When They are lost 100.000 jobs in a month, as tech did in January, it's easy to think the tech jobs market is bottoming out. The torrent of layoffs from big companies has been swift and brutal, with Microsoft, Alphabet, Amazon and Salesforce, among others, laying off thousands each.
But as with everything else in this economic downturn, nothing is as it seems, or certainly not as clear cut as it was in 2008 or after the dotcom bubble burst in 2000 when the economy crashed hard, and it was a long and difficult journey to return to stability.
The justification for these layoffs is to reduce operating costs and increase profits, perhaps by reducing the payroll that increased during the height of the pandemic. It's a wild business, but a careful look at the employment data suggests it may not be as bad as it first appears.
Conventional wisdom suggests that these job cuts will eventually catch up with us, but so far, tech workers—especially those with specialized skills like engineering, data, AI, and cybersecurity—continue to be in demand as supply lags the number of jobs. workers. open jobs.
It's also possible that people laid off at Big Tech just don't go to other tech companies.
Businesses and governments at all levels have been demanding people with technological skills. And likewise, laid-off tech workers who perhaps are yearning for more stability may welcome the security offered by some of these other industries. Changing situations also give people the opportunity to use their abilities in a different way.
Digging deeper into the tech jobs data, it allows for a more positive picture than recent headlines would suggest. Maybe these scorned employees will have the last laugh after all.
Something is happening
The data is confusing. You can see companies laying off tens of thousands of people, and yet the employment outlook remains surprisingly strong.
Considering that across all sectors there was a net gain of 517,000 new jobs in January and the unemployment rate hit a 53-year low (United States). That's unlike any recession you've ever experienced.
Atta Tarki, founder and president of executive search and recruiting firm ECA Partners, and author of the book "Evidence-Based Recruitment," says the evidence suggests the job market remains tight across the board, especially for technological jobs.
"It seems to be based on all these exploding headlines, and every employer I talk to asks me, 'Well, isn't this going to be Armageddon right now?' And I've been telling you for a long time, it looks worse than it is, and even in the tech sector [with all these layoffs], it looks worse than it is.”
Manpower, in its latest monthly employment survey of employers, found that in the IT sector, 76% of employers surveyed said it was still difficult to find people with the necessary skills to fill open positions. Additionally, half of all respondents expected to increase their staff in the first quarter, while only 16% reported reductions in staffing.
Nicholas Marshall, director of sales enablement for ManpowerGroup, agrees with Tarki that things are a lot better than they seem.
“The perception is that, well, there are tons of layoffs. But what we see is that in the last two years, those tech companies overhired, and it's more of a correction and a flattening, but there's still strong demand and job prospects,” he said. He said that we are not, in fact, seeing an overall decline and that there is still "a really strong employment outlook for the tech industry overall."
Overall, the company reported a net employment outlook of 35%. They get that number by taking the percentage of employers anticipating an increase in hiring activity and subtracting from this the percentage of employers expecting a decrease in hiring activity.
It's a solid outlook, but not as good as it was last year right now, down 16% from a year ago and down nine points from the prior quarter. So it's adjusting, but not as much as you'd think given the sheer number of people we've seen laid off over the last year.
Still, it was a more optimistic employment outlook than any other industry, as the graph below shows:
No thanks, Big Techs
So if the big tech companies are laying off and the overall number of jobs isn't falling appreciably, where are all these people landing? What we're starting to see is that some of the people laid off by tech companies are landing at non-tech companies.
Tim Herbert, director of research at CompTIA, a company that issues certifications for the IT industry, tracks tech job data and issues monthly reports. This includes looking at jobs numbers from the Bureau of Labor Statistics and tech job postings across all industries.
He says the January report was mixed for tech jobs, as net new jobs fell into negative territory after 25 straight months of positive growth to -700 jobs, a number likely to worsen in February with job losses in January. . But there was also some good news to offset that: The number of job postings in the types of tech jobs actually increased.
In fact, there is a huge increase in postings for tech jobs in industries like government, manufacturing, insurance, and financial services. According to CompTIA, the top companies posting for tech jobs last month included financial services like Citi with the IRS coming in third with the most openings.
Herbert said these companies feel they can compete better for tech workers now than they did last year. “The implication is that there are many of these sectors that probably see this as an opportunity to avoid some of the frenzy that we saw around this time last year. I mean the market was on fire in terms of competition for tech talent. There was a lot of concern about the increase in wages.”
“So you could definitely see that some of these companies (who aren't going to have the same brand recognition as working in Silicon Valley) are probably in a better position to hire now,” Herbert said.
What hiring managers say
We spoke to several CIOs and hiring managers, and the message was clear. They may be more careful with spending, and that includes hiring, but they're still hiring for the most part, and that's consistent with the data. Also, the market may be easing a bit for less technical workers, but it's still tight for people with more specialized skills.
Monica Caldas, CIO at Liberty Mutual, says she's hiring with hundreds of openings in engineering, data science and cybersecurity, and it's not much easier to do so than it was six to nine months ago, even with tech layoffs.
“If you look at CIO budgets and IT spending around the world, you start to see where people are spending money, you see common threads in the operational excellence, digitization, cyber literacy and analytics data work. And those are all areas where we're increasingly competing for talent. So, I don't think it's significantly easier or materially easier,” Caldas said.
The way Sharon Mandell, CIO at Juniper Networks, is hiring is changing a bit to accommodate changes in spending. “I'm hiring, and I'm hiring FTE. I am also trading contract for contract, and I am slowing my pace so that the dollar lasts longer,” she said.
Hiring is slowing down a bit, says Alexa Shanahan, director of recruiting at Starburst Data, a Boston startup that has raised more than $400 million. But she's not completely putting on the brakes. “Our workforce has reached more than 600 employees around the world. We saw more than 50% growth in the number of employees last year, and a considerable amount of that actually happened in the second half,” she said. “Over the coming months, our primary focus will be on growing and investing in R&D to support the growth of our Enterprise and Galaxy products. As a result, we have fewer than 10 open positions at this time, the majority of which are in our product and engineering teams."
Molly Austin, senior director of people at D2iQ, a San Francisco startup helping simplify Kubernetes deployment, is still hiring and says it's still hard to find people with the right skills for her company.
“For D2iQ, the hiring landscape hasn't really slowed down that much in the last year. The talent pool with Kubernetes experience is relatively small and it's still a challenge to find amazing people, especially in sales and business development for us right now. Incredible people and talent will always be in high demand and we are finding that is still the case, even with the recent layoffs,” he commented.
But Austin says hiring is down a bit in less technical roles. "I've noticed that HR and recruiting roles have been the most frequent on layoff lists, and we just filled an open people operations manager position with an amazing candidate before the holidays without a hitch."
The obvious question is whether there will be a delay as the sheer number of people laid off finally catches up with the number of open jobs. Tarki doesn't think so.
“I've been hearing this message in a way since March of last year that when next month's numbers come in, it's going to be Armageddon,” he said. "Situation? The data for April arrived, and it did not happen. Same for May, June, July. And yes, we did see a little bit of an uptick in October. We may see a small rebound in January [due to layoffs at big tech companies], but the sky is not falling. The job market is still stronger than it seems.”
