The tech winter of 2022-23 was cold. It was characterized by hiring freezes, icy cuts to workforces, and coldly cutting off employee access to company resources without warning. How long will this winter last? Is there a forthcoming tech talent war about to take over Silicon Valley?
Tech layoffs made headlines in 2022, and it looks like that the firing trend is continuing in 2023. The tech winter of 2022 will go down in history as one of the coldest periods ever experienced by the industry. Technology firms experienced a hiring freeze during several phases of the pandemic.
The competition for software engineers in Silicon Valley sparked a “talent war” in which companies offered extravagant compensation packages to attract and retain top talent. CEOs acted as if the good times would never end as revenues skyrocketed.
According to CNBC, Sundar Pichai, CEO of Alphabet and Google, said that after a solid revenue growth of 41% in 2021, his company “assumed that the growth would persist”.
Layoffs.fyi finds that 153,160 people worked in technology last year, but all were laid off.
More than 50,000 layoffs have been reported by some of the biggest names in tech in the previous year, including Alphabet, Amazon, Meta, and Microsoft. Even after these massive layoffs by big tech, these businesses remain very profitable behemoths in their industry. They grew dramatically during the pandemic, recruiting tens of thousands of staff. In 2021, Apple, Amazon, Google (Alphabet), Meta, and Microsoft amassed a combined revenue of $1.4 trillion. The layoffs announced over the last months reverse just a fraction of the hiring made in previous years.
Big tech leaders and executives pointed the finger at economic conditions, which were made even more severe by rising interest rates and inflation. However, they are also admitting that they over-hired, having underestimated the longevity of the pandemic acceleration in the rise of online services.
The worldwide nature of layoffs affects the entire IT industry. Tech giants and startups have both been impacted by the downsizing. Tech.co has documented a complete timeline of the companies that have been cutting staff.
Mark Zuckerberg laid off 11,000 employees at Facebook’s parent company, Meta, in November 2022. This represented a 13 percent decrease in the firm’s workforce. Similar to Meta, Amazon eliminated 10,000 people from its corporate personnel.
IBM let off 3,900 employees, and Google, 12,000, or 6% of its workforce. Following his October takeover of Twitter, Elon Musk lay off 3,700 employees, or about half of the overall workforce (many more have left voluntarily since then).
Similar things happened to other smaller organizations, such as the layoff of 1,050 employees at the payments company Stripe. The fitness startup Noom has slashed 1,095 jobs. The bitcoin exchange Kraken also announced the dismissal of 1,100 employees.
The decline in cryptocurrencies and the recent scandals that have shaken the fintech sector have been particularly devastating. More than 10,000 fintech jobs layoffs in 2022 marked a 1,670% spike from the 529 reported in 2021.
Why did so many layoffs happen? Cost cutting was listed as the leading cause of these layoffs last year and contributed to more than 82,000 reported job reductions. Nearly 60,000 of the terminations were linked to the economy or market decline.
In the meantime, people across the business world who have been affected by layoffs, having job offers retracted or dealing with other difficulties linked to a company that is in the process of implementing cost-cutting measures took to LinkedIn to vent their frustrations. Several other tech company newcomers complained of feeling strung along. Some of these laid off employees had recently received promotions too.
“The overall economy is still creating jobs, though employers appear to be actively planning for a downturn. Hiring has slowed as companies take a cautious approach entering 2023”, says Andrew Challenger, senior VP of the outplacement company.
According to Jeffrey Pfeffer, a Professor of Business Administration at Stanford University, social contagion can be seen at work in the widespread layoffs in the technology sector, as businesses follow the lead of their competitors. He has been researching hiring and firing practices in businesses worldwide for more than 40 years. If you’re looking for reasons why corporations lay off employees, the answer is simple: everyone else is doing it too. The decision to lay off employees is sometimes arbitrary and not grounded in factual evidence.
This viewpoint can be debated against strongly, but the recent 2022 and 2023 layoffs do appear to be a bandwagon of sorts to an onlooker.
