There is a version of this story that has become almost ambient. AI is replacing software developers. Demand is collapsing. The market has fundamentally changed, and whoever hasn't adapted yet is about to find out the hard way. I hear this regularly. In news articles, on LinkedIn
There is a version of this story that has become almost ambient. AI is replacing software developers. Demand is collapsing. The market has fundamentally changed, and whoever hasn't adapted yet is about to find out the hard way. We track software developer job postings daily across multiple Western markets. The data mostly does not support what everyone is saying.
What the data shows
We use the Indeed Hiring Lab sectoral index for software development, which tracks job postings relative to a pre-pandemic baseline of 100. Yes, postings are significantly below their 2022 peak — but the decline started before AI tools became widely available. Nearly half of the drop from the 2022 peak had already occurred before large language models entered mainstream use. The correction looks more like a normalization after pandemic-era overhiring combined with interest rates returning to normal.
In the United States, the software developer index currently sits at 70.7 — the highest reading in roughly two years. Six months ago it was at 65.8. The market troughed in May 2025 and has been recovering since: nine consecutive months of upward movement. The United Kingdom follows a similar pattern — from a low of 53 in May 2025 to 63.7 by February 2026, an 18% recovery from the bottom.
In the Netherlands, ICT vacancies increased from 16,600 to 16,900 in Q4 2025, making it the only major sector to grow while the overall Dutch labor market contracted by 7,000 vacancies in the same quarter.
The geographic split nobody is talking about
The Anglo-Saxon markets and the Netherlands are recovering. Continental Europe is not, at least not yet. Germany's software developer index sits at 57.7, down almost 3% over the past six months. France is at 55.9, barely moved from its December 2025 trough. Both markets declined through the autumn while the US and UK were already climbing.
Why the split? A few possibilities: it could be macro-economic — Germany in particular has been dealing with a structural industrial slowdown. It could be cultural — more internationally oriented, entrepreneurial business climates may move faster through transitions. It could even be that Germany and France are actually realizing more productivity gains from AI tools, meaning they genuinely need fewer developers right now. The mechanism remains an open question.
What this does not prove
The recovery is real but this is not evidence that demand has returned to pre-pandemic levels. The US at 70.7 is still 29% below February 2020. The UK at 63.7 is 36% below. It is also not evidence that the nature of the work is not changing — it is. The shape of demand is shifting even as the volume recovers. And it is not evidence that the recovery will continue at the same pace.
Why the gap between narrative and data persists
The collapse narrative is intuitive. It follows a clean logic: better AI tools mean fewer developers needed. That logic is not wrong as a general direction. But it runs ahead of what is actually measurable in the market right now. The demand for software developers is not collapsing. In some of the most important markets, it is growing again. The story is more complicated than what most people are repeating.
