“Are Layoffs the New Normal for Big Tech?” – University of Richmond Journal of Law & Technology
“How Did Tech Become America’s Most Troubled Industry?” - The Atlantic
“Have Tech Jobs Lost Their Luster?” - Crunchbase
As these headlines demonstrate, the recent and ongoing job purge among the world’s leading technology companies raises questions. While ominous, the headlines fail to capture the whole story. Scaremongers ask why there are so many tech layoffs, but more level-headed industry observers believe tech is doing just fine. In fact, coming on the heels of the mass layoffs plaguing big tech, a hiring boom is soaking up much of the suddenly available talent.
2023 Mass Layoff Statistics in the Tech Industry
Make no mistake, however, big tech is reeling. Why are there so many tech layoffs? Covid-fueled hiring binge comes home to roost. During that 2½-year boom, six of the biggest names in tech added 2.3 million people to their payrolls. That all changed as the rest of the economy entered the recovery phase. Since then, Layoffs.fyi reports that Amazon has shed 27,000 jobs; Alphabet, Microsoft, and Meta have cut more than 10,000 each. In all, 776 tech companies have shown employees the door, eclipsing even the carnage of 2022, when more than 1,000 firms furloughed workers.
The mass layoffs at the most recognized tech firms, however, have done little to alleviate a tight labor market. That’s because the Society for Human Resources Management reports that 79 percent of those affected landed new jobs within three weeks of being terminated. Demand remains high for these highly qualified software engineers, full-stack developers, and AI specialists in the tech industry. Small businesses and non-tech-specific companies are gobbling up workers who can’t afford or don’t want to take a break from the workforce and who may have become disillusioned with big tech’s corporate vibe. Smaller companies that offer flexible work schedules, hybrid models, and relevant perks make themselves especially attractive to the 63 percent of workers who, even before the job losses took hold, expressed little interest in holding full-time, in-office tech jobs.
Mass Layoffs or Hiring Boom? What's Actually Happening?
This dichotomy between big tech and mainstream businesses that need IT professionals to maintain their CRM, cloud applications, and automated processes emphasizes the reality that in today’s automated, connected, and digital world, every company is in the technology business. Healthcare, education, retail, media, and other industries will benefit from technology firms’ inability or unwillingness to keep strong performers on the payroll.
Tech remains strong; a big chunk of the employment pullback is simply window dressing as leaders work to satisfy investors’ desire for lean, efficient operations and higher stock prices, says Gartner Analyst Mbula Schoen. As Tech Crunch notes, “Large American tech companies are very often both profitable and incredibly wealthy, even if their market cap has fallen from record highs.” Still, their eyes were bigger than their payroll appetites. They splurged on talent as Covid drove big expansions in online shopping, remote work, and the applications that support them. Lingering global supply chain issues, Russia’s invasion of Ukraine, and other macroeconomic forces have dampened that enthusiasm.
Understand, however, that all tech firm cuts are not coming in the form of lost tech jobs. Just as all companies need tech positions, tech firms are composed of a variety of job functions. A survey of those let go at Meta, for instance, found that about 23 percent were software engineers and data scientists. Twice that number came from marketing, communications, recruiting, and other non-technical roles. With the big guys shedding fewer high-tech workers than the headlines reveal, and those who do hit the market getting scooped up quickly, there remain more people employed in tech jobs than before the pandemic.
How Do Mass Tech Layoffs Affect the Staffing Industry?
The influx of tech talent in the market and the latest round of belt-tightening among large and medium-sized data-centric firms bodes well for the staffing industry on at least two fronts:
- Increased reliance on contingent workers – Leaner workforces deprive tech companies of the ability to absorb new projects and respond to unexpected challenges and opportunities. When talent demand temporarily outstrips human resources, tech firms will depend on agencies to supply well-matched temporary, and part-time coders, project management consultants, and other contingent workers. Staffing firms that recruit newly out-of-work professionals will rise and deliver the skillsets their clients demand quickly and cost-efficiently.
- Opportunities for smaller firms and displaced techies – As big tech may be forced to resize other companies will take advantage of the temporary easing of the labor market. Small businesses have felt the talent pinch, unable to match the big firms’ salaries and fringe benefits. Now is the time to lock up workers who value culture and security in-office over climbing walls and backrubs. The sudden buying opportunity for businesses outside big tech will lead them to seek help from staffing professionals. At the same time, the tech sector’s layoffs are a tiny eddy in a surging current of hiring. April’s unemployment rate checked in lower year-over-year for the vast majority of U.S. metropolitan areas. As the candidate’s market persists, job candidates, too, can be expected to engage with staffing agencies, whether within our outside pure-play tech.
Benefits of Hiring Despite Tech Layoffs
Companies in a position to hire tech skills while others are turning them loose gain significant advantages. The first is obvious – a larger supply of quality candidates relieves a bit of the wage pressure that pushed smaller firms out of the talent market. This is especially true for workers in the country on H1-B work visas, who must find employment within 60 days of their dismissal from their old jobs. Staffing agencies that can place foreign tech experts quickly may find a viable new revenue stream.
Tech talent-starved businesses also send a strong signal when they adopt a contrarian attitude toward hiring during perceived downtimes. As Warren Buffet advocated, being bold when others are scared often is the best policy. By aggressively pursuing workers possessing rare skills while others pull back, organizations project an image of prosperity and flexibility that potential employees love and competitors fear.
The Future of The Staffing Industry
Staffing agencies should count themselves among the “non-tech” companies that can benefit from a tech-savvy workforce. They, too, can take advantage of the sluggish market to stock up on talent that can help automate processes and build platforms that alleviate much of the labor intensity required to onboard candidates, attract clients, and match them with each other. While the IT industry’s hesitancy to retain staff spells an end to the last two years' double-digit growth for tech staffing firms, most observers expect the sector to land on its feet and add 5 percent or more to its market value this year.
“Macroeconomic headwinds are not slowing digital transformation,” said John-David Lovelock, a vice president of research at Gartner. “Prioritization will be critical as CIOs look to optimize spend while using digital technology to transform the company’s value proposition, revenue, and client interactions.”
Like all firms, staffing agencies are intent on increasing efficiencies and cutting costs while continuing to serve clients and candidates. Consolidating these efforts within a single platform and engaging with a leading hiring platform-as-a-service provider like JobDiva empowers agencies to better accomplish hiring and placement at scale, streamline workflows, and solidify relationships.