People are aware that layoffs are detrimental to the health of the firm, let alone the health of the employees, and that they don’t help much with the image of (very profitable) companies. But since everybody else is doing layoffs, their boards of directors also start wondering why they aren’t doing layoffs as well. Not a lot give similar thought to reducing their own corpulent salaries, beenfits and bonuses…
Analysts predict that layoffs will proceed at least until the first half of 2023. According to Layoffs.fyi, the number of IT industry layoffs in the first 20 days of this year already exceeds the total number of layoffs in the first six months of 2022. Things have taken a somewhat odd turn this year, with 55,225 layoffs recorded by 154 technology companies this month alone. In November, Amazon said it would lay off 10,000 workers, and last week; the company announced another 8,000 layoffs. Over a week ago, Microsoft said it would be laying off 10,000 employees. A further 12,000 employees will be laid off at Google. On Monday, Spotify also announced that it will be laying off around 6% of its workforce.
Apple is the only major tech company that has not conducted any major employee layoffs. However, the firm is currently amid a hiring freeze which it says will continue till September of 2023.
By Melissa Cantor, Editor at LinkedIn News “The U.S. economy obliterated forecasts by adding more than 500,000 jobs in January. However, private-sector data from leading recruiting companies suggests that the number of job postings is declining”
After years of working to diversify their revenue streams, businesses in this sector have been forced by the current economic climate to take a long, hard look at themselves, reevaluate their purpose and refocus their attention on their core strengths. Google’s parent firm, Alphabet, spent years attempting to establish itself as a moonshot company by funding far-fetched initiatives such as Wi-Fi balloons in the stratosphere (Loon LLC), smart contact lenses, and delivery drones. Mark Zuckerberg, founder and CEO of Facebook, staked the firm on the metaverse, a modern digital world, which he believes will become the next major computing platform. Since none of these investments have paid off so far, and given the current economic climate, businesses may have to choose to reset by refocusing on the products which made them successful in the first place. Microsoft, meanwhile, is shifting their investment and business focus towards OpenAI in a bid to outdo Google in the AI search engine wars of 2023.
At a time when the state of the economy was highly volatile, when the supply of people both willing and able to work was rapidly dropping while labor demand skyrocketed, it is no surprise that many organizations (prominently big tech) turned to aggressive recruiting strategies.
Recruiters and hiring managers became stubbornly determined in their recruiting endeavors. So much so, that companies were almost ‘hoarding’ talented candidates. Any and all candidates were sought after, reached out to, and clued in on the company in an attempt to sell them the job. Why? Because, as Sundar Pichai was quoted above, companies expected the demand growth to continue on its upward trajectory for a long time in the future.
This assumption was not out of place at the time, for many feared that the pool of qualified candidates would soon dry up, or that if they did not act fast, an ideal potential hire would be poached by another company. In fact, the labor economy went through a period of a tech talent shortage as well. In 2020, there were nearly 6 million fewer resignations compared to the previous year. Many workers decided to stay at their current jobs during the pandemic as a result of economic uncertainty, and the consequent fear of unemployment.
As a result, the majority of those who may have otherwise resigned or sought out other jobs at the time did not, and companies began turning towards aggressive hiring practices not simply because they required an increase in their workforces, but because potential workers were not seeking out new jobs themselves. Stability was all that mattered, and so they were not willing to change things at a time of such uncertainty.
Therefore, it is no surprise that companies kept recruiting employees at a fast rate when much of the control of the labor market was in the hands of the labor market. However, companies had different approaches to this as well.
At the beginning of the pandemic, countless retailers across the world were closing their doors, leaving many people having to resort to fulfilling their consumption needs by ordering online through Amazon.
There was a good reason for this, as Amazon is the largest e-commerce company in the world, and allows customers to order everything they need, from groceries to office products. But because of everyone flocking to Amazon, the company itself required more workers as well.
At the time, Amazon said they would hire 100,000 workers to aid in making online deliveries across the United States amidst the rise in demand for their services. Amazon hires ranged from warehouse work, administrative work to going out and delivering the products to the customers’ doorsteps.
However, they offered a compensation increase of only two dollars per hour, and in addition to this, many felt that they had no other option because the height of the pandemic had many fearing no other job opportunities would come their way. As a result, when Amazon of all companies approached them, they accepted immediately without considering other options.
When people were stocking up on groceries and clearing supermarket shelves, Pepsi, as one of the largest food and beverage businesses in the world, needed to begin hiring more workers quickly to keep up with the rising demand and reassure their customers that their products would remain available.
