During the COVID-19 pandemic, the tech industry boomed. As people worldwide depended more on the internet for work, shopping, and connection, tech companies hired rapidly.
But in 2022, a shift occurred. Startups faced layoffs first, soon followed by industry giants like Amazon and Meta.
By 2023, the situation worsened.
Layoffs spread across diverse tech sectors, from crypto to e-commerce. Some analysts suggest an impending recession as a cause, while others point to a pivot towards AI and automation.
Regardless, the tech employment landscape has undeniably transformed. In this exploration, we'll uncover the reasons behind these shifts and investigate the fate of the engineers who found themselves in the crossfire of these industry changes.
Join us as we navigate this significant tech transition.
Table of contents
Tech Layoffs: Most Recent Stats
The numbers paint a stark picture of the evolving landscape of the tech industry. In 2022, a total of 164,744 employees were laid off across 1,060 tech companies, according to data from the layoffs tracker. Fast forward to September 2023, and the count has already escalated to 233,562 employees laid off across 991 companies.
According to TechCrunch data, January 2023 witnessed the most significant layoffs, with 89,554 employees losing their jobs at companies such as Groupon, Paypal, Spotify, Microsoft, Coinbase, Amazon, and Salesforce. The subsequent months show a gradual decrease.
Notable announcements sent shockwaves across the industry:
- Amazon: Another round of layoffs totaling 9,000 (3% of its workforce), adding to 18,000 previously laid off.
- Meta: Announced 10,000 layoffs and had previously laid off more than 11,000 employees (13% of its staff).
- Zoom: 15% of its staff laid off, about 1,300 employees.
- Microsoft: 10,000 members laid off, with additional cuts during its 2023 fiscal year.
A study by 365 Data Science reveals that the largest group of laid-off employees (27.8%) were from HR & Talent sourcing, followed by software engineers (22.1%), marketing (7.1%), customer service (4.6%), PR, communications & strategy (4.4%), etc.
Interestingly, while HR departments took the most significant hit at Amazon, Meta, and Microsoft, software engineers were the most affected positions at Twitter and Google.
Other widely laid-off roles include program managers, QA, data scientists, Cloud & Data center engineers, product managers, and UX/design.
Where Did All the Laid-Off Talent Go?
The vast number of layoffs within the tech industry naturally lead to a pressing question: Where did all these experienced professionals go? These aren't just numbers; they are individuals with an average work experience of 11.9 years and 2.5 years on the job before being laid off, according to the same study by 365 Data Science. Furthermore, 60% of them hold bachelor's degrees. The qualifications and experience of these professionals ensure they have much to offer.
But the answer to this question is far from simple, and it requires a nuanced exploration. Let's take a closer look at what some recent research and reports are saying as we attempt to trace the paths and opportunities seized by these talents in the wake of the significant layoffs in the tech industry.
Embracing the Independent Contractor Route
One significant avenue that laid-off tech talent has turned to is the world of independent contracting. This shift is emblematic of a broader movement in the business world, where flexibility, creativity, and cost efficiency are paramount.
The Seattle Times' interviews with laid-off Amazon employees who have been rehired as part-time or consultants illustrate this growing trend. It's a phenomenon supported by a McKinsey survey showing that 36% of people, or 58 million Americans, now work independently.
Tech talents are increasingly gravitating towards independent contracting for a number of reasons. The most common reason is the allure of flexibility — the freedom to set your own hours and pace. The rise of remote work opportunities means they can collaborate from anywhere in the world, unshackled from the traditional office setup. This model also empowers them to diversify their portfolio, working on varied projects that pique their interest. Additionally, the autonomy of being an independent contractor often brings a sense of empowerment and reduced workplace politics, making it an attractive choice for many.
This strategic shift towards independent contracting is not limited to tech companies in the U.S. It's a global phenomenon embraced by companies big and small across various industries. The approach helps businesses avoid regular full-time costs like benefits, taxes, and training, allowing them to adapt rapidly to shifting market conditions.
Technology is playing a pivotal role in this transformation. Platforms like Adeva act as essential conduits, breaking down geographical barriers to connect companies with the best talent from anywhere. This technological advancement is more than a convenience; it's crucial to ensuring that collaboration between businesses and professionals is high-quality and effective.
The move towards independent workers resonates with businesses of all sizes, from fast-moving startups to global giants like Google, Apple, and Meta. Smaller companies leverage this model to access specialized skills crucial for growth, while larger corporations utilize it to adapt quickly to market changes.
Launching New Business Ventures
Many laid-off workers are looking beyond traditional employment. Instead of settling for less stable, lower-paying roles, many are considering starting their own tech businesses. A study by Clarify Capital LLC surveyed 1,000 former tech employees and found that 63% planned to launch their own company.
Additionally, the startup incubator Y Combinator saw a 20% rise in applications in 2022, with even more expected this year. Yahoo! Finance also notes that some of these tech professionals might be using their saved private shares to finance these new startups.
