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For enterprise IT leaders pursuing their talent needs, a layoff in the tech startup world may present a hiring opportunity.
Companies will lay off nearly 37,000 tech workers by 2022, according to Crunchbase data analysis. Layoffs.fyi, an online tracker of layoff activity, found 68,642 layoffs this year, most of them in the second and third quarters of 2022 after a relatively stable 2021.
Thomas Vick, regional director of Robert Half Technology, said the strikes are focused on specific areas of technology. But while some companies are cutting back on hiring or laying off workers, others are going full steam ahead.
“We still have tech companies hiring from us at a very fast pace and they’re trying to get talent as quickly as possible,” Vick said. “They are using this opportunity to hire that particular talent.”
It remains to be seen whether layoffs will lead to an influx of high-tech talent into the enterprise realm, but enterprise IT could benefit from hiring in-demand workers suddenly looking for their next opportunity. Organizational leaders must adapt to emerging talent needs and develop attraction strategies.
There are cases where layoffs can bring skilled workers back into the labor market. At Chipotle, after an AI salesperson was laid off, CTO Curt Garner says Chipotle began seeing an influx of candidates from people affected by those cuts who now want to work for the restaurant chain.
“But that’s a very high environmental situation,” Garner said. “I don’t see any significant trend in terms of candidate flow. Because again, there’s still such a shortage.”
Unemployment in IT occupations has consistently followed unemployment in general and reached 1.7% in July – less than half a percentage point from the 1.3% low level first recorded in May 2019, according to CompTIA statistics.
Variation in dismissal
The recent trend is at a time when unemployment and overall demand for talent is high.
Strikes at startups don’t necessarily have a direct impact on tech hiring. In layoffs, it’s not always clear whether the workers being let go will be marketing, sales or technical workers, said Tim Herbert, chief research officer at CompTI.
Despite some layoff announcements and some other concerns, it’s still an extremely tight job market for tech talent, Herbert said.
U.S. employers shed 25,810 jobs in July, a 21 percent month-over-month decline, according to a report by Challenger, Gray & Christmas. However, job cuts are still higher than in July 2021.
While some technology providers have recently laid off workers, such as Microsoft in July or Oracle earlier this month, technology companies are hiring different types of workers.
“Every large technology company has many different roles,” said JP Gownder, VP and principal analyst at Forrester. “Marketers, salespeople, designers alike, as a technology leader in an enterprise organization may not be the people you want.
One way to appeal to workers affected by layoffs is to consider contract or temporary increases, because many of them want those kinds of opportunities.
“Building your strategy isn’t necessarily a full-time hire, it’s probably more successful as a freelancer,” says Gonder.
In an uncertain economy, executives are increasingly turning to outsourcing firms for critical projects.
“When I talk to my peers, one of the things we see or expect is that it’s easier to find short-term talent as contractors,” Garner said. “A lot of companies are starting to cut their contractor workforce, which isn’t necessarily news. But now some contracting agencies have more people than they’ve had in the last two years.”
In the long term, employers should be aware of macroeconomic conditions in the event of a major, prolonged recession. This, including further reductions in technology, could shape the labor market into its current form.
“Everybody’s fair game at that point,” Gownder said.
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