Exuberance, no “bossism” behind wave of tech layoffs
Exuberance, no “bossism” behind wave of tech layoffs
Layoffs in the tech sector have been in the news lately, for good reason.
Google’s parent company, Alphabet, laid off 12,000 people, or about 12% of its workforce. Facebook’s parent company, Meta, laid off 11,000 workers and IBM cut 3,900 employees, or 1.5% of its global workforce.
A total of 1,045 tech companies laid off 160,097 workers in 2022, and this year 344 tech companies have already issued pink slips to 103,767 workers, according to Layoffs.fyi.
Concern over a looming recession – despite unemployment hitting a 50-year low of 3.4% – is contributing to the layoff frenzy. The same goes for the pandemic hiring hangover. Another factor, according to some labor market observers, is the “Great Restart”.
According to Business Insider, the Great Reboot is management’s response to the Great Resignation and “silent resignation.” He is making strategic decisions, including layoffs and pay and benefit cuts, to regain the power lost by employees during the pandemic.
Withdrawal, not bossism
The big reboot has its skeptics, however.
“What looks like ‘bossism’ or a vicious pushback from tech leadership to put help in its place is much more likely a step back from the over-hiring at the start of the pandemic.” , observed Mark Muro, senior fellow in the Brookings Metropolitan Policy Program at the Brookings Institution, a nonprofit public policy organization in Washington, D.C.
“Tech companies overshot their skis as the world piled on digital platforms and now must step back,” Muro told TechNewsWorld.
He explained that the tech sector is in a real temporary recession and is being forced to correct past mistakes in hiring. Slowing tech sales and rising interest rates have, at least for now, denounced unlimited hiring.
“Companies are facing real market problems – not just trying to put workers in their place,” observed Muro, “although the time for unlimited benefits and spiraling wages is certainly on hold.”
“It’s also important to recognize that Big Tech is its own world,” he added. “Most of the rest of the economy is still struggling with tight labor markets where workers still have a lot of leverage.”
remarkable for its absence
However, as Gartner analyst Wade McDaniel pointed out in a recent blog post, some companies have handled the pandemic hangover better than others.
“Many companies mentioned in the press say they splurged or overinvested in talent during the height of the pandemic,” he wrote. “Others say they react to changes in their business model.”
“But one company is particularly absent from media coverage of the layoffs: Apple,” he continued. “They’ve seen strong growth during the pandemic but aren’t currently laying off staff even though revenue was down in the fourth quarter.”
McDaniel noted that Apple has increased its workforce by about 20% over the past three years, while Microsoft, at 50%, and Alphabet, at 57%, have taken much more aggressive approaches to staffing.
“For sure economic and market uncertainty are contributing to these cuts,” he wrote, “but ultimately many companies will retain larger staff after the layoffs compared to just 12 years ago. month”.
A case of over-exuberance
Robert D. Atkinson, president of the Information Technology and Innovation Foundation, a research and public policy organization in Washington, D.C., called the idea that companies would lay off workers to reclaim control lost during the pandemic “outlandish.” “.
“What’s happened to tech companies is that they’ve been a little too exuberant in responding to the pandemic,” Atkinson told TechNewsWorld.
“A lot of the computing demand during the pandemic was somewhat temporary,” he explained. “When demand returned, it was below business expectations.” “They overshot,” he continued. “I don’t buy into the idea that they’re laying off workers they could use productively now so they can send a message to their workforce.”
“You have workers for a reason,” he added. “If you have more workers than you need for your workload, you really only have one choice, and that is to downsize.”
Atkinson, however, sees a post-pandemic shift in the tech sector.
“Are there going to be these frothy terms in the future with huge signing bonuses and big salaries? I doubt it,” he said. “I think we’re at the end of this era for the tech job market.”
He acknowledged, however, that there are always certain skill sets that will be in high demand or low supply. “You’re always going to pay for this superstar,” he noted. “It’s not going to go away. He’s just not going to reap the kind of bounties he’s had in the past.
The biggest change in technology will be how it deals with costs, he continued.
“Before that, cost was not a main constraint. Talent was their main constraint,” he said. “Now they operate in a world where they cannot be indifferent to cost.”
“They were in a world where they had so much money that they wanted to keep hiring and keep hiring the best,” he continued. “Now they’re going to focus a lot more on cost containment than they used to.”
“It could lead to them hiring more new people right out of college because you pay less for someone with that level of experience than someone from another company with 15 years of experience” , he added.
Cybersecurity a refuge for employment
When an industry starts to tighten its belt, there are always niches that seem to buck the trend. Along with technology, one such niche is cybersecurity.
“In the area of cybersecurity, we are seeing relative insulation from the impacts of the recession,” observed Clar Rosso, CEO of (ISC)², an organization in Clearwater, Fla., that certifies cybersecurity professionals.
“In cybersecurity, we’re seeing robust hiring plans,” Rosso told TechNewsWorld.
An example of tech companies reasserting their control over workers is the elimination of work-from-home options for workers. This is not the case among cybersecurity professionals, she asserted.
Rosso cited figures from a study to be released on Thursday that found 55% of cybersecurity professionals work remotely or have the ability to choose where they work, up from 23% before the pandemic.
“What we’ve seen in cybersecurity is that when employers force people back into the office, a lot of people change jobs where they don’t have to go to work every day” , she said.
Rosso added that organizations seem to have a better understanding now than before the pandemic of the value of cybersecurity professionals.
“Because they’re in high demand, they’re not people you’re going to get rid of lightly,” she noted.
Rosso had this message for IT people cut off from tech companies: “Come to cybersecurity, especially if you have deep technical skills. We have over three million jobs open for you.