Tech Hiring Fluctuates Amid Industry Downturn

Image of a woman behind a laptop waiting for tech hiring.
While bright, the future of new tech industry talent is not certain.

Specialized jobs in tech have never been in higher demand. However, tech hiring as a whole has reported a change in hiring plans. Companies are canceling employment negotiations, making hiring freezes, and even initiating layoffs. Some sectors are affected more than others, forcing tech specialists to better analyze offers for employment.

At the moment, the tech hiring turbulence is mainly affecting these 3 sectors:

  1. Cryptocurrency
  2. Transportation
  3. Retail

Additionally, the reported reasons for the industry crunch are not the same across all sectors. In some cases, the situation in tech follows the developments in the real world. Often, customers can’t match the prices offered. Conversely, the so-called Web3 lost trust. Many do not believe in what the technology has to offer.

Presumably, the sectors negatively affected by inflation and high gas prices should continue to grow, provided that their issues are resolved. But, when it comes to products like crypto, the future will likely see a completely new industry or at least a new product.

The only sector that is not experiencing this turn of events is business-to-business (B2B) companies. They have seen less exponential growth but more stability in the last few years. This includes older financial giants, like Citigroup, who are on track to hire thousands in the upcoming months.

Contracting from Pandemic Growths

Many commented that the downturn in tech hiring is due to the drop in stock prices. But that may not be a good indicator for the reason. According to Ryan Sutton, a district president for Robert Half in charge of recruiting, “the stock market price is not always a good indicator for hiring.”

All companies that have reported layoffs had a massive tech hiring surge in 2020 and 2021. They had offered new jobs in the thousands. In many of those cases, the jobs went to people who lost their employment due to lockdowns.

Now that the majority of pandemic rules have subsided globally, the situation is normalizing. Namely, the customers for tech services are diversifying their spending. The need for startups and even billion-dollar tech companies is simply not high enough.

Image of a smartphone with stocks showing Coinbase.
Coinbase has been one of the companies hardest hit by the cryptocurrency crunch.

Crypto and Web3 Hit the Hardest

Many of the tech companies that are exhibiting a tech hiring downturn have legitimate external reasons for layoffs and contraction. Additionally, those involved in the industry around crypto might have the biggest problems on their plate.

For one, investors and enthusiasts have significantly lost trust in the product. While some aspects of the technology have found other uses, the trade of crypto as a commodity has slowed down significantly.

Bitcoin (BTC) has experienced a ~66% loss in price. It is currently at the lowest price since December 2020. A significant chunk of that drop has happened in the last week. The price fell from roughly 30 thousand dollars on June 9th to less than 22 thousand dollars on June 15th.

Due to this downturn, companies reliant on crypto trading such as Coinbase have laid off 18% of their workforce. They have also frozen all future tech hiring. This has primarily affected the future hiring of new talent that has yet to finish their education. Those contracts have, for the most part, been terminated.

Other crypto-related companies have also experienced layoffs. The Seychelles trading platform BitMEX reduced its workforce by 25%. This is followed by BlockFI at 20% and companies like Gemini and Robinhood that have laid off roughly 10% of the people working for them.

Startups Still Financed by Venture Capital

The reduction in potential for tech companies, in general, is now confirmed. However, smaller tech startups in the Series A and Series B venture capital investments, those under $1BN in total, are still seeing interest and showing promise.

Specifically, B2B industries have a lot of opportunities for new solutions. Investors are also willing to take their chances with startups that show valuable inventions.

But we can still say something to those who lost their job in the tech hiring downturn. Consider the current layoffs in the San Francisco bay area, which is the most affected location globally by this downturn. However, remember the new developments shown during the SF RSA conference two weeks ago. When comparing these two, we can still find a place for those losing their job in the downturn.

Companies focusing on cybersecurity and reducing security prices are on the rise. We can also say the same for those focused on cloud-based and networking solutions.

Image of the Golden Gate bridge in San Francisco California at golden hour.
San Francisco Bay Area companies are the most affected by the industry downturn.

More Layoffs Are Imminent

Companies that have already reduced their workforce might be financially stable enough after the fact to prevent any more job cuts. But, that doesn’t mean that the layoffs in the industry are over. Due to the surge in new jobs and the new structure of the job market in general, more shakes are bound to happen.

Primarily, this is due to a drastic rise in employment in general for many companies in the last two years. These losses are also predominantly in non-tech positions in these companies.

But, most people are also working remotely. As a result, the nature of tech jobs has changed significantly. A lot of companies are starting to see the benefits of appealing to global talent with practical outsourcing.

With rent prices skyrocketing, especially in places like the Bay Area, it is disputable if quality talent can be reached for reasonable market prices locally. The cost of living might diminish the value of the offer.

Growth in the B2B Industry

The sectors involved with crypto and direct-to-market services such as Uber and Lyft have experienced a significant tech hiring crunch. In contrast, tech companies that are offering their services directly to other companies have seen a steady rise. They have not been as affected by the downturn.

Depending on the future of the new bill proposed in the US Senate, the growth of smaller B2B companies can be even greater in the coming years. With a more level playing field, the opportunities for better services through tech giant platforms can be plentiful.

The services and technologies that are expected to grow in the future are predominantly in the domains of cloud computing, cybersecurity, and networking. This growth may be at the expense of other jobs in the tech industry. The true value of such companies will only be apparent once the market as a whole has normalized.

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