With recent headlines filled with news of tech sector layoffs, one could be concerned about tech growth. However, in reality businesses are hiring tech in droves as companies are offering flexible work options, such as a combination of in-office and remote work and higher salaries.
And with the migration to remote workers who can live anywhere and voluntary resignations across all industries, there is plenty of fish in the sea. Given the rapid expansion of the available talent pool, this might be the best time to hire top-quality talent to meet your organization’s hiring needs.
However, the situation is not that simple. Despite the large number of news reports stating the layoffs, there is yet significant demand for tech workers with a number of companies scrambling to hire the best workers. CompTIA, the leading tech industry voice, reports that hiring activity for tech positions has grown for the 18th straight month, in its June Jobs Report. Despite layoff news, unemployment rate remains at historical low and professional services private sector jobs added 48,200 net new jobs in May 2022 compared to April 2022, according to labor department data. Majority of these jobs are high tech jobs, according to the BLS. If you are out to hire right now, make sure you have the right strategies in place to ensure that you absorb the best talent on the market.
Image: https://pixabay.com/photos/youtuber-blogger-screenwriter-2838945/
The supply of tech talent
2022 has been a rough year for tech firms and their employees. According to aggregator layoffs.fyi which tracks job cuts in the tech industry, nearly 40,000 workers have lost their jobs since the beginning of 2022, with nearly 17,000 jobs lost in May 2022 alone.
There is a long list of tech companies that have laid off workers. A prominent example has been Coinbase, one of the world’s largest cryptocurrency exchanges with 98 million users and $256 billion in assets. Last month, Coinbase reported a massive $430 million loss in the first quarter of 2022, with a 19% reduction in average monthly users. Consequently, Coinbase plans to lay off approximately 18% of its workforce, or 1,100 employees.
Another cryptocurrency firm BlockFi announced it was laying off approximately 250 people despite growing nearly sixfold in 2021. The layoffs are not just limited to crypto companies. OneTrust, a privacy and marketing company, also announced that it would lay off 950 people, about 25% of its workforce. Other recent examples include Switch Fix, ID.me, Bird (a transportation company), and PolicyGenius. While tech start-ups have initiated the majority of layoffs, even established tech companies like Netflix, Peloton, and Robinhood are actively laying off workers, while tech giants like Twitter and Meta have paused or slowed down hiring.
Ironically, tech companies that stood their ground at the peak of the pandemic in 2020 while all other industries were laying off workers are now downsizing their workforce. However, there is a difference between the layoffs in 2020 and 2022. In 2020, the layoffs were a global problem that could be attributed to a pandemic-induced uncertainty and slowdown in growth. Conversely, in 2022, many of the tech companies laying off workers were named unicorns just a year ago.
Beyond layoffs, the number of workers voluntarily quitting jobs across various industries is at an all-time high. This phenomenon, termed The Great Resignation, peaked in March 2022 with nearly 4.5 million resignations. Whether workers quit voluntarily for better work-life balance and career opportunities or are involuntarily laid off, one thing is certain. The readily available talent pool, especially for tech, has never been larger, owing to the combined effect of these workforce shakeups. So if you’re hiring, this is the right time to strike to acquire high-quality talent.
Reasons for tech layoffs
While widespread tech layoffs have certainly expanded the talent pool, it is wise to understand the underlying mechanics behind this phenomenon to avoid making the same hiring mistakes. Successful recruiting is not just about hiring the most number of people; it’s also about developing and retaining top talent.
These are the major reasons for tech layoffs:
Overvaluation -- There were many niche areas, where valuation of tech companies, for example, cryptocurrency companies, were overvalued. A market correction was coming for these companies.
Returning to the old normal – Many tech firms benefited immensely from stay-at-home mandates and behavioral shifts during the pandemic that increased the uptake of their products. However, as pandemic-related restrictions ease, the same tech firms are suffering as people’s preferences shift away from stay-at-home activities.
