Despite recent talk of managerial staffing cuts, the average team size hasn’t grown much, even in tech.
Since 2022, hiring began to cool, especially for the knowledge labor market. In 2023, managerial promotion rates cooled to pre-pandemic levels. And dozens of employers, including some of the world’s largest tech companies, announced plans in late 2024 to reduce managerial staffing.
One might think that team sizes would grow as managerial staffing ratios shrink, especially within tech companies and teams. But that’s not what we found.1We define the tech industry as a set of select software-producing industries and tech teams as those comprising at least two-thirds of members in software-producing roles. See the methodology section for details.
We examined ADP payroll data for more than 300,000 people at companies with at least 250 employees between January 2019 and May 2025.
Based on that analysis, we find:
- Overall, team sizes show no clear sign of recent growth.
- Tech team sizes are shrinking, not growing.
- But the most technical teams might be a different story.
Overall, no clear sign of recent team size growth
The average team size across all industries and roles held steady during 2019. Then came the Covid-19 recession, causing team sizes to shrink from 7.4 in January 2019 to 6.9 in May 2020, a decrease of 7.6 percent.2Figures are rounded to nearest tenth after calculation of indices, not before.3See the methodology section to learn how we calculate average team size.
After a brief period of growth during the latter half of 2020, the second pandemic wave caused teams to shrink again in January 2021. Steadier team size growth began in June 2021, and by January 2022 the average team size was 96.1 percent of its pre-pandemic level. That growth leveled off during 2023.
Beginning in 2024, we see possible signs of renewed growth in the average team size toward 97 percent of its pre-pandemic level. But it’s too early to tell whether that trend will continue, or even to precisely characterize its strength.
These trends—depicted in the slides below—make it hard to distinguish any recent increase in average team size from a longer-term trend of partial return to pre-pandemic levels.
How manager and non-manager dynamics drive recent team size trends
We can’t fully understand the dynamics of average team size without measuring the balance of manager vs. team member employment growth.
Team sizes can shrink because manager employment growth accelerates, or because team member employment growth slows down. Conversely, team sizes can grow because manager employment growth slows down, or because team member employment growth accelerates. And if manager and team member employment both grow or shrink at the same rate, then the average team size won’t change.
For those reasons, we compare how manager and team member employment grew from pre-pandemic levels, and how their comparative growth lines up with team size trends.4See the methodology section for how we calculate manager and team member employment indices.
Before the pandemic, overall employment among managers and team members grew at the same rate. During the pandemic recession, employment fell less among managers than team members, causing the average team size to shrink.
After the recession, employment for both groups began growing again at the same rate. But lacking sufficient catch-up growth in team member employment, the ratio of managers to team members—average team size—remained smaller than before the pandemic.
Team sizes in the tech industry are shrinking, not growing
Since much of the recent talk about managerial force reduction comes from tech executives, you might predict team sizes at tech companies would have grown over the last year, but they didn’t.
In January 2019, team size averaged 6.6 in the tech industry compared to 7.5 in all other industries. Fast forward to May 2025, and tech-industry team size averaged even smaller at 5.3, whereas teams in all other industries averaged closer to their pre-pandemic size.5We define the tech industry as a set of select software-producing industries. See the methodology section for details.
Relative to January 2019, tech-industry employment indexed higher for managers than team members until the final quarter of 2020, when team-member growth briefly outpaced managerial growth through the first quarter of 2021. Since then, manager employment growth again overtook that of team members, and that gap widened into May 2025.
Given the ever-shrinking average size of tech-industry teams, perhaps it’s no wonder some tech leaders worry about managerial staffing ratios.
Tech teams are shrinking even if they’re not in the tech industry
For all non-tech industries combined, the comparison between tech teams and all other teams mirrors that between the tech industry and all other industries, in terms of both average team size and the trend in average team size since January 2019.6We define tech teams as those comprising at least two-thirds of members in software-producing roles. See the methodology section for details.
Tech teams within the tech industry might be a different story
From the beginning of the pandemic to its official end in May 2023, the average team size shrunk within tech companies for both tech and non-tech teams. After May 2023, non-tech teams within tech companies continued to shrink, matching the trend for tech companies as a whole.7This is because even at these tech companies, non-tech teams outnumber tech teams.
