Layoffs across the US technology industry have now claimed more than 300,000 jobs.
Yet companies are still hiring in areas they see as mission-critical. Contract positions are still commanding $120-an-hour wages.
The industry has not experienced cuts this deep since the dot-com bubble burst, but Linda Lutton, who has been recruiting for tech companies since 1987, says it doesn’t feel like a bust. For one, she said, companies are still taking her calls.
“I’m in constant contact with my tech clients, and they keep telling us, ‘We will come back',” said Ms Lutton, who recalls how clients suddenly stopped answering their phones during the dot-com crash of the early 2000s because they had folded overnight.
“I haven’t had a single message from a single client saying, ‘We have to cut everything down'.”
Whatever happens to the tech industry in the coming months and years will ripple across the entire US economy.
The sector now claims the biggest share of market value in the S&P 500, accounting for about a quarter of the index. That’s up from 18 per cent a decade ago.
Tech accounts for about 6 per cent of US gross domestic product, and a similar share of jobs across the country. The average pay in tech is nearly twice that of the typical US worker.
There is no doubt that the tech sector is under strain. In the past two weeks Meta Platforms announced it was cutting another 10,000 jobs and eliminating 5,000 open roles, Amazon.com laid off an additional 9,000 workers and job-hunting website Indeed slashed 2,200.
This month’s collapse of Silicon Valley Bank, which served about half of all start-ups in America, certainly won’t help.
Ms Lutton knows friends and colleagues who are struggling to find work in tech. And while her company, Recruiter.com, has active tech clients, she hasn’t recruited for the industry since last September, and has been picking up clients in the healthcare sector instead.
But this is not an industry under siege, Ms Lutton said. It’s an industry hitting the pause button after a three-year, pandemic-fuelled hiring binge that added more than 600,000 workers, bringing total employment to a record 9.16 million jobs in 2022, according to CompTIA, a trade group.
Even after accounting for the hundreds of thousands of workers affected by the wide-scale layoffs that began around the middle of last year, total tech jobs remain about 7 per cent above pre-pandemic levels, according to CompTIA.
With a recession looming, big tech companies are downsizing in areas they no longer see as priorities. But they’re also doubling down on resources seen as mission-critical, such as artificial intelligence, engineering and software development.
The recruiters that help companies fill their job openings say that the push into new frontiers, along with the need to maintain existing infrastructure, continues to fuel demand for key positions while hitting departments such as human resources and sales hard.
The somewhat nuanced picture might explain why the unemployment rate for the industry has stayed relatively low, coming in at 2.2 per cent in February, according to a CompTIA analysis. That’s lower than the 3.6 per cent rate across the US economy — which is itself close to the lowest since 1969.
Ciara Cornette, a product design recruiter at the New York company Creative People, is still working to fill anywhere between six and eight roles at a time. That’s down from the 15 to 20 jobs she was juggling in mid-2021. But the current pace of work proves there is still a healthy appetite for talent, she said.
“We’re still getting people jobs, we still have clients,” Ms Cornette said, noting that recruiting work at her company has picked up this month compared with January.
“For product designers in the start-up space who have leadership experience, there’s a big market for that type of candidate.”
While companies are still hiring, some may not be willing to pay as much.
“Microsoft was paying $90 an hour for contractors during the height, and now you’re routinely seeing $45 an hour for someone with PhD experience,” said Hang Xu, a former user experience designer who runs tech talent agency Collective Supply in New York.
Some weeks, he’s been able to match only one or two people with jobs, he said.
“That’s not exactly what I was hoping for when I started this.”
A representative for Microsoft declined to comment.
Steve Witmer, who recruits for software start-up ServiceBell from San Diego, said he was “shocked” when a design manager who had just been laid off by Netflix approached him for a short-term contractor role paying $120 an hour. The candidate was making at least $350,000 a year previously, he said.
“Normally I wouldn’t be able to speak to someone from Netflix,” Mr Witmer said. “No one knows who ServiceBell is.”
Will McNeil, who co-founded the job board Black Tech Jobs in 2018 in Chicago to help bolster hiring of black workers, said he expects some tightening in hiring and expansion plans from his clients at tech companies. But he still sees plenty of employment opportunities.
“If you type ‘software engineer’ into LinkedIn, thousands of jobs still show up,” he said.
“We think tech will bounce back.”
-
Twitter has cut more than 3,000 jobs since Elon Musk purchased the social media company, with some of the firings happening in the eye of the public. 'Regarding Twitter’s reduction in force, unfortunately there is no choice when the company is losing over $4M/day,' Mr Musk tweeted. AFP -
A robot retrieves a pallet of items for employees to sort at an Amazon warehouse. The e-commerce company plans to cut about 10,000 jobs and the lay-offs have started, chief executive Andy Jassy said. Bloomberg -
Facebook parent Meta is cutting 11,000 jobs, the first major round of layoffs in the social-media company’s history. 'I want to take accountability for these decisions and for how we got here,' said Meta chief Mark Zuckerberg, pictured. AP -
Hewlett-Packard expects to cut up to 6,000 jobs by the end of the 2025 fiscal year, or about 12 per cent of its global workforce, as computer sales slide amid consumer budget constraints. AFP -
Apple, the iPhone maker, has paused hiring for many jobs outside of research and development, an escalation of its plan to reduce budgets heading into next year. AFP -
Digital banking start-up Chime Financial is cutting 12 per cent of its staff, or 160 people. A representative of the company said Chime remains well-capitalised and the move will position it for 'sustained success'. Reuters -
Cisco Systems is beginning a restructuring plan that will affect about 5 per cent of employees. The company says it will incur pretax charges of about $600 million for severance, termination and other costs. The employees will be given a chance to move to other jobs within the company, chief financial officer Scott Herren said. AFP -
Dapper Labs founder and chief executive Roham Gharegozlou said in a letter to employees that the company had laid off 22 per cent of its staff. He cited macroeconomic conditions and operational challenges stemming from the company’s rapid growth. Dapper Labs created the NBA Top Shot marketplace for nonfungible tokens, a digital asset class that has suffered a steep drop in demand since the cryptocurrency market downturn. Reuters -
Intel is cutting jobs and slowing spending on new plants to save $3 billion next year, the chip maker said. The hope is to save as much as $10 billion by 2025. The headcount reduction could be in the thousands. Reuters -
Lyft's cost-saving efforts include divesting its vehicle service business. It is eliminating 13 per cent of staff, or about 683 people. The company had already said it would freeze hiring in the US until at least next year. Reuters -
Peloton laid off 500 employees globally, or about 12 per cent of the workforce, in October. It was the fourth time this year the company has cut staff. Along with other expense reduction measures, Peloton said the move will help it reach the break-even point on cash flow by the end of the 2023 fiscal year. Reuters -
Qualcomm has frozen hiring in response to a faster-than-feared decline in demand for phones, which use its chips. It now expects smartphone shipments to decline in the double-digit per cent range this year, worse than the outlook it gave earlier. Reuters -
Salesforce is focusing on margins as demand for its software products slows. The company has cut hundreds of workers from sales teams as it looks to improve profitability. Since 2017, Salesforce had almost tripled its workforce. AP -
Payments company Stripe, one of the world’s most valuable start-ups, is cutting more than 1,000 jobs. The 14 per cent staff reduction will return its headcount to about 7,000. Co-founders Patrick, pictured, and John Collison told staff that they needed to trim expenses more broadly to prepare for 'leaner times'. Bloomberg
