Thousands of IT pros working for large national/international companies have received pinks slips in recent months: in January, CNBC reported that Google, Meta, Amazon and others had laid off 104,000 employees in the last year.
The pink slips aren’t disappearing: The Wall Street Journal on March 28 provided a list (one that continues to be updated), showing other companies expected to reduce their ranks in the coming months.
And the layoff likely will keep on coming: the article also mentioned that the layoffs have “shifted beyond high-growth technology companies to other parts of the economy, with companies including Dow Inc. and 3M Co. announcing cuts.”
If you’re one of the thousands upon thousands cut, chances are you have a question: “Why?”
After all, tech companies and others went on a hiring spree just a couple of years ago, a mere few months after the start of the pandemic, a hiring binge that lasted until early 2022 (when a trickle of layoffs began, resulting in a whoosh by mid-year, which continues).
In brief, here’s your answer: tech executives have blamed economic factors such as inflation and rising interest rates as the reasons behind the layoffs.
Yet, with cheeks turning red from embarrassment, they also fessed up: they admitted that “they over-hired, misreading the durability of the pandemic acceleration in the growth of online services.”
And yet… we must admit, we’re a tad shocked: the tech sector long has been viewed as an economic growth driver. After all, our culture as a whole is becoming more reliant on technology and, when the pandemic hit, there became an even greater need for more software developers, cybersecurity professionals and IT experts to help companies keep up with demand as so many of us started working from home, purchasing ever more items on-line and conducting our lives in an increasingly “virtual” world.
Yet the party definitely was over in later 2022, with the tech industry increasing its layoffs by 649 percent that year compared to 2021, the highest since the dot-com bubble a few decades ago.
Were “rock-bottom” rates the culprit?
In a big way, yes!
Or as the New York Times put it so poetically in the article linked to, above: “For Tech Companies, Years of Easy Money Yield to Hard Times.”
As the U.S. Federal Reserve started raising interest rates in March 2022, many tech firms, thinking that massive growth would continue, weren’t able to service their debts.
They’d been able to receive extremely low interest rates, making it easy for tech companies to over-extend themselves. What’s more, many tech firms raised significant amounts of debt in public markets, with total debt in the sector rising from $300 billion in 2019 to $500 billion in 2021.
Or as one analyst put it at the NYT.com link, above:
“The whole tech industry of the last 15 years was built by cheap money,” said Sam Abuelsamid, principal analyst with Guidehouse Insights. “Now they’re getting hit by a new reality, and they will pay the price.”
Some good news (unless you’re a middle manager):
Most of the tech layoffs are focused on middle management and support roles. As companies shift their focus to core products and services, they’re finding they don’t need as many support professionals or middle managers.
Instead, they’re investing more in engineering and product talent; these professionals are seen as key to driving innovation and growth.
Still, IT pros have many reasons to feel hopeful:
Many companies – not just those in tech – need great IT talent.
Many of those recently laid off are finding new positions within 8-12 weeks: a ZipRecruiter survey in November found that 80 percent of respondents said they’d found a new job within three months of starting their job search (while 37 percent found a new role in one month).
Who is in demand? Software engineers, data scientists, full-stack developers, data scientists, cloud architects and other specialized roles.
Where are IT pros finding work (which business sectors)? Most actually return to the tech sector. Others are finding positions in retail/e-commerce, financial services/fintech, healthcare, as well as in government agencies, within aerospace companies, etc.
Many are working as cybersecurity pros, data analysts and web designers.
In a way, the fact that tech companies have been laying off thousands of in-demand professionals is good news for other industries: had the tech sector continued its extreme growth it would have had the lock on tech talent. Instead, non-tech employers now have the chance to hire individuals with these valuable, critical skills.
And speaking of hiring…
Our terrific clients need great IT professionals! Whether you’ve recently found yourself “between positions” or you’re looking a move up your career ladder, take a look at our current opportunities and, should one or more interest, apply.
Even if none appeal to you now, we’re always listing new openings at companies across the country. Register with us so that we’ll be able to contact you as soon as something that matches your goals and skills appears.
Find & apply for the best IT positions