Labor Market Weakens: IT Jobs Shrink, AI Skills Rise, and Apple Delays Siri's Major Upgrade

[00:00:01] It's Tuesday, March 11th, 2025, and I'm Dave Sobel for Things to Know Today. Tech jobs shrinks, small businesses are cutting workers, how IT spending will be affected. We look at IT services in 2025, AI's rise, budget struggles, and the $7,800 productivity problem. ConnectWise adds free security and backup, but there's more to the story. And Siri's makeover takes a detour, why Apple is holding back. This is the Business of Tech.

[00:00:32] The latest jobs report reveals signs of softness in the labor market, with the economy adding 151,000 jobs in February, a figure close to the average monthly gain of 168,000 over the past year. The unemployment rate has ticked up to 4.1%, still low but concerning due to 380,000 workers leaving the labor force and 590,000 reporting they were no longer employed.

[00:00:58] Notably, the broadest measure of unemployment, which accounts for those wanting to work but not actively seeking it, rose to 8%, the highest level in three years. Evidence suggests that businesses are becoming more hesitant to hire, with private sector employers adding only 77,000 jobs last month, a stark decline from the previous month's gains. This slowdown is attributed to uncertainty surrounding tariffs and spending cuts, which are causing employers to reassess their hiring strategies.

[00:01:27] Meanwhile, the Institute for Supply Management's monthly survey indicated an acceleration in the service sector, yet participant comments reflect a mixed outlook, citing chaos due to tariff actions and increased uncertainty post-election. However, small businesses, defined as those employed between 1 and 19 workers, experienced a net decline of 12,000 jobs.

[00:01:50] Regionally, the Northeast and Midwest saw employment gains of 55,000 and 56,000 respectively, while the South and West reported declines. The IT job market in the U.S. showed mixed signals in February, with unemployment rising for the second consecutive month to 3.3%, up from 2.9% in January, according to data from the Bureau of Labor Statistics. Despite an increase of nearly 490,000 job postings, tech employment shrank by over 9,000 positions.

[00:02:20] Janko Associates reported a higher unemployment rate of 5.4%, though this is down from 5.7% in January. Economic uncertainties, including stock market fluctuations and inflation concerns, contributed to hiring slowdowns, with tech demand decreasing by 6% so far this year. However, demand for skills in artificial intelligence continued to trend upward, with job listings mentioning AI skills rising by 116% compared to last year.

[00:02:51] Freelancers are increasingly facing challenges due to the rise of artificial intelligence, according to a recent study by researchers at Washington University and New York University's Stern School of Business. The study reveals that for every 1% increase in a freelancer's past earnings, there is a 0.5% drop in job opportunities and a 1.7% decrease in monthly income following the introduction of AI technologies.

[00:03:16] This trend is concerning as, by 2024, over 76 million Americans were identified as freelance workers, representing more than 36% of the workforce. Why do we care? The latest job data highlights a softening labor market, regional disparities in employment, and tech hiring stagnation. Those small businesses shedding 12,000 jobs, signaling that this segment is under economic stress. For MSPs targeting SMBs, this could translate to budget cuts, longer sales cycles, and lower IT spending.

[00:03:46] And regional job disparities could influence IT spending. The Northeast and Midwest saw job growth, 55,000 and 56,000 respectively. South and West experiencing decline. If you operate in a struggling region, expect slower growth and possible pricing pressures. If you're in a growing area, position IT services as an enabler of business expansion and consider geographic diversification. MSPs with clients across multiple regions will be less vulnerable to localized downturns.

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[00:04:47] Backup to local on-prem storage or any of the leading cloud providers. Visit CometBackup.com to start your free 30-day trial today. Get $100 free credit when you sign up with the promo code MSPRADIO. Comet Backup. The backup solution that MSPs trust. And there's some new data on IT services. The new State of the Channel 2025 from the Global Technology Industry Association reveals that the demand for artificial intelligence and cybersecurity

[00:05:17] is creating significant opportunities in the channel, despite ongoing economic challenges. Global IT spending is projected to rise by nearly 10% this year, reaching approximately $5.6 trillion, with IT services expected to increase by 9% to $1.73 trillion. The report indicates that almost 60% of surveyed companies see the growing complexity of technology as a key driver for channel demand.

[00:05:44] Notably, half of North American channel firms anticipate robust sales growth driven by artificial intelligence in the next two years, surpassing cybersecurity as the leading revenue growth area. However, challenges remain, including skills shortages, which are cited by 37% of firms as a major concern. Additionally, 44% of respondents highlighted external economic factors as significant worries.

[00:06:09] The data comes from a survey conducted in December with over 1,000 channel company executives. A survey conducted by ScalePad reveals how leading managed service providers distinguish themselves in a competitive market. The survey highlights that 85% of top providers prioritize customer satisfaction, while 72% invest heavily in employee training and development. Furthermore, the report indicates that these MSPs are more likely to adopt innovative technologies,

[00:06:36] with 68% implementing cloud-based solutions. A recent survey by SolarWinds reveals that only 23% of IT professionals believe their current budget is sufficient to meet their organization's needs. This concern is exacerbated by economic uncertainty, with 43% of respondents identifying budgetary issues as their biggest challenge this year. The survey, which includes 272 global IT professionals,

[00:07:03] highlights that nearly half of the participants struggled to justify their expenses to upper management, with 28% having budget requests denied in the past year. Looking ahead, 43% anticipate that budget constraints will continue to be a significant challenge through the year, particularly in crucial areas like cybersecurity. Furthermore, 40% of respondents find it increasingly difficult to plan IT spending accurately due to global volatility and supply chain disruptions affecting hardware procurement costs.

