Over the past weeks we’ve been witnessing a trend no one likes. Public and private tech companies have been announcing layoffs across sectors, while also pausing hiring. On top of that we see tech stocks tumbling down. The Nasdaq composite index, where the so-called “growth stocks” concentrate, is down nearly 25% compared to this time last year.
When it comes to tech jobs, looking at the stocks, hiring freezes and workforce reductions it seems like the tech market is in slowdown. But is that really the case?
Before we set off alarm bells and proclaim everything doomed, let’s look at this situation from a different angle. It seems like just recently we’ve been talking about the great resignation. Now is the time to talk about the great recalibration.
Layoffs don’t only happen to companies, they, more importantly, happen to people. The tech industry may be under siege, but hope isn’t lost. Here’s what job seekers, as well as companies, need to know.
1. Going back to basics matters
Every business generates data but it’s how you interpret it that makes all the difference. Just as data was key during the pandemic, it is key now as well in this shaky moment for the industry. Founders have a moment to pause, regroup and maximize resources. You need to go back to basics and ensure that the company’s fundamentals are right. Staying close to your customers, developing a product they love, and paying attention to purpose and wellbeing are just some of the things you can do to recenter the core of your business.
It all sums up under the umbrella of being efficient and having a strategy. Make sure you don’t get caught up no matter what happens. Judging from our own experience there are companies which have strong strategies in place, are stable and have a solid business plan. These companies are looking to expand even in the times of crisis and have hiring plans.
2. The market is self-regulating
When the tech company layoffs have hit Europe, several well-known startups have made drastic cuts to their teams in order to cut costs and preserve their cash runway as the global economy takes a downturn. Growth at all costs is being replaced by cost-cutting.
If something goes up, must it come down? Many technology startups saw tremendous growth in 2020, particularly in the real estate, financial, and delivery sectors. But also Covid shut down the world and some companies needed to fire people to stay afloat, while plenty of companies staffed up to support usage spikes caused by remote work and lockdowns. 2021 was the year of hiring and funding boom paired with hyper-digitization. What we have now is the shaky 2022. And at this moment for the industry, the employment landscape may appear a little more precarious. When it comes to investing, following months of unusually huge rounds and valuations, this is a return to a more stable, risk-aware VC space.
Essentially, job-seekers have largely benefited from the tech boom, enjoying fat compensation packages complete with generous bonuses and equity offerings. And according to 42matches’ founder Moritz Drerup, that is not sustainable. “That kind of a market made some people oversell themselves. It was a risk to pay juniors more than seniors in the last months. That is not normal and healthy. There definitely is a salary bubble waiting to burst and the situation we are facing now on the market will regulate the salaries, bringing rationality back into tech. Companies will not pay premium prices at the moment.”
On the other hand, says Drerup, the big employment bubble will not burst. “The big hype that we had in the last year will not stop, because of, for example, generational change and post-Covid hiring effects. Therefore, I fully believe that we will keep the full employment push as we have it right now.”
3. War for tech talent is still here
How do you make your workforce leaner when it’s your much-needed superpower? You don’t. Whilst a few tech brands might make the headlines with unfortunate lay offs, that’s not the case in the rest of the tech employment space. We are seeing lots of medium- and small-sized companies which are dying for talent, and they’re not slowing down their hiring at all.
More and more midsize tech companies may actually have an unexpected opportunity to recruit talent who might have otherwise gone to larger companies. Those companies may come out as winners from this situation, with an option to scale up, as finding quality talent is still as hard as it’s ever been. “In general, companies have been in a race to hire tech talent. The rate of new positions flowing into the business remains very strong. If you are an attractive candidate, and if you have desirable skills, the demand still exists,” says our founder Moritz Drerup.
The solution for moving forward
Even the big tech companies will always be hiring for the most important positions. And the demand for great tech talent is always present. Therefore, job seekers shouldn’t panic over the tech industry’s bad news. One of the suggestions is expanding the job search to include different sized companies or to consider tech jobs at non-tech companies. Candidates could also use the time to recalibrate and learn new or scarce skills which are in demand.
Companies can expand the search for tech talent internationally, as it opens up new possibilities, and amp up the benefits such as upskilling. That can also lead to finding new talent internally. Take the best you can from a given situation, as tightening the belt in the tech world can unleash a lot of new opportunities.
If you are looking to hire worldwide tech talent or you just need advice get in touch with us. We can help recruit the best developers for your company or work with you on your hiring strategy and HR skills.