventuate and the significant decrease of contingent opportunities in the tech and white collar continues to put pressure on rates.

When it comes to technology sales roles, we have also seen the market revert to pre-COVID levels in terms of hiring for many go-to-market roles i.e., sales, sales leadership, and for some roles we have seen demand drop well below pre-COVID levels, i.e., customer success, channel/partner and pre-sales.

Candidate needs in Sydney

• Flexible working arrangements
• Progression and professional development opportunities, including improved access to online learning from their employer or third parties
• Rewarding work – stable, long term large project/BAU work will often be preferred

Business needs in Sydney

• The expectation of 3-5 days per week working in the office
• Opportunity to leverage the rapidly developing opportunities with AI
• Stable workforce with stable predictable costs
• Cybersecurity skills and experience

The year ahead for Sydney 

What can we expect as we head into FY26?

We continue to remain optimistic about the market outlook as upgrades and business-critical projects need to be completed. The Manager Services Providers and Consultancies are slowly starting to rebound off the back of these projects. The caveat to this is that they are now competing primarily on cost, which in a tight labour market brings into question the ability to deliver over an extended period.

The Financial Services industry continues to show resilience with the Big 4 reporting strong half-year results despite competition and rising costs. Despite the positive financial results, we are in a period of consolidation. Headcount reductions and offshoring have continued into the first half of 2025 and most likely through to the end of the calendar year. We have yet to see the full impact of Agentic AI on the industry, FY26 is when we expect to see this being rolled out.

In terms of working arrangements, from the job seeker’s perspective, there is higher demand for more working from home options and general flexibility – but although this is the case, we are finding that the majority of companies are enforcing a return to the office (3-5 days per week). In a tougher market this may work, but Australia still has a skills shortage, so when the market lifts, we suspect employers that offer less flexibility will suffer. Fully remote work only seems to be available to candidates who are willing to take pay cuts to work from home entirely.

Looking at top skills right now, cybersecurity is in high demand. As Australia is a wealthy country and a fast adopter of new technologies, it’s an attractive target for cyber criminals. The government wants Australia to be “a world leader” in cybersecurity by 2030. State government agencies will have to scale up to address (and get in front of), an increase in frequency and complexity of attacks, and as such, cybersecurity will be an area to watch out for over the next few years. The Albanese government’s Clare O’Neil (Minister for Home Affairs and Minister for Cyber Security) has already described cyber threats as, “the fastest growing threat that we face as a nation”. Part of the funding allocated will be invested in a threat sharing platform for the health sector which will drive some demand in eHealth for skilled contingent labor in 2024. $586.9 million has been announced for the “action plan”, which runs until 2030. Local government agencies and universities are already working on the implications highlighted in the Security of Critical Infrastructure Act and planning investment accordingly. This includes hiring in this space.