The company promised to hire 6,000 workers across the United States. While this is significantly lower than the number of employees Amazon was hiring, Pepsi also promised full-time, full benefit work as an incentive. While most people would agree to a job with these perks under ordinary circumstances, the conditions at the time of the pandemic led many to accept immediately.
Both of these methods worked for Amazon and Pepsi, but there was also a significant difference. One needed an increase in their number of employees, and to do so went after many who were already working on minimum wage. The other set a smaller goal, but knew that workers valued stability and benefits during the pandemic, and offered those as a major incentive rather than the fear of not finding any other work.
Apple is not laying off employees in this firing spree. It sounds weird because when you look at Apple as a giant tech company, they appear like the kind of enterprise that would rush to cut costs by laying off employees as well (just like their peers).
But even during the worst economic downturn and uncertainty of this decade, the company has been able to avoid laying off tens of thousands of workers, thanks to the reasons listed below.
Most businesses prioritized overhiring in 2020-2021, they had to drastically reduce their spending and lay off a lot of employees after the Ukraine War triggered an energy crisis and a severe economic downturn. Apple, on the other hand, continued to hire relatively slowly before freezing hiring on November 22, 2022. The graph amply justifies why Apple evaded joining the notorious laying-off spree that other businesses were forced to partake in.
Please use this table to make a bar graph with brands on x axis and employee growth on y axis. Insert source links on brand names.
|Company||Employee growth (2020-2021)|
One could argue that Apple has never been inclined to hire in large numbers to begin with. From 2020 to 2022, Apply hired a total of only 17,000 employees.
Another reason why Apple has managed to avoid layoffs is due to its focus on product reinvestment. The company reinvests in its current products in order to maintain an advantage over its competitors. Despite an overall decrease in demand for physical products due to the safety protocols, Apple’s digital services such as iTunes, App Store, iCloud, Apple Music, and many others experienced an increase in demand. This allowed the company to not only break even but also experience profits and growth over the past 9 months.
Apple understands that its success is partially due to its innovation and product improvements which make sure that its customers stay loyal to its ecosystem. As a result, the company can often make money by marginally increasing prices on its existing products and services. This ensures that Apple is not only able to break even, but also generate more profit in the process.
Apple also has one of the highest employee retention rates in the world. This is largely due to the company’s commitment to employee satisfaction and job security. Apple is always willing to invest in employee wellness and increased job security, which helps ensure that talented individuals stay within the company. This high employee retention rate also helps the company save on costly recruitment expenses, which may be why Apple has not felt the need to undertake massive layoffs. Although it did lay off 100 employees in 2022, this modest figure does not even come close to the numbers dominating headlines.
Moreover, CEO of Apple, Time Cook, along with top management of the company have taken 50% pay cuts in order to further prevent Apple from having to lay off some of their staff. The company finds greater value in the long-term benefits of being able to retain their existing workforce and avoiding any cost-saving measures which would only end up driving good employees away.
Apple’s stronghold on its finances is another reason why they are not experiencing any layoffs. Apple is still the most valuable publicly-traded company in the world and its stock has outperformed the S&P 500. The company has robust cash reserves and a keen ability to generate profits even in the face of uncertainty.
Despite the current downturn in the global economy, there is still a great deal of potential in the technology sector, and Apple continues to be one of the biggest players in the industry. The company continues to launch new products and services, and as more people become part of their hard-to-escape-from ecosystem, Apple’s market share is likely to increase steadily overtime. This implies that Apple tends to hire moderately and make optimal and efficient use of their employee strength – they therefore do not feel the need to undertake any massive layoffs.
Owing to aggressive hiring, an unexpected economic crisis due to exogenous variables like the Ukraine War, energy crisis and political uncertainties, layoffs and hiring freezes have followed. Companies such as Meta, Amazon, Twitter, Salesforce, and HP all announced massive layoffs in November 2022. The month alone saw nearly 50,000 people in the tech industry being laid off, according to data from Layoffs.fyi. This year, nearly 150,000 people have been added to the cohort of employees who lost their jobs.
Despite the economic slump, several small firms and startups continue to hire.
