With tech jobs being cited among the most in-demand, it has come as a considerable surprise that some of the biggest tech companies have undertaken some big layoffs this year. Whilst panic may be a natural response for those who aspire to a long and successful career in tech, the layoffs may not be the bad sign that it appears to be at first.
In order to understand exactly what this means for Hr departments and talent acquisition, we first need to understand not just what happened, but why, and what it means for recruiters looking to fill tech jobs in 2023.
The data
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The series of layoffs by some of the world’s largest tech organizations has seen more than 150,000 lose their jobs in the past few months. This includes more than 50,000 layoffs from just four of the big players: Microsoft, Alphabet (Google’s parent company), Meta and Amazon, alongside Twitter’s lay off of over 4,000 staff – around half of the workforce- upon the appointment of its new leader, Elon Musk.
The causes
It may seem incredible that we are lurching from a tech talent gap to a tech talent layoff. Much like the tech talent gap and the Great Resignation, the tech layoff can be attributed to several different contributing factors. And while industry experts all seem to agree on what those many factors are, there is little agreement on what is the most significant influence. In chronological order, rather than the order of severity of impact, the tech layoff has most probably been caused by:
- The pandemic
- Inflation
- Recession
- A change in priorities
The pandemic
The impacts of significant global and national events, be that war, famine or pandemic, will be felt for decades – in some case even generations. And so it is not surprising that, just three years later, the pandemic is still cited by many as a significant contributing factor to the big tech layoff. Lockdown forced people to remain at home and, while at home, many turned to online sources of entertainment and industry. A massive reliance on technology was a natural reaction to this; as all organizations across industries fought to survive, investment in tech was the natural way forward. However, the forced circumstances of the pandemic meant that consumer activity was just not sustainable, so following the rapid surge in some areas of tech, there has been a natural downturn.
Inflation
It is not unusual for a major global event to result in a rise in inflation, as governing bodies try to regain some level of equilibrium in the financial situation. This rise in inflation, alongside the natural dip in consumer activity as lockdown eased and became a memory, has resulted in a drop in consumer spending across a host of areas, including tech. A downturn in consumer spending naturally leads to scaled back investments and workforce.
Recession
A recession is inflation’s bedfellow. And as organizations keep an eye on global events, caution is probably wise. Some industry experts see the impending recession as one of the more significant contributing factors to the big layoff, as major organizations prepare themselves for what could be a rocky period.
A change in priorities
is not consistent with the considerable investments that these companies are making in AI, with Microsoft announcing plans to invest $10 billion in the creators of ChatGPT, OpenAI, and Google said to be working on its own equivalent.
As far as HR departments and talent acquisition specialists are concerned, this is another storm that needs to be weathered. The numbers will, undoubtedly, even out eventually and in the meantime, recruiters can go from trying to fill growing positions with not enough talent to go around, to choosing from the best talent to fill the right job for them.
Managing in-house anxieties
A key to navigating this stormy period is to display honesty, integrity and compassion at all times. This is a stressful time for people working in tech; around 75,000 of the layoffs were in the United States, which could naturally lead to a culture of fear. Those working in in-house HR departments as well as those working for tech recruiters will benefit from applying as much transparency as possible to prevent ripples of gossip, paranoia and general discontentment among the workforce.
A redistribution of talent
As the big tech companies take up so much industry space, it is tempting to assume that all tech companies will follow suit. However, there is no evidence to suggest this. In fact, among small, medium and medium-large organizations, there is still rising demand for tech talent. The good news? Thanks to the big tech layoff, there is now a whole lot more desirable tech talent out there looking for jobs.
Seeing the positives
While it can be easy to become fixated on these relatively unsettled times, it is important that those working in tech, as well as those recruiting to tech, recognize this period not as a time of fear, but a time of opportunity. The tech talent gap left considerable-sized holes in organization hierarchies, and recruiters were under pressure to find talent that was simply not available. This hiatus in that rapid growth gives everyone the opportunity to stop, recalibrate, and make sure that the right people are in the right posts, when they should be there. What is even better is that, thanks to generous severance packages befitting of big tech, these newly available individuals are more likely to be available to afford to take a punt on a passion project or startup; opportunities that they could not have afforded to pursue without a financial buffer.
The big tech layoff doesn’t have to be a negative; with a little creativity, tech recruiters can see it as an opportunity to level the playing field and enable the most desirable talent to go to the organization that is the best fit for them. By continuing to look at the long term opportunities for individuals, whilst keeping the hiring firm’s vision in sight, this is a golden opportunity for recruiters and HR teams to help their organizations to hire smart, for the long term.