Reuters – In the last few days, future tech hires for the biggest tech companies have received a rude awakening. Several tech companies in the US have canceled arrangements with their future talents. Even the most gleaming candidates lost their future jobs due to the current crunch.
Due to the slump in stock prices, the total number of tech jobs worldwide has declined significantly. Additionally, the federal government has created a pending interest rate hike. This has negatively impacted reported earnings. In all, investors are looking for more stable options, and this is not assisting hiring in tech companies.
At this time, we know 3 main facts about the issue:
- The Fed aims to get interest rates above 2% by 2023
- Roughly 21,500 people in the tech industry have suffered job loss
- Stocks for tech-related companies have dropped ~25%
In addition, new talent for some services is hard to find. As a result, we will see a pending imbalance within the tech market. That said, a tech bubble like the one in 1999 is still improbable. However, according to Henrique Dubugras of Brex, companies will need to optimize their business if they wish to stay afloat.
The U.S. Tech Slump is Affecting Young Hires the Most
During the World Economic Forum back in May, top tech CEOs expressed that, while the current situation might not be the best, the future of the tech industry is bright. The biggest tech companies believed the sector will exit the crisis stronger than before.
According to Nicola Morini Bianzino, a CTO at EY, the job crunch is not the same across the board. Mainly, he discussed the situation for those with generalized skills, like sales and marketing.
Most of the people who lost their jobs work in tech companies, but not in tech jobs. These jobs don’t have a direct correlation with customers and commercial success. As a result, those workers are the easiest to lay off without affecting tech companies’ core business.
On the other hand, companies will now need to work harder to keep the talent they need. To start with, this talent is severely lacking at the moment. Additionally, the market is very competitive. Tech companies are offering more to those who can get them out of the slump, to a new level.
The problem with the market is also affecting future hires. In the last few years, tech companies have been collaborating with universities. Top students would then be able to work for these companies right after graduation. Regretfully, these dreams for young talent seem to be shattered. Many are reporting they have received a call canceling the arrangement and leaving them with no job prospects.
Reduction in Job Offers Happening Worldwide
The tech slump mainly affected the San Francisco Bay Area. Companies like Uber and Lyft have been laying off hundreds of workers daily. Still, many other companies, including those with bases of operation outside the US are also feeling the slump. These tech companies also need to cut down on the number of people working.
The CEO of the Swedish-based Spotify, Daniel Ek, has emailed the company announcing that employment will slow down by 25%. At the moment, the company has yet to reduce the number of tech employees significantly. However, Spotify is preparing measures in case the situation worsens.
On the bright side, this decline in offers will likely not deny jobs to those who hope to work in the tech industry. The overall job posts in the US alone were for 1.1 million jobs in 2022. At the moment, this number is larger than the eligible workers in that field.
Worldwide, the most lucrative jobs will likely have a reduced value. Most tech companies will focus on developing their core services instead of expanding into new fields.
However, these new fields are still being financed by a significant amount of venture capital. In turn, employment in these fields may still be promising.
Entry Level Positions Are at Stake
The current layoffs and the tech slump have mainly affected 2 categories:
- Novice tech employees that need to establish a good tech report with their companies
- Non-tech workers within the tech companies
Smaller tech companies may not have the time to wait for novice employees to get used to the system. They may decide to temporarily lay off novices despite their high entry salaries.
Novice workers will still have options available at larger IT enterprises. Tech giants will also provide them with the necessary resources to increase their competencies. That said, these individuals may see a reduction in their salaries.
On the other hand, we can mention the general employees at tech companies. Sales, marketing, or business operation employees may lose their jobs. But they will also have a significantly harder time finding new employment in the tech industry.
Talent Shortage and Employee Layoffs
Two opposing labor forces are acting at the same time. As a result, the market is suffering simultaneously from a labor shortage and surplus. It all depends on the company, industry, and sector. Companies like IBM are struggling to find cybersecurity talent. Cybersecurity specialists have been in high demand for a couple of years; the tech slump has not affected this demand.
Jobs focused on cloud-based operations, cybersecurity, and virtualization are still on the rise. The current market problems did not create a significant effect on these sectors. The demand might only be rising.
On the other side, generalized tech jobs, such as quality assurance and design, will be seeing a downturn in the upcoming months. Employees with primary tasks in these fields will have a harder time finding work in the tech industry. They may find more luck in more stable parts of the economy.
Changing Qualifications Might Be Necessary
Tech is a quickly developing industry, and the situation in both the stock market and the job market is changing daily. This means employers expect employees to have a lifelong learning process. This is a good practice for anyone who is just entering the field.
Tech talent will need to change their qualifications and add new skills. This will allow them to retain their position in a growing company. Because of the industry’s development, other jobs that are highly specialized or not directly tech-related will still be available. Yet, the compensation and stability of those jobs should be questioned.