Anyone working in tech will know the instability inexperienced over the past two years and will have experienced the ripple effects of that volatility whether they realize it or not. From adjusted employment benefits to the rise of entrepreneurs using their severance pay to enable to go it alone, the impacts can be felt globally across the industry.
Motion Recruitment’s IT Salary Guide 2024 gives an overview of the data from the past three years and examines what can be learnt from tech layoffs by employers and employees alike.
Tech Layoffs in Summary
With a wealth of data available, it can be tricky to see the overall landscape. According to the Salary Guide, nearly half – 42% – of tech layoffs were from FAANG companies: Meta, Apple, Amazon, Netflix and Alphabet. While these layoffs naturally caused panic within the industry, the reasons for those layoffs went beyond purely financial motivations, as reported by Forbes during the eye of the layoff storm in January 2023.
Ironically, tech may be responsible in some part for those layoffs. Amid speculation that a range of roles, including HR, which accounted for 28% of layoffs, were becoming reduced thanks to automation, there is also the fact that AI also helps some companies to identify low-performing staff.
We can be sure that the layoffs were the result of a range of factors, but it is important to maintain context: the layoffs followed a massive employing spree from tech companies up to 2019. This was not only cut short by the global pandemic, but the forced move to remote and hybrid working meant that tech companies and tech talent could work more flexibly across geographies, permanently changing the way we hire people.
Tech in 2024
While layoffs have slowed down, they are still happening. According to Crunchbase’s Tech Layoffs tracker, although we are unlikely to see anything like the 65,000 layoffs of January 2023, tech still remains an enigma, with a wealth of both opportunity and instability. Some of these layoffs are the result of the winding down of promising startups, according to Crunchbase. So it is wise for tech talent to be cautious when looking to leave a secure position, and for those who feel their position may be precarious to start looking for other opportunities sooner rather than later.
Where is the FAANG Talent Going?
Tech professionals are known for being creative and resilient and these qualities showed amid the devastating layoffs of late 2022 and early 2023. In fact, 79% of workers who were laid off in 2023 secured another position within three months. According to SignalFire’s State of Talent Report, of the nearly 19,000 engineers that were laid off by FAANG companies, 27.8% were hired by another FAANG, and just over 6% left to go to early stage startups.
Going it Alone
According to one study by Clarify Capital, 63% of laid off tech workers took the opportunity to start up their own company. Motivating factors for starting a new business include: professional growth; more money; to create something new; to lead others; to be their own boss; greater opportunities; because other job prospects looked bleak; because they were unfulfilled working for others; because they weren’t paid enough; because they were unable to find the right position. The gamble paid off: of those surveyed, an average annual salary increase of $13k was reported by those who did start up their own company, and most (57%) feel better about their job security now than they did prior to lay off. What’s more, within a year, 93% of those startups were competing with the company that laid them off.
Joining Seed and Startup Organizations
It’s not just new entrepreneurs that are taking advantage of the layoffs. For startups and seed companies who could only dream of attracting FAANG talent, there was influx of skilled tech talent with a financial buffer thanks to their redundancy. This meant that personnel that startups would probably not be able to afford or attract prior to the layoffs were in reach and willing to take a gamble on a small project that they believed in. What’s more, agile and creative startups are coming up with alternative packages to make up for the lack of financial compensation, such four-day weeks, accelerated development, internal training and recruitment opportunities.
The resulting redistribution of talent and, to an extent, power, could act as a stabilizing factor, in part improving smaller organizations’ capability to compete in a highly competitive field and giving the power to recruit talent to smaller organizations who may not wield as much financial power, but who benefit from the flexibility and agility of their size, making them an attractive proposition for ambitious tech talent.
Tech in 2024 and Beyond
There is no doubt that the tech world is volatile. However, that does not mean that it is without opportunity. Global tech demands and discoveries grow every single day, and in order to stay in the game, tech companies of all sizes have to stay ahead of them. It is not surprising, then, that recruiters are most concerned about their ability to fill data analytics roles in the future, to process the 2.5 quintillion bytes of data that is produced every day around the world. Data analytics are followed by key management roles, including HR, executive management, IT, mobile and web design. This is not surprising; while the tech industry is packed with talented, ambitious individuals, the sudden growth of tech and relative newness of some areas mean that there are relatively few skilled, qualified and experienced employees ready to step into leadership roles.
For people in tech looking for the next opportunity as well as job security, it is important that you understand your worth, your potential, and what you need to fulfil that potential. If you have skills and experience in tech, work on your communication and leadership skills. If you don’t have a strong portfolio, develop that so that you can show potential employers or investors just what they are buying into when they back you. Securing the assistance of a specialized tech recruited can help you to gain an insight into what can help you to secure – and keep – the position that you want now, and in the future.