But tech team sizes at tech companies grew from May 2023 to May 2025. The start of that growth coincides with changes to Section 174 of the U.S. tax code that made research and development labor more expensive to employers.8These changes required employers to amortize research and development investments, including labor costs, rather than deduct them immediately. Although 2025 amendments to these changes only require employers to amortize foreign research and development investments, the U.S. research and development labor market might still suffer from spillover effects.
Yet there are at least four reasons to be skeptical of this evidence that tech teams at tech companies have grown since mid-2023.
First, the growth was modest at 6.5 percent over two years, amounting to less than half a team member. Second, the trend was inconsistent, with teams shrinking back down to 2023 sizes between November 2024 and March 2025. Third, we don’t see the same trend among tech teams at non-tech companies. Finally, tech teams at tech companies remain 8.1 percent smaller than they were before the pandemic.
The takeaway
When prominent tech leaders announced plans last year to cut managerial staffing ratios, it was natural to think that shrinking average team size would follow suit, especially in tech.
But a year later, neither of these predictions came true. It’s hard to tell for sure why not, but at least two possibilities stand out:
- Leaders planning to cut managerial staffing might find it harder than they think. In a large company with many competing priorities, it’s hard to decide which managers get cut. And the middle managers whose headcount might be affected by cuts often make the decisions. This combination of organizational complexity, adversarial decision-making environment, and principal-agent problem might delay leadership’s plans.
- Just because prominent leaders of large tech companies plan to cut managerial staffing ratios, that doesn’t mean all companies will. Other employers might cope with economic uncertainty while chasing after greater efficiency by shedding non-managerial jobs and delegating the extra work to managers. Others might find an alternate path to greater efficiency in creating smaller teams where managers act as player-coaches rather than pure people managers, which could cause managerial staffing ratios, promotion rates, and hiring rates in those companies to rise, not fall.
Methodology
Sample selection
We focus on larger employers with at least 250 head count because their team sizes can be more responsive to economic conditions. After all, it’s hard to change the average team size in a company of only ten people. To reduce bias from the shifting mix of ADP clients, we used a constant panel of private non-farm employers who: (1) were present in ADP data during the full period from January 2019 through September 2024; (2) had complete data mapping job titles to ADP’s proprietary standardized job taxonomy, which in turn maps to Occupational Information Network Standard Occupational Codes (O*NET-SOC); and (3) mapped to the North American Industry Classification System (NAICS).
Average team size calculation
To calculate team size, we identify managers from a company’s direct reporting structure. Then for each month, we calculate each manager’s average daily team size as the number of people who reported to that manager weighted by the fraction of the month that each of their direct reports worked at the company. This method accounts for hires and terminations that add and subtract members from teams during the month.9For example, a team with three people who worked for the company for the whole month and one person who left mid-month shouldn’t be counted as having the same team size as another team with four people who all worked the whole month. In the first team, the team had four people for the first half the month, and three people for the second half, making that manager’s daily average team size for the month 3.5, not four. Note, however, that our method doesn’t account for cases when a worker’s manager changes during the month, either due to managerial departure or internal transfer.
To calculate the average team size each month, we average team sizes across managers. To compare average team size trends among groups that differ in their typical team size, we indexed monthly average team size values to January 2019.
Manager vs. team member employment indices
To see how team size trends depend on the dynamics of manager vs. team member employment, we counted the monthly total months worked by people employed as a manager and team member, respectively, indexing both counts to January 2019.10A manager is also counted as a team member from the perspective of their own manager if they have one.
Tech industry definition
We define the tech industry as a set of select software-producing industries. Specifically, when the employer’s six-digit NAICS code is one of 454110 (Electronic Shopping and Mail-Order Houses), 511210 (Software Publishers), 518210 (Data Processing, Hosting, and Related Services), 519130 (Internet Publishing and Broadcasting and Web Search Portals), 541511 (Custom Computer Programming Services), or 541512 (Computer Systems Design Services).
Tech team definition
We define tech teams as those comprising at least two-thirds of members in software-producing roles. We define software-producing roles as those in the ADP job taxonomy whose job function is Information Technology, and whose sub function is one of Infrastructure, Quality and Release Management, or Software and Application Services.
