Navigating the Challenges of Mass Tech Layoffs: Turning Adversity into Opportunity

“Sorry, we will have to let you go.”

These are the most feared words for employees across the world in the wake of widespread layoffs.

 Mass layoffs are back in the news, and most of them focus on one sector: technology. According to layoffs.fyi, there have already been a total of 97,520 tech jobs cut from 313 different companies, as of 7 February 2023. In fact, four of the biggest rounds of tech layoffs since the Covid-19 pandemic’s inception occurred in January 2023. It is evident that the tech industry is putting thousands out of work, and leaving many more speculating if they will have a job in the coming weeks or months. It has reached the point that one tech recruiting website, TrueUp, developed an interactive tool to monitor layoffs across the tech giants! According to Challenger, Gray & Christmas Inc., the tech sector’s layoffs in 2022 were up 649% compared with the previous year, the highest since the dot-com bubble two decades earlier. In 2022, there were more layoffs in the tech sector than in 2020 and 2021 combined!

Source: The Challenger Report

Let’s have a look at some in-depth information on the ins and outs of mass tech layoffs, and how other tech companies and those looking to hire within their tech department can benefit from the current scenario.

Decoding mass layoffs

In 2020, when people were confined to their homes because of the Covid-19 pandemic, there began a surge in online activity, be it working remotely, taking virtual classes, shopping online, or streaming movies. This rush resulted in record revenues for the tech companies, and with this, they began their hiring spree to keep up with the demand. The tech companies felt this would be the new normal, rapidly expanding their teams.

When the economy got worse last year, tech companies prioritised keeping their payrolls low out of fear that the world is headed for a recession. But as normalcy in consumer behaviour took hold, many of these tech companies reported dismal growth rates. Since over-hiring was definitely not sustainable in the current economy, many companies resorted to layoffs to prepare for the economic downturn.

Furthermore, the 365 Data Science’s study report examines various characteristics of laid-off employees, like education level, work experience, job tenure, and job position, to uncover more explanations. The fact that the laid-off employees are educated and experienced is a significant discovery, disproving the theory that companies mostly let go of junior or inexperienced employees.

Impact of layoffs on companies and employees

The tech companies have given a range of explanations for why the mass layoffs were essential, which generally boil down to a desire to cut expenses as global economic development slows. While there appears to be no valid proof that layoffs succeed, they have become the go-to short-term tactic. And unfortunately, employees bear the brunt of the blame.

In Edelman’s 2022 Trust Barometer, 85% of respondents cited job loss as their top worry. Due to these uncertainties, tech companies are on the verge of losing critical competencies, and the remaining employees are still determining their future with the company. According to studies, 74% of employees who are kept on after being laid off have lower productivity. With this in mind, companies must prepare to manage the workloads, expectations, and priorities of the remaining workforce.

 Also, due to mass layoffs, in the UK, more than half of the tech employees, who are still employed, are applying for new roles, in anticipation of being let go. The feeling is strongest in London, with a staggering 63% of employees pre-emptively applying for new jobs.

Tech jobs in the UK are surprisingly easy to grab if you know where to look…

In some positive news, nearly 80% of laid-off tech employees land new jobs within three months of beginning their search, a study from Zip Recruiter published in The Wall Street Journal reports. These highly-skilled people don’t stay unemployed for long, so it is important to re-evaluate what your business needs, taking both the present and the future into account. In addition, the UK Tech Ecosystem update (June 2022) - a Tech Nation report supported by the Department for Digital, Culture, Media & Sport and the Digital Economy Council - reported that there has been a significant drive to encourage talent to enter the tech sector, with over two million available positions in the past year.

A good time for small tech companies to hire is now!

There’s no doubt that the tech industry is going through a tough time right now. It is also unlikely to change in the near future. Having said that, layoffs are not always bad news when seen in the long run. Yes, 2022 was a challenging year for the tech sector. But as we go deeper into 2023, start-ups and small tech companies may have the most significant opportunities this year.

 Small tech companies are bound to benefit now, with full access to the fresh talent pool created by the mass tech layoffs. To attract this new group of job seekers, these companies will require a solid approach to integrate them into their business. Here’s where MBA can help your company grab exceptional candidates. Our dedicated and specialised technical recruitment team knows the tech industry inside and out, and is prepared to source the best talent for your business.

 For the companies to attain and sustain a competitive advantage, we deploy a range of effective recruitment strategies to attract and engage the best pool of tech talent. From this, we select and onboard highly motivated candidates with skills and capabilities suited to the company’s exact needs, thereby helping to build a retentive culture deeply rooted in progression. Our mission is to match the right people with the right jobs!

Conclusion

Even with tech layoffs happening all so frequently, and in mass, the future of work is still connected to technology. But the tech industry is undergoing structural rather than technical changes, which is a sign of a more significant issue than it seems.

To minimise such issues, and get top talent onboard, connect with MBA’s dedicated technical recruitment team for a sure way to source top tech talent to grow your business.

Contact a member of our technical recruitment team today.