Is the “Battle for Tech Talent” pumping the breaks?

Finding talent will continue to be the biggest challenge of 2022, surpassing discussions about a great retirement or resignation. Organizations will still be struggling to find the necessary talent, which will be complicated by tech skills being sought after across multiple industries and countries. One thing is clear: companies who continue to ignore the reality of the new recruiting landscape will quickly find themselves unable to compete for talent against those that have embraced change.

As a recession is looming, the technology labor market could go from being in a frenzied state of flux to being in a roaring flame, but this is no time to pull back on best practices firms have been building around creating a more adaptable organization to the demands of the business. The tech sector draws the best-educated, best-skilled talent in the job market, and layoffs provide some respite from a hiring squeeze across the wider economy. Even companies that experienced high-profile layoffs, like Peloton, are still hiring developers and other technical roles. 

In fact, listings for tech jobs were much higher in May and April than they were the same time last year, notes Amit Bhatia. At ZipRecruiter, a job listings site, active job listings for tech industries increased from January to April across all job types, including project management and software development, says ZipRecruiter chief economist, Sinem Boer. 

So far this year, listed tech firms, valued at a total of $3.4 trillion, announced hiring freezes or layoffs. Private startups, which are safe from the stock market, are feeling the pinch too, with 29 companies furloughing employees since early April, according to layoffs.fyi, which tracks layoffs across the tech sector. When companies like Facebook and Netflix stopped hiring or laid off employees, some of those employees frequently found — or joined — startups that might seem risky in comparison with the safety of larger companies.

Another unique facet of the coming downturn will be the widespread availability of gig work — that is, temp jobs without benefits, like driving for Lyft or Uber. When the next recession hits, some jobs might disappear and never return (automation could accelerate this, but that is an article for another time). With rising inflation and potential future recessions, we could see a starting point for declining turnover rates, as employees become less confident about the outside job market, thereby slowing down job-hopping and increasing job-tenure. An economic slowdown will probably cool down the labor market–bad news for workers, but no good news for the budgets of senior-housing operators–meaning operators might not need to increase rates as aggressively to keep pace with costs going forward.

As layoffs become more commonplace in the increasingly volatile tech startup landscape, another trend is emerging. A growing number of LinkedIn members are reporting that offers they have received to join a new employer are being rescinded. Coinbase, for instance, has begun pausing all new hires and is also “pulling some accepted job offers.” The trend to take back job offers exemplifies the turmoil facing the tech sector’s market. Venture capital-backed firms are being hit especially hard as investors abandon risky bets and seek immediate returns.

Resources would still be allocated to technology-related departments, but the strategy would switch for many companies from hiring W2 employees to hiring independent contractors or working with firms that provide staff augmentation. Leading technology organizations will instead leverage high-skilled technical talent, with an emphasis on creating differentiated value for customers and shareholders.

Current List of Layoffs

Here are some of the firms that have announced layoffs in recent weeks:

• Video message service Loom is cutting jobs.
• Insurance startup PolicyGenius laid off 25% of staff.
• The Winkelvoss twin’s crypto Gemini is reducing its workforce, along with stock and crypto platform Robinhood, which axed about 9% of its employees in April.
• Coinbase has frozen staff numbers and begun rescinding job offers.
• Supply-chain tech startup Stord is laying off workers.
• Fintech unicorns Bolt and Klarna announced their laying off employees.
• Medical software startup Carbon Health laid off 250 staff members.
• Agios Pharmaceuticals, a biotech company let go as many as 50 employees in its early-stage research department.
• Marketing software firm Terminus cut 15% of its employees.
• Cloud security firm Lacework laid off 20% of its workforce.
• Mortgage lending company Tomo announced it let go a third of its staff and Better.com fired up to 4,000 in March as mortgage applications fall to lowest levels since 2018.
• Buzzy brands Carvana, Vroom, and Cameo, along with Fintech unicorns Bolt and Klarna announced layoffs in May.
• Project management platform ClickUp let go 7% of its workers.
• Amazon brand aggregator Thrasio laid off about 20% of its staff.
• Ride sharing startup Swvl it laid off 32% of its workforce, which affects about 400 workers.
• Delivery startups Gorillas and Getir have announced workforce cuts. Tech giants such as Netflix and PayPal are also shedding jobs, while Uber, Lyft, Snap and Meta have slowed hiring.

The greater economy

According to the latest US job statistics, the US May added the fewest jobs since the pandemic recovery began, as small businesses shed workers while larger firms added employees. May numbers had a unique insight: companies with fewer than 50 employees lost 91,000 jobs; those with fewer than 20 saw their a fourth straight month of losses. The results suggest that the smallest businesses are struggling to compete with bigger ones in attracting and retaining workers amid a historically tight labor market.

The jobs report continues to break patterns and signal while the unemployed have finally decided to reenter the workforce, the troubling economic signs of a pending recession could mean the volatility in the job market is here to stay.

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Amid a variety of corporate challenges, from volatile markets, rising inflation, falling revenues, and an elevated risk of a downturn, companies are slowing hiring, and in some cases, are laying off workers. Startups and publicly traded companies are bracing themselves for waves of cost-cutting and job cuts in the face of challenging market conditions. Ugly layoffs could erupt across the board, warns one investor and industry observer – from publicly traded tech giants to scrambling startups. 

As we saw with the trade war, and will continue to see with looming economic downturn, companies are becoming more and more risk-averse about hiring. Companies in all industries and niches are always hiring to fill roles that generate revenues and are digital, and that remains true during the downturn.