The Software Developer Market Is Not Doing What Everyone Says It Is

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, in conversations at events. It is stated with confidence, and it spreads easily because it fits a coherent narrative: AI improves, developers become redundant, companies need fewer of them.

The thing is, we track software developer job postings daily across multiple Western markets. And I wanted to know whether the data actually supports what everyone is saying.

It mostly does not.

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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. It covers the US, UK, Germany, France, Canada, and Australia, among others.

Yes, postings are significantly below their 2022 peak in most markets. That correction was real and steep. Worth noting: the decline started before AI tools became widely available. Nearly half of the drop from the 2022 peak had already occurred before the end of that year, 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 levels, than a structural AI-driven displacement. But what has happened since is where the story gets more interesting.

In the United States, the software developer index currently sits at 70.7. That is 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. The index reached its lowest point in May 2025 at around 53, and has recovered to 63.7 by February 2026. That is an 18% recovery from the bottom.

In the Netherlands, where Indeed does not publish a comparable sectoral index, the picture comes from CBS data. In Q4 2025, ICT vacancies increased from 16,600 to 16,900, making it the only major sector to grow while the overall Dutch labor market contracted by 7,000 vacancies in the same quarter.

The software developer market is recovering in the markets that matter most to us.

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The geographic split nobody is talking about

What the data shows, and what I find genuinely surprising, is how differently this plays out across Europe.

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. Neither has shown a clear recovery signal.

Why the split? I genuinely do not know, and I want to be careful not to reach for an explanation that fits the pattern but cannot be verified.

A few possibilities come to mind. It could be macro-economic: Germany in particular has been dealing with a structural industrial slowdown that has nothing to do with AI or tech specifically. It could be cultural: more internationally oriented, entrepreneurial business climates may move faster through transitions like this, partly because English-language AI tools and discourse are more accessible to them. It could even, somewhat counterintuitively, be that Germany and France are actually realizing more productivity gains from AI tools, meaning they genuinely need fewer developers right now. I do not think that is the most likely explanation, but it cannot be ruled out from this data alone.

What I can say is that the pattern is real and consistent across several months of data. The mechanism behind it remains an open question.

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What this does not prove

A few things I want to flag explicitly, because the data does not support them even if the headline seems to.

This is not evidence that demand has returned to pre-pandemic levels. It has not. The US at 70.7 is still 29% below February 2020. The UK at 63.7 is 36% below. The recovery is real, but the context is a deep trough.

It is also not evidence that the nature of the work is not changing. It is. I wrote about that at length recently, specifically about how job postings have become longer, more contradictory, and often describe people who cannot exist given how recently the required technologies were invented. The shape of demand is shifting even as the volume recovers. Those are separate questions.

And it is not evidence that the recovery will continue at the same pace. Germany and France show that different conditions produce different trajectories. The recovery in the US and UK could stall.

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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. When the pace of change is high enough that it is difficult to distinguish signal from noise, you tend to absorb the ambient story rather than go looking for the data.

The demand for software developers is not collapsing. In some of the most important markets, it is growing again. That does not mean the field is unchanged. It means the story is more complicated than what most people are repeating.