More than a hundred thousand job cuts have rocked the US tech industry in 2022. Even if it doesn’t necessarily mean that the market will be different, it’s obvious that tech spending rein-in will impact tech hiring.
For many tech workers, it’s a first. They’ve never experienced similar turmoil: on the contrary, they’ve known nothing but non-stop growth and swag – free food, generous work-from-home, or work-from-anywhere options.
This is changing. According to Layoffs.fyi, a website that tracks publicly reported job cuts in the tech industry, almost 150,000 employees have been let go in 967 tech companies in 2022.
November alone was particularly punishing, with 51,215 layoffs, up from 12,683 in October and 5,881 in September. The largest companies are leading the pack, such as Meta (11,000 layoffs) and Amazon (10,000).
Cybernews chatted to several tech industry insiders, some of whom think that this trend proves we’re seeing a trigger effect, and that layoffs will continue and expand.
Others, though, claim that this pause is temporary because demand for experienced tech professionals will not diminish.
In other words, even if winter truly came to the tech world, spring is just around the corner – especially when the unemployment rate for tech occupations in the US stood at 2.3% in August and was lower than the overall rate of 3.7%.
Besides, there are an estimated 8.7 million tech workers in America, according to the Computing Technology Industry Association – so 150,000 layoffs do not sound so bad, after all.
Yet, of course, maybe it’s time to shed some bad habits for good – even if, as Jakub Poluszynski, Talent Acquisition Manager at Studocu, an online education platform, told Cybernews, there are indeed many smaller companies still doing very well, looking both to hire and to retain talent.
Jobless holidays for thousands
According to the Insider news website, an outcry was heard earlier this year at Meta, where management decided to limit free meals availability at offices and took away the laundry service it offered to workers.
One can obviously live without all these nice extras – but without a job? Within two months, Meta pulled thousands of new job offers from the market, and soon after, Mark Zuckerbeg, Chief Executive of the company, said layoffs were coming.
It’s more or less the same story around the whole Big Tech industry. Perks are being removed (in Meta’s case, not without reason, as employees were exploiting the offer of free food by loading up steaks to takeaway boxes), spending is being cut, and teams are being shrunk.
Some think it’s not a bad idea to try to maximize efficiency as possible recession looms. Brad Gerstner, Chief Executive of Altimeter Capital, a long-term shareholder at Meta, recently wrote an open letter to Zuckerberg and asked that the company cut costs.
“It is a poorly kept secret in Silicon Valley that companies ranging from Google to Meta to Twitter to Uber could achieve similar levels of revenue with far fewer people,” Gerstner wrote.
Saad Siddiqui, a venture capitalist for Telstra Ventures, a venture capital investment provider, told Cybernews that hiring in the tech industry looks bleak now because, as interest rates rise, companies are under pressure to prove “to investors that they are yielding benefits rather than continuing as endless experiments.”
“Besides, venture financing has reached record lows, with the third quarter being the worst quarter since 2018. This means that many startups are cutting benefits, curtailing hiring plans, and reducing headcount to extend their cash runway,” Siddiqui said.
The times were good, though – maybe too good, Gerstner adds in his letter and reminds that at Meta, the number of employees – prior to the latest mass firing exercise – was up over three times from 25,000 to 85,000 in just the last four years.
The sad reality is that thousands of people are finding themselves not only without a beloved perk but also jobless – just before the holidays.
“Getting laid off can be jarring. You feel the rug being pulled from under you, during a time when the economy is fragile. With varying levels of severance, some tech workers are taking the time to reflect, while others are feeling the pressure to get another steady salary quickly,” Jake Cooper, Chief Executive and Co-Founder of Grow Therapy, a technology-enabled mental health group, told Cybernews.
“Losing your job creates uncertainty and instability, and this added stress is worse during the tough economic climate.”
Quick growth, poor efficiency
And yet, is the worst still to come? Maybe, says Tim Rowley, Chief Technology Officer at PeopleCaddie, operator of professional labor online marketplace.
He is seeing a longer period of financial belt-tightening in the tech industry, which is reacting to the stock market downturn and anticipating a possibly deeper economic slowdown in 2023.
