As tech companies across Europe continue to scale, the ecosystem faces a growing challenge: finding the right talent in an increasingly costly and uncertain hiring market.
Rising economic uncertainty is reshaping hiring trends across Europe. According to LinkedIn’s recent labour market report, hiring is down 26% across the EU compared to 2019 and in the UK it’s down 24% from 2019.
Despite this slowdown, AI is creating demand at a rapid pace. Companies in the EU have added over 256,000 AI-related jobs on LinkedIn since 2023, according to the same report.
How to navigate this market change was one of the key talking points in our latest Sifted Talks in partnership with global HR platform WorkMotion. Panellists unpacked how scaling companies in Europe can adapt to changes and how to future-proof their talent strategies.
Our panel of experts included:
- Felix Steffens, CEO at WorkMotion
- Caitriona Staunton, VP of people at fintech company Primer
- Matt Hooper, chief marketing officer at data and AI software company Quantexa
- Valerie Bures, partner at VC firm XAnge
AI is changing the way we hire
AI tools are increasingly being used for mid-layer tasks that were previously done by managers, says Staunton.
“Companies are expected to be doing more with a lower headcount,” she says. “A lot of the hiring of AI specialist roles is skewed towards more senior hires. Yet we're seeing a lot of the middle layer now being automated.”
But, Steffens argues that AI isn’t necessarily a “job killer” but actually a “job augmenter”.
“There is a certain narrative that AI is slashing jobs,” he says. “I don't think that's true. There are jobs that can be substituted with AI but there are also jobs which can be made more productive with AI.
“Companies are hiring for those roles more and more. Now the most difficult part is finding the talent to fill those roles."
However, if a candidate relies entirely on AI, their work output becomes average, adds Bures.
Hiring becomes so AI-oriented we forget if a candidate can actually produce evaluated work …For me, the biggest challenge is knowing how good a candidate’s critical thinking is and their creative ways to approach problems. - Bures
Evolution of work models
Many founders have been inspired by the “996” movement, which advocates working 9am-9pm, six days a week, says Steffens, which is ultimately proving to be a bottleneck.
“I know founders who are big fans of hustle culture who want everybody in the office. They are now in a situation where it doesn't work. They can’t find the talent locally needed to scale fast enough.
“In the world of AI everything can be built quickly. If you have a role open for three to six months, that's going to kill your business plan.”
Companies are now hunting globally for employees that can work remotely. Unlike the US, where talent tends to be concentrated in San Francisco or New York, Europe's talent pool is scattered across hubs like London, Berlin, Munich, Paris and Stockholm.
Restricting hiring searches to just one of these cities can stall a company’s expansion.
Companies should keep their hiring strategies agile rather than adhering to strict year-by-year goals, adds Staunton.
At Primer, we are cautious. We have a very loose three-year hiring plan and a far tighter one-year plan. This reflects the uncertainty within the external market right now. - Staunton
The collapse of entry-level roles
According to the Institute of Student Employers, graduate hiring in the UK has fallen 8% year-on-year. This is the first time it’s fallen since the Covid-19 pandemic which saw it fall 12% year-on-year.
Traditionally, junior hires start at the bottom of an organisation’s hierarchy and work their way up. By eliminating entry-level jobs, companies are losing that bridge to senior leadership.
Many early-stage companies are utilising the prospect of AI taking over junior roles as an excuse to pause recruitment, says Hooper.
“There’s a convenient narrative around holding recruitment,” he says. “Costs are getting squeezed so companies think they can save money if they don’t need to hire as many young people."
But Staunton says founders should change their mindset around entry-level workers. Instead of viewing a graduate's salary as an overhead, it should be categorised as a research and development (R&D) investment.
"I'd advise founders not to kill the junior pipeline because these people are fluent in AI tools. In my last company, I had someone move from intern to SVP within a few years with the right coaching around them."
I fear for the graduate market. AI has had an impact on not necessarily that roles have already been replaced, but the prospect of roles being replaced - Hooper
Future-proofing talent strategies
Many European startups can’t match the salaries offered by their US counterparts. Instead, they choose to compete on culture and flexibility.
Founders must develop a unique selling proposition (USP) and a clear answer as to why a candidate should choose them, says Staunton.
“The role of a talent partner has completely changed,” she adds. “In the last few years it's no longer only about identifying the talent but how to engage those people and being more creative about how we actually assess their skill sets.”
For Quantexa, working in a hybrid model has allowed the company to develop close teams and culture. “We could never be completely remote,” Hooper says. “We get the benefits from flexible working and that drives efficiency and a level of work-life balance.
“At the same time, we want the best of both worlds with interaction and collaboration, and with those water cooler moments."
The difference between the most productive employees and less has become more pronounced in recent years, adds Steffens.
“In terms of adapting talent strategies, companies should go the extra mile to make sure that they get the right people. They might have to consider hiring somebody remotely because you get access to more talent that way.
Talent has different expectations these days and they know their market value. Companies will have to go the extra mile to secure them. - Steffens