The videoconferencing platform Zoom found success and development prospects during the pandemic. As more people engage in remote work and virtual meetings, the company has seen a rise in demand and has been able to quickly hire and grow. The e-commerce platform Shopify is another example. During the outbreak, the number of merchants joining the site increased dramatically as people chose to spend their homebound months by starting small online businesses.
To keep a lookout for job openings in your area of work, keep a close eye on platforms like LinkedIn and Indeed and keep up with your professional lest an opportunity pop up in one of your friends’ or families’ workplaces. LinkedIn alone has over 6 million open jobs listed for people based in the United States.
According to a Mint + Shine Talent Insights survey of 820 senior human resources professionals from various industries, 79% of employees chose to work for startups despite the high number of layoffs. In modern firms, executives demand simpler hierarchies and swift decision-making. Many have opened up to accepting remote-based employees as part of their full-time teams.
There are alternatives to layoffs of employees. lowering the pay of executives, delaying promotions and raises, cutting back on work hours, speeding up retirement, and looking into other options. Still, you shouldn’t try to save money by lowering the pay of the remaining employees until all the good ones leave.
When things go rough, it’s crucial to show total buy-in at all levels. CEOs must demonstrate that they are making financial savings; otherwise, they will lose the respect of the surviving staff and the business will finally fail.
Job-seekers may take the following strategies to improve their employment prospects in the present market:
Networking: Getting to know people in your field lets you know about job openings and other opportunities.
Upskilling: Continuing your education and training can help you stand out to potential employers and make you more marketable on the job market.
Adaptability: Being open to diverse types of employment, such as part-time or contract work, can improve your chances of landing a job.
Startups: Applying to startups and small firms may provide greater growth and learning opportunities than applying to larger corporations.
It’s also important to remember that the job market is always changing and that it’s important to know what’s new and what’s trending in your field. In a competitive job market, job seekers can boost their chances of getting employment by remaining proactive and flexible.
Don’t hesitate to apply for a job even if you think you are underqualified for it. The worst that can happen is you won’t hear back from them, or you might land an interview but not get selected. In the latter case, you will have practiced your interviewing skills and connected with more people in your industry.
Gaper.io regularly hires remote developers and engineers to work with our client businesses.
Even though big tech companies enjoy a substantial amount of influence when it comes to setting the tone and paving the paths for the directions that the tech industry takes (in the US and globally), their recent layoffs have not been met with a passive attitude. Many stakeholders are now questioning whether big tech companies should be able to get away with firing employees in mass numbers at their whim. Should employees be treated as easily disposable resources or is it time that some level of care and consideration is exercised when you need to cut costs? Should everyone’s careers and job security be at the mercy of directors and executives?
The strategy of hiring fast when the future is “assumed” to be rife with growth and then firing fast when things appear to go south is unethical and unsustainable. A powerful and well-informed labor market is rendering this growth mantra obsolete now.
Apart from the unpopular and debatably unethical nature of this approach, firing a large mass of employees could very well be costly for companies because of severance packages, the productivity hit borne by internal teams, internal restructuring, rehiring when needed, losing tacit knowledge and of course, the public image of your company.
When startup and enterprise businesses hire developers from Gaper, the feasibility of hiring an appropriate number of engineers and developers is always discussed, lest a company miscalculates their needs and over hires inadvertently.
In the event that future growth appears to be staggeringly steep, and you as a tech giant in competition with other industry mammoths, are afraid of missing out.
According to a LinkedIn report on technology recruitment, almost 50% of recruiters struggle to find qualified candidates. At the same time, now that companies are choosing to part ways with a significant portion of their workforce, recruiters are also worried about finding businesses client that will hire candidates from them. This has been the season of layoffs and quiet-quitting, setting the labor market climate in a somewhat uncertain mood. It has also generated discussion about hiring practices that big firms engage in.
What comes to mind when you hear the term “sustainable hiring?”
The pandemic times drove businesses into a state of frenzy – due to this many of them resorted to the strategy of immediate hiring. There was an illusion of talent scarcity, which to some extent, was not untrue. Some startup founders were completely overburdened by demand, competition, and the urgency to grow their teams because at the time, rapid team growth meant you were on track to become a hyper-growth company. We all know the consequence of these unplanned recruiting methods and haphazard decision-making.
