March 17 (Reuters) - STEM recruiter SThree reported an 8% drop in net fees for the December 1-February 28 period on Tuesday, as muted hiring activity continued to weigh on client sentiment, and said
SThree says AI slowing demand for software jobs in weak hiring market
Impact of Artificial Intelligence on Software Job Demand and Hiring Trends
By Nithyashree R B
March 17 (Reuters) - Demand for software development roles has slowed as artificial intelligence initiatives across companies disrupt technological hiring, recruiting firm SThree's CEO said on Tuesday, after the British group reported an 8% drop in net fees for the December-February period.
AI's Influence on Hiring Decisions
Mounting fears that AI could displace white-collar jobs have made clients and candidates cautious about committing to new appointments in an already subdued hiring market, affecting recruiters such as SThree, which focuses on the science, technology, engineering and mathematics fields.
Shifting Demand Within IT Roles
"There is a movement within IT that certain roles are in much stronger demand than other roles," CEO Timo Lehne told Reuters, with demand for roles around data, cybersecurity, transformation and project management "much higher" than that seen in the past, as software development demand slowed.
Shares fell as much as 5.6%.
Challenges Facing the Hiring Market
Economic and Geopolitical Factors
COCKTAIL OF CHALLENGES
Global economic and geopolitical uncertainty has affected companies more than candidates, Lehne pointed out, saying that employees were "swapping jobs in line with what is available on the market," but employers in Europe were cautious about hiring due to “a very difficult cocktail” created by these challenges, and now AI-related concerns.
Regional Trends and Stability
SThree has seen stability amongst its contractors in the Middle East, and has not seen any short-term reactions to the ongoing conflict, Lehne said, adding that while candidates from outside the region were hesitant to move there now, specifically to the UAE, it was too early to draw conclusions on trends.
Performance and Outlook
The company's technology segment, its biggest, recorded a 14% decline in net fees over the three-month period, due to soft demand in Germany and the Netherlands.
Signs of Recovery and Leadership Changes
However, Lehne said German clients were showing early signs of renewed confidence, helped by expected government stimulus measures.
SThree continues to expect fiscal 2026 pretax profit of about 10 million pounds ($13.3 million). The recruiter said finance chief Andrew Beach will be stepping down next month. He will be succeeded by insider Damian Fehrenberg as interim CFO from April 30.
($1 = 0.7524 pounds)
(Reporting by Nithyashree R B in Bengaluru; Writing by Pushkala Aripaka; Editing by Sumana Nandy and Chizu Nomiyama )