Venturing Into Smaller Firms and Startups
Research shows many people who found new jobs went to smaller software companies (19%) or internet firms (13%).
An e-commerce startup shared that out of the 65 people they hired last year, 15% had come from big tech companies like Meta, Tesla, Amazon, and Google.
The Wall Street Journal reports that many skilled tech workers, like developers and engineers, are leaving big tech firms for smaller startups. Even if these smaller companies don't pay as much, they attract top talent because they offer something new and different. For example, some companies are trying to draw software engineers with AI projects or bigger roles.
Exploring Opportunities Beyond Tech
Many workers who were laid off didn't just go to smaller startups. Some left the tech world completely. Here's where some of them went, according to 365 Data Science:
- 10% moved to financial services
- 8% chose the services industry
- 7% went into consulting
- 6% joined manufacturing
- 4% stayed in the IT sector
- And 34% found jobs in other fields
Embracing Downtime and Battling Burnout
After some big layoffs at places like Facebook, Snap, and Twitter, many tech workers had enough money saved up to enjoy long vacations.
Many of these tech workers didn't feel stressed thanks to high salaries, regular bonuses, and stock rewards over the years, plus some good severance pay when they left. Instead, they saw it as a chance to travel and relax.
In the US, workers often don't get much when they're laid off. The law doesn't make companies pay severance; if they do, it's usually just a week or two of pay for each year worked. But tech workers are different. They're often in the top 10% of earners in the US, based on what the Bureau of Labor Statistics says. Plus, when they get laid off, they tend to get more money than most other workers.
For instance, Meta has given laid-off workers pretty good deals. They've offered things like 6 months of pay, stock options, and full health benefits.
How Can Enterprises and Startups Leverage the Abundance of Tech Talent Availability?
Rapid Expansion and Scaling
Startups often face the challenge of growing quickly to stay competitive. By hiring experienced tech professionals who've recently been laid off, these startups can get a boost. These experts already have the skills and know-how, so they can jump right in without spending much time on training. This means faster progress, new ideas, and quicker results. It's like adding seasoned players to a sports team; they can help lead the way and make big plays right from the start.
Diverse Skill Acquisition
Big companies sometimes miss out on certain skills that could give them an edge. Now, with so many tech professionals available, these enterprises have a golden chance. They can hire people with unique skills, whether that's in AI, specific software areas, or other tech niches. By doing so, companies not only fill their skill gaps but also bring in fresh perspectives. It's like adding different tools to a toolbox, making the team ready for any challenge.
Flexible Project Teams
When a company has a big project on the horizon, it needs the best hands on deck. With so many tech experts now available, businesses can create special teams just for these tasks. Think of it like assembling a dream team for a big game. By bringing in independent contractors with the right skills, projects can move faster and smoother. It's a smart way to tackle important jobs without long-term commitments.
Mentorship Programs
Hiring seasoned tech pros isn't just about getting work done; it's also about learning from them. When a company brings in these experts, they can also help train the next generation. Think of it like having a coach for your team. The newer members can learn valuable skills faster, and the whole team gets stronger. This not only boosts the company's skills but also helps everyone grow in their careers.
R&D Investments
When companies have more tech experts, they can really dive deep into creating new things. Think of it like having more scientists in a lab. They can experiment, find out what works, and come up with fresh ideas. This means companies can create new products or improve old ones faster than before. And in the tech world, staying one step ahead can make a big difference in beating competitors.
Remote Work Expansion
Nowadays, working from home or from a cafe halfway around the world is pretty common. So companies can think bigger when hiring. Instead of just looking in their own city, they can search everywhere. This means they might find someone really good who lives far away. And since many tech people already know how to work from home, it's an easy fit. This way, companies can have the best team, no matter where everyone lives.
Strengthening Weak Departments
Sometimes, companies have departments that aren't as strong as they could be. Maybe they don't have enough people, or they don't have the right skills. But with more tech experts available now, companies can fix these weak spots. They can hire new people who know exactly what to do and can teach others, too. So, those departments that used to struggle can now become much stronger and help the company do even better.
Diversifying Product Offerings
When a business taps into the big talent pool out there, it can do more things. People have all sorts of skills and that can help a company make new and different products. By doing this, they can offer more to their customers and keep up with what people want. This not only means more ways to make money but also can make the business grow and reach new customers.
Conclusion
The technological landscape has undergone seismic shifts over the past few years. From the boom in tech hiring during the height of the COVID-19 pandemic to the unexpected wave of layoffs in subsequent years, the industry's trajectory has been nothing short of unpredictable.
While initially appearing bleak, these developments have opened new doors of opportunity. The reservoir of tech talent, now available in the market, offers immense potential for businesses willing to adapt and evolve.
Whether it's the rise of independent contractors, the birth of innovative startups, or the fortification of established businesses, the redirection of this workforce can shape a brighter, more resilient future. Companies that strategically leverage this wealth of experience and skill will undoubtedly lead the next phase of technological innovation and growth.
