By Randi Weitzman, Executive Director, Technology Talent Solutions, Robert Half
Layoffs continue at Big Tech, and it’s making people nervous. Headlines about headcounts are dominating the media, making tech workers, employers, investors and CEOs wonder if we’re seeing another tech bubble bursting, bringing fallout like we saw in the first years of the 2000s.
From where I oversee recruiting for Robert Half’s technology practice group, I feel comfortable saying: That was then — this is now.
The 1990s dot-com boom was really a mirage, built on speculation and shaky market valuations as every Silicon Valley developer rushed to bring e-commerce sites and search engines to the new World Wide Web and NASDAQ.
No one who understands speculative markets was too surprised when the slow-motion dot-com crash of 2000 arrived, bringing down hyped-up e-commerce sites like Pets.com and eToys.com and tech-driven communication firms like Worldcom and Global Crossing. Other promising digital companies were weakened and absorbed by larger companies. All told, an estimated $5 trillion in investment capital had evaporated.
In contrast, today’s technology sector is much more stable and includes some of the world’s most valuable public companies. These are employers with real goods and services, revenue coming in and new products in development.
Meanwhile, the U.S. labor market remains strong, unemployment is historically low, and stock markets seem relatively unaffected by layoffs. Analysts say there’s little risk these tech layoffs will be the factor that pushes us over into recession.
So, while many news reports continue to treat tech layoffs as a sign of an economic cataclysm, let’s take a collective deep breath and explore what’s really happening in the tech labor market — beyond the headlines and behind the scenes.
Confused by recent reports of tech layoffs? See this Robert Half infographic to get a better grasp of the situation.
Tech layoffs are not necessarily about tech talent
Layoffs may be happening at high-profile tech firms, but they aren’t happening to tech professionals across the board. In fact, a sizable portion of layoffs at Big Tech haven’t actually been technology professionals but those in other departments of these giant corporations.
For example, companies had to bring on large numbers of HR and staffing specialists during the hiring boom of 2021 and early 2022 to fill the thousands of open technology positions, and now those levels are adjusting. Fortunately, demand remains high for recruiters and HR professionals across industries, with 59% of HR managers planning to add team members and 90% expecting difficulty finding the right people.
Job cuts are relative — hiring is still strong
In my view, what we are seeing with these layoffs is an adjustment. Companies forced to power down and release staff during the first year of the pandemic raced to hire as soon as business started to improve.
For technology, it improved a lot. According to a McKinsey Global Survey, the pandemic accelerated the digital transformation of companies by three to four years. Digital businesses doubled down to bring products and services to market that would connect remote workers and customers and serve a locked-down populous. By March 2021, this hiring had helped drive the monthly new jobs report to almost 1 million.
As the economy started softening last year, tech employers recalibrated headcounts. Silicon Valley has been following this boom-and-bust model for decades.
Tech workers are still in demand, but hiring takes longer
Despite the waves of tech layoffs, Robert Half’s latest data tell us almost two-thirds (64%) of tech hiring managers plan to hire in the first six months of 2023.
And it seems clear from their exceptionally low unemployment numbers that laid-off tech workers aren’t having trouble landing a new role. According to an analysis late last year by workforce data provider Revelio Labs, 72% had found new jobs in their field within three months, and about half were collecting even higher salaries than before.
It’s likely that many will land tech jobs outside of technology companies. We’re seeing demand for tech talent in many industries, like government, education, manufacturing, energy, professional services, non-profits and the financial sector.
According to data from Robert Half’s latest Salary Guide, 91% of technology hiring managers say it’s challenging to find skilled talent. In January 2023, the tech unemployment rate was a mere 1.5%.
However, we’re observing much less frenzy around the hiring process these days. Employers are taking more time to fill positions, interviewing more candidates and doing more due diligence. So, companies looking to bring on new tech talent should be aware they will be looking at longer times to hire this year if they try to do it themselves.
And just because there is free-floating tech talent out there doesn’t mean they’ll be easy to land. Competition is fiercer than ever.
This is where partnering with a talent solutions provider can pay off. Recruiting specialists can help your internal hiring team cover more ground, and faster. They can launch a search for skilled candidates, evaluate applicants and reduce the time and stress of hiring a new employee. They even evaluate culture fit to help your firm find a candidate who’s a solid match with your team.
Tech companies turn to contract staff in uncertain times
Even when companies let talent go, they still have to manage projects, initiatives, deadlines and plenty of work to go around. Tech enterprises are filling those gaps with full-time and part-time contract talent. Our data show 72% of technology managers plan to increase the number of contract employees in their departments in the coming year.
Despite tech layoff trends, it’s important to understand how and why companies are reducing staff. It’s not always an indicator of the labor market’s direction — or even trends in the larger economy.
It’s also worth remembering that these layoffs are not making skilled tech talent more easily available. If anything, with the number of IT managers looking to add staff in the coming months, hiring for your tech teams may only become more challenging.
Check out some of the ways Robert Half can help you find tech talent.