VC portfolio rebalancing – It is no surprise that startups that grew exponentially during the pandemic are at the forefront when it comes to laying off workers. These same startups that hit dizzying valuations are now struggling to raise follow-on funding rounds in an economic downturn, leading to the tough decision to lay off workers to reduce cash burn. Additionally, the denominator effect might also be slowing down the growth of venture-backed startups – a fall in stock prices increases the proportion of VC investments in LPs’ portfolios, forcing institutional investors to rebalance portfolios in favor of stocks and away from VC funds.
The continued demand for tech talent
Up until 2021, the demand for tech talent was quite intense. Non-tech companies, FAANG companies such as Meta and Amazon, and especially tech startups were all hiring tech talent in record numbers. Tech startups increased the size of their software engineering and developer staff by approximately 60% each year until 2021. The market was hot, and hiring negotiations were skewed in favor of employees.
Growth continues in 2022, but corrections in some niche areas within the tech-sector do not necessarily mean the industry has stopped growing. Companies that grew rapidly but unsustainably during the pandemic are now simply witnessing a lower, adjusted, and sustainable growth rate. Experts suggest that this is a shift from the pandemic-induced hypergrowth to efficient growth. Additionally, some bigger tech companies have shifted their hiring to other parts of the country, no doubt due to the “tight market for talent.”
However, even though the talent pool has increased due to layoffs, it’s important not to let your guard down. The demand for tech talent is always volatile and top talent is recruited quickly, even during times of reduced growth and hiring slowdowns. Recruiters wanting to take advantage of the current scenario should devise an effective hiring strategy right away before top talent is recruited away, leaving behind a large mediocre pool.
How to attract high-quality tech talent?
Tech companies now face intense competition from non-tech firms that have started hiring tech talent at a record rate. Whether it is healthcare, financial services, or even the government, tech talent is universally required and coveted.
Knowing how to attract high-quality tech talent is therefore critical. However, it is not just about hiring the right people but also about retaining them and nurturing their talent. Constant attrition can be costly for your company and reduce your competitive edge considerably.
Here are some ways to attract and retain top quality tech talent:
Focus on diversity and inclusion – According to a Beqom survey, 40% of 1,000 employees surveyed said they would consider switching to firms that focused on Diversity, Equity, and Inclusion (DEI). While DEI practices are an important social good, they also have a proven record of improving company performance. Have you downloaded FloCareer’s eBook, Improving DEI with Unbiased Interviews?
As a recruiter, you can grow your candidates by considering applicants who do not meet predefined criteria, such as a minimum GPA or top-ranked universities, and evaluating them on objective, skills-based criteria. In this manner, you can conduct an unbiased hiring process.
Structured interviews – This is an interview assessment method that systematically measures candidates’ skill levels to determine their competency for a particular job. First, recruiters evaluate candidates based on a set of predetermined questions put forth in the same order, which ensures standardization across all applicants. Candidates’ responses are then graded on a scale to rank the top performers. Structured interviews reduce bias considerably and help hire top talent while achieving DEI objectives.
Mentoring and upward mobility – Apart from the financial benefits of a job, employees need to feel valued by the company. It is crucial to foster and develop employees’ talent through mentorship. Millennial and Gen Z employees, who have potential but lack experience and constitute a large proportion of the workforce, especially value this kind of an investment made by companies in their people. If you want to attract and retain top tech talent, you must provide them with mentorship and long-term growth opportunities at your company.
At FloCareer, our team of 3,000+ freelance experts specializes in conducting structured and technical interviews to scout the best talent for your firm. Our experts are proficient in DEI practices and focused skill assessments and excel in making data-driven decisions. FloCareer also offers a live interview platform that provides a framework for conducting structured interviews. It includes a question bank of over 50,000 crowd-sourced questions, enabling recruiters to customize interviews for specific positions.
Regardless of the tech position you’re hiring for, FloCareer has you covered. Leverage FloCareer’s expertise, specialization, and best-in-class hiring practices to attract and retain top tech talent. Book a demo to learn about our services today.
