Big Tech is firing employees by the thousands. Why? And how worried should we be?
The tech sector has seen explosive growth in the past two years. The pandemic saw a dramatic rise in the hybrid working model as employees left the office to work from home. This saw major firms such as Amazon and Facebook hire thousands of workers, doubling their headcounts in a matter of months. Now with a potential recession looming, tech companies are laying off workers left and right. In the last year, more than 70,000 people globally have been laid off by Big Tech companies. What has led to this massive shake-up?
Hannah Prevett spoke to Kim Antoniou, founder and CEO of Auris Tech, Ketan Makwana, Tedx, speaker, author and mentor, Melissa Snover, founder and CEO of Nourished, and Will Hale, Group Director EMEA at Monday.com at the Tech Show in London, Excel on Wednesday, March 8. She asked the panel about the mass layoffs of tech talent and what this means for the workforce.
Ketan explained how tech companies have gone on a mass hiring spree during the pandemic, and because the current market and economy have changed, it is simply too expensive for these firms to keep their talent. “A lot of these tech companies went on the optimal trend of hiring during the pandemic and lockdown building these teams for hybrid remote roles,” Makwana said. “Now things are starting to change in which these big tech companies need to perform, and it is now creating this void where it’s too expensive for them to keep these workers. So, what you got now is this abundance of talent in the market, but I don’t think that talent is gone up a notch or level as it currently stands.”
The mass layoffs of top-tier tech talent have changed the attitudes of workers in the industry, Hale said. It’s caused a ‘knock-on’ effect felt by employees, as many are left afraid of jumping into new roles and risking their current jobs. “We have seen an uptick at Monday.com in terms of people applying directly and reaching out,” Hale said. “But attracting talent has become harder in a way, so the biggest knock-on effect of the redundancies is that top tