At the start of this year, the biggest recruitment problem facing the tech sector in Ireland was a shortage of talent.

IT professionals were in high demand sparking competition among employers to recruit staff.

"I'm overpaying for very average candidates," I recall the Irish head of a big multinational tech company telling me a few months ago.

Over the summer however things started to change.

Soaring inflation, geopolitical unrest, rising energy costs, fears of a global recession and stock market sell-offs have led many tech firms to rein in their spending and announce major cost-cutting plans to prepare for the uncertainty that lies ahead.

In May, it was announced that PayPal was planning to cut 300 jobs in Dublin and Dundalk with the company saying the decision was taken to help it scale its business and make it ready for its next chapter of growth.

Other tech firms followed and announced their plans for the 'next chapter'.

In August, US payments processing company Yapstone warned of potential job losses among its 65 workers at the firm's international headquarters in Drogheda.

A few weeks later, Canadian investment firm Clearco said it was closing its Irish operations, with the loss of 50 jobs. Just six months previously, it had announced plans to create 125 jobs in Ireland.

Earlier this month, the Irish-founded software company Intercom announced 49 job losses, 23 of them in Ireland, as it prepared for a "lower growth market environment".

On Tuesday, Patreon, the membership and payment platform for independent artists, said it was closing its Dublin office and offering its nine Dublin engineering staff relocation packages to join its US-based teams.

The company said that over the last nine months the tech industry, and the whole economy, had changed considerably.

Also in recent days, US cloud communications company Twilio announced plans to cut 11% of its global workforce in a bid to reduce costs.

260 people are employed at the firm's European headquarters in Dublin and it is feared some of them will be affected by the job cuts.

While not announcing any major redundancies, some of the bigger tech firms with headquarters here have paused plans to expand their office space.

In July, Facebook owner Meta said it was stalling the completion of its new Dublin base in Ballsbridge as it reviewed its property needs globally.

Also that month, Twitter said it was re-sizing its Dublin office, which houses the company's European Headquarters. The move saw the fourth floor of its office building being taken offline and sub-leased to another tenant.

Globally, many of the big tech firms have announced recruitment freezes as they reassess their future plans.

A new study released on Tuesday revealed a sharp fall in hiring intentions in the technology, IT, telecom and media sector in Ireland.

The ManpowerGroup Employment Outlook Survey showed that the net employment outlook in the sector for the fourth quarter of the year had fallen by 25 percentage-points compared to the previous quarter.

"Businesses that drove hiring confidence in the tech and IT sector over the last year are now having to reduce workers rather than take on new staff for growth," said John Galvin, Managing Director, ManpowerGroup Ireland.

"Layoffs in the tech and IT sector have become much more prominent in the last quarter, a shift driven by large tech companies who may have over-hired coming out of the pandemic as their markets reopened and now find themselves with a surplus of employees, which is now forcing them to divest recent hires and retract some job offers," he added.

Over-hiring during the Covid-19 pandemic appears to have become an issue for some companies.

Business boomed while the world was in lock-down and forced people to do everything online but now that things have reopened, some firms have realised that they have too many staff.

In July, Canadian e-commerce firm Shopify announced a 10% cut of its global workforce and acknowledged that its rapid expansion, driven by a Covid surge in business, had not worked out.

"Ireland was Shopify's largest base outside of Canada and in 2021 the company announced plans to recruit more than 2,000 engineers globally," said Elaine Burke, Editor of Silicon Republic.

"That decision was made when Shopify was reporting pandemic-driven e-commerce growth but when they laid off ten per cent of their workforce, the CEO blamed this on a mistaken bet that the growth would continue to accelerate," she added.

Within the tech sector, hiring slowdowns and layoffs appear to be impacting some categories of jobs more than others.

"I don't think you will see big job cuts across engineering and cyber security because, at the end of the day, software and cyber security still have skills shortages but what we have been seeing is cuts to teams in sales, marketing, admin, support and HR," Ms Burke said.

Technology Ireland, the Ibec group that represents the technology industry, warned this week that there were signs of an increasing hiring slowdown.

The group called on the Government to use Budget 2023 to focus on attractors such as talent, skills, tax, enhanced infrastructure and making Ireland Europe's global regulatory hub.

"Ireland remains the heart of the technology industry in Europe, but we cannot be complacent and must continue to focus on increasing our attractiveness, especially at a time where companies are reviewing and, in some cases, slowing down hiring," said Una Fitzpatrick, Director of Technology Ireland.

"At a time when inflation and infrastructure pressures are weighing on the economy, there are signs of an increasing hiring slowdown."

"Budget 2023 must address issues of inflation and infrastructure gaps with the potential to further dent growth. This budget must fortify our ability to thrive in the future, by investing in skills, focusing on research and innovation and enhancing our regulatory capacities," Ms Fitzpatrick added.

IDA Ireland says that there is a tech reset underway amid an uncertain global landscape but despite this, employment and hiring at the largest tech companies in Ireland has so far remained robust.

The agency is pointing to recent announcements of new investments and job growth at companies such as Intel in Kildare, Analog Devices in Limerick, Ericsson in Athlone, Diligent in Galway, Kaseya in Dundalk and IBM in Dublin, Cork and Galway.

"Rising interest rates and challenges in global energy markets are a cause for concern, and there have been limited job losses in some companies, arising from increased caution in the face of increased global uncertainty; however IDA remains cautiously optimistic with regard to the pipeline of tech investments in the coming months," an IDA Ireland spokesperson said.

"This is driven by a number of trends including the increased pace of digitalisation which has given rise to a corresponding increase in demand for IT hardware and software."

"The sustainability agenda is also a strong trend that will continue into the future," the spokesperson added.

So, is the current slowdown a temporary blip or a sign of dark days ahead for Ireland's all-important tech industry?

Elaine Burke of Silcon Republic believes what is happening now is a correction, particularly for those firms that scaled-up excessively.

"Many companies are preparing for a harder business environment, so it does make sense for them to reduce staff. It's very difficult for the people who lose their jobs but the companies don't seem to be doing anything too dramatic, rather they are responding to the current economic environment," she said.

While there has been a hiring slowdown in the tech sector, there is still employment growth, much of it driven by smaller firms who are benefitting from the fact that the bigger players have pulled back on their recruitment plans.

It means that start-ups and scale-ups may now find it easier to attract staff and grow their businesses.

It is all about the cloud when it comes to the IT industry and perhaps this particular one has a silver lining.