[00:07:34] IT workers face unprecedented challenges, costing employers an average of $7,800 annually in lost productivity due to recurring tech issues. A report from Liquid Web reveals that each IT professional deals with about 144 technical problems each year, with each incident costing around $50. One in 10 professionals report being asked for troubleshooting help multiple times a day,

[00:08:00] and in-office staff encounters significantly more issues compared to their remote counterparts. Despite these hurdles, nearly 75% of IT professionals believe their teams effectively address daily frustrations. The report highlights that the real estate industry suffers the most tech problems, averaging four issues a week, while digital marketing reports the least, with just two. Why do we care? Well, let's reinforce the key trends driving IT services this year.

[00:08:28] AI overtaking cybersecurity as the primary growth driver, budget constraints limiting IT investment, skills shortages threatening expansion, and IT efficiencies costing businesses billions. IT spending is increasing, but budgets are tight. Clients need ROI-driven services, and providers should help justify their value. Focusing on solving those technical issues, which continue to persist, is significant. $7,800 annually per employee.

[00:08:56] And skills shortages are a major problem. A ScalePad report shows that 72% of top MSPs prioritize staff training. Retaining skilled employees will define success. As we heard earlier, the labor market alone won't solve it. Investing in automation and employee development will separate leading providers from struggling ones. ConnectWise announced the inclusion of Security360 and Backup360 at no extra cost with its ASIO platform.

[00:09:25] The integration allows for seamless connections with leading security and backup vendors, empowering over 100,000 active endpoints with proven solutions. The company also announced enhancements to its remote monitoring and management and robotic process automation solutions. The new features include advanced automated patching to bolster cybersecurity, reducing the time spent identifying and applying updates. Additionally, the upgraded platform now offers over 1,200 intelligent alerts to minimize false positives and improve productivity.

[00:09:54] Notably, the new onboarding digital worker workflow can cut the time required to create user accounts in Microsoft Office 365 by 75%. ConnectWise launched its new SaaS security solution, designed to empower and manage service providers to manage and monetize Microsoft 365 security services effectively. Key features include automated threat detection and remediation, enabling faster responses to vulnerabilities.

[00:10:20] Speaking of Microsoft, Microsoft is set to replace its Windows desktop application for Windows with a new Windows application, ending support for the former on May 27, 2025. Users connecting to services like Windows 365, Azure Virtual Desktop and Microsoft DevBox will need to transition to the new app which launched in September 2024. The updated application features enhancements such as multi-monitor support and dynamic display resolutions.

[00:10:47] While the existing Remote Desktop Connection app will remain operational in Windows 11, the new app currently requires a work or school Microsoft account with potential plans for personal account support in the future. Splashtop has launched a new autonomous endpoint management solution designed to enhance remote support for businesses. The new product aims to provide improved efficiencies and visibility for IT teams managing network devices.

[00:11:13] According to Splashtop CEO Mark Lee, mid-market organizations face constant threats from cybercriminals, being crucial for them to address security vulnerabilities affordably while maintaining productivity. The new solution offers features like real-time asset discovery, vulnerability scanning and automated patch management, allowing IT teams to manage up to 200,000 endpoints without performance issues.

[00:11:36] Splashtop's solution aims to simplify security management, providing a user-friendly dashboard for proactive control over IT environments. Now why do we care? ConnectWise leans into the price wars while also managing to release new capabilities. By standardizing security and backup, ConnectWise is reinforcing vendor lock-in. Providers using ASIO may find fewer reasons to seek third-party alternatives.

[00:12:01] Splashtop's entry into autonomous endpoint management highlights that important trend. RMM solutions are evolving beyond traditional monitoring into AI-driven automation and cybersecurity integration platforms. Apple has announced a delay in the rollout of its upgraded Siri features, stating that it is taking longer than initially expected.

[00:12:22] Company spokesperson Jacqueline Roy indicated that the enhancements, which aim to make Siri more personalized and context-aware, will now be released over the coming year. Originally, these features were anticipated to launch this spring, following their introduction at last year's Worldwide Developers Conference. Concerns have arisen within Apple regarding the functionality of these advancements, with reports suggesting that some executives believe the features need to be completely rebuilt.

[00:12:49] Notably, Bloomberg's Mark Gurman has indicated that a fully modernized and conversational Siri may not be available until iOS 20 at the earliest. Why do we care? Apple's delay in rolling out its upgraded Siri raises critical questions about the company's AI strategy. If Apple recognizes that Siri's current foundation is unsalvageable, delaying to build a genuinely next-gen assistant could be the right move.

[00:13:15] Unlike rushed AI rollouts that face backlash over inaccuracy and security concerns, Apple could be ensuring that its next iteration of Siri aligns with its high standards for user experience. However, the real risk is irrelevant. However, the real risk is irrelevant. If Apple fails to ship meaningful AI improvements in the next year while competitors aggressively innovate, Siri could become a relic of a past era rather than a contender in the AI-driven future.

[00:13:41] Given the rapid advancements in conversational AI from OpenAI, Google, and others, Apple's hesitation suggests either internal roadblocks or a fundamental reassessment of its voice assistant's direction. Either way, businesses and IT providers should remain skeptical of Siri's near-term viability as a leading AI assistant. Are you ready to get your brand in front of the tech leaders shaping the future of managed services?

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