“This financial belt-tightening is being reflected in all forms of spending, including bonuses, salaries, benefits, or perks. So employees should not expect the same level of total compensation that they received during the pandemic-driven tech boom,” Rowley told Cybernews.
“As large tech firms have slowed or completely paused hiring, tech pros no longer have the same level of access to employment at mega-cap tech companies that are willing to compete for their services by paying top dollar.”
According to Patrick Morrissey, Chief Growth Officer at HireVue, an online platform for virtual interviewing, tech workers are already facing and will face more challenges of the unpleasant kind.
“Tech workers really need to understand if their target company is actually hiring. Some organizations are still interviewing candidates, but their job requisitions are frozen, which can be a very frustrating experience for candidates,” Morrissey told Cybernews.
Jesse Sacks, Director of People, Talent and Operations at Haystack, a Los Angeles-based intranet startup, thinks the contraction is actually logical because, so far the tech world has been seeing relatively cheap capital.
“Companies have been prioritizing growth metrics and raising capital predicated on these growth metrics – achieving lofty valuations in the process. Although the vast majority of these companies are developing incredible products that have real impact, the access to cheap or aspirational capital has allowed them to grow quickly but often inefficiently,” Sacks told Cybernews.
"We’ll see a redistribution of talent from Big Tech to mid/small tech, which in the long term has potential to invigorate some smaller firms and give them more market power,”Paul Johnson, Leadership.dev
“The pullback in the public markets has forced many of these companies to take a hard look at what is truly necessary to achieve their missions rather than hit outsized growth targets. This has led to reductions in force.”
All this, of course, translates into hiring pauses all around the US as tech firms are now in a position to simply be more selective in their hiring process – and, of course, this means leverage and the ability to both demand more and give less to job seekers.
“The sunshine and rainbow period is coming to an end for employees at tech giants. These firms will be expecting more from their staff and now have even wider options when selecting talent,” Timothy Nicholas, Chief Executive and Co-Founder of Permworks, an online talent marketplace, told Cybernews.
All is not lost
On the other hand, it would probably be a bit naive for employers to think that the ball is fully back in their court – unemployment in the tech industry remains at record lows, and companies posted more than 300,000 tech job openings in October alone.
“The need for tech skills and upskilling is not going away, the opportunity might just be changing. While traditional tech giants might be cutting back, increasingly every industry has a growing need for strong tech talent. So, the offers might be fewer and in a wider range of industries, but the need isn't going away,” Jim Chilton, Chief Technology Officer of Cengage Group, a global education technology company, told Cybernews.
Other experts also find it important to see the difference between Big Tech companies and the rest of tech firms – if you’re able to distinguish one group from the other, you might just conclude that market correction is taking place.
“I can’t tell you how often I've heard mid-sized tech firms complain that they simply can’t compete with FAANG money,” Paul Johnson, who runs a tech consulting firm Leadership.dev, told Cybernews.
In finance, FAANG is an acronym that refers to the five most prominent US tech companies – Meta (formerly known as Facebook), Amazon, Apple, Netflix, and Alphabet (previously Google).
“So yes, the trend lately is layoffs and hiring freezes, but I think this current moment is better framed as a market correction in Big Tech. We’ll see a redistribution of talent from Big Tech to mid/small tech, which in the long term has potential to invigorate some smaller firms and give them more market power,” Johnson thinks.
He’s also seeing a lot of confidence in the tech market and among talented candidates – just a few months ago people were talking about what McKinsey, a management consulting firm, calls the Great Attrition, where thousands of tech workers simply quit in search of other work.
“Quitting your job voluntarily is a good confidence indicator that people feel like they can land new jobs,” Johnson told Cybernews.
Meanwhile Rowley, the CTO at PeopleCaddie, advises the market to keep calm because tech professionals with hard skills – for example, the ones actually writing code – remain either employed and generously compensated, or in high demand.
“They just may need to look beyond the mega-cap tech firms for employment. Besides, while it may be a new experience for younger tech pros, more senior tech pros have experienced similar cycles in the past,” Rowley said.
“When markets overheat, like in the dotcom boom or during the pandemic, ultimately, there tends to be a natural correction that gives way to a more sane and sustainable market environment. So, instead of feeling as though the sky is falling, most seasoned tech professionals will view this as a passing storm.”
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