The layoffs of 2022 have now crept into this year! For instance, let us take the example of Amazon. Reports tell us that in November 2022 Amazon let go of approximately 10,000 employees. When 2023 started, the headlines of 18,000 Amazon tech job cuts torpedoed us. Shocking, isn’t it?
Are you a tech recruiter or startup founder looking to hire the cream of tech talent? Often, hiring managers or recruiters face problems when short-listing candidates for a job post. More than 9 out of 10 employers are finding it difficult to fill jobs.
Sustainability recruitment is all about searching for talent that can grow in the company. A long-term role means more learning and increased benefits for the organization in the future in the form of tacit knowledge, a perpetually growing knowledge base, employee loyalty, and a healthy work culture. Listed below are a few crucial elements of sustainable hiring.
“Sustainable business cannot happen without sustainable leadership.” In the case of managers and leadership roles, there needs to be a strict re-evaluation in terms of how they approach hiring.
“Time spent on hiring is time well-spent.” Robert Half
At the end of the day, to hire the best IT experts you also need to think from an employee’s perspective. Do you want to hire top-tier talent? The tech recruiter should be able to market the organization and entice candidates with an impressive job offer.
Online job boards such as Gaper are a marketplace for the best software engineers from across the globe. Now, what are some of Gaper’s strengths?
We’ve talked about the vetting process and its complications. At Gaper. every candidate is interviewed personally before becoming a part of our marketplace. Moreover, there is a two-tier assessment stage to check their technical and communication/soft skills to ensure they will be able to work seamlessly with our clients. Therefore, a tech recruiter or hiring manager does not need to stress about sifting through hundreds of resumes and interviewing and vetting every engineer.
Clients are given access to our AI-powered marketplace that they can then choose a resource from.
Secondly, tech hiring trends are transitioning. Unlike some leaders (*cough* Elon Musk *cough*), Gaper is sensitive to these changes. We understand that recruiting and working methods have transformed drastically over the past two years. We value sustainable hiring and how it can help organizations whether they are small startups or big enterprises. Our goal is to help you hire the best software engineers according to the specific objectives and goals of each of our clients.
If you are looking to hire engineers or developers for your business, or you would like to build an entire tech, or you want to augment your existing team (team augmentation), waste no time and schedule an appointment with us to discuss your needs.
Recent news surrounding layoffs are worry-inducing considering the companies involved. San Francisco’s largest employer, Salesforce, has begun to carry out their workforce reduction that was announced at the start of the year. EBay says it will be letting go of 500 employees, which will reduce its workforce by 4%, and Dell Technologies reportedly has plans to terminate around 6,650 positions, which accounts for 5% of its global workforce.
The figures are staggering enough for big tech companies, and are even greater for small businesses. 10% of employees at the Seattle startup Highspot have reportedly lost their jobs, and cutbacks at Mindstrong have affected 127 employees, including the startup’s CEO.
With word of a different company laying off a significant portion of its workforce making headlines every day, those who have been affected are naturally going to be facing a mix of many emotions.
Grief at losing a job where many have found their professional footing, insecurity over the situation, and questioning oneself’s capabilities and identity are all natural to feel at a time like this, but that does not make them any less difficult to endure.
It may be hard to search for the silver lining in this situation so soon after having to face the loss of a job, and it is important to pause and process all these feelings. But the next step is just as important; the step where you ask yourself where to go from here.
A few tips and words of advice to take into consideration during this step are:
It may sound cliché, but sometimes a situation outside of your control may be the wake up call needed to realize where your professional priorities lie, and can be just the thing to open your eyes to the possibilities that come with a change in career.
Don’t simply update the work you have done. Really take a look at all of your accomplishments, the strides you’ve made in your career since you last visited your resume. Recognize how you have grown, and take it as a reminder that confidence in your capabilities is deserved, and being dealt a bad (or good, if you choose to look at it that way) hand does not negate your skills.
Don’t hesitate to talk to as many people as you can in your professional network during the search for a new job. Introduce yourself to as many people as you can, because not only will this open up the doors to possibilities you may not have been aware of before, but because it is essential to know that you do not have to be alone during this new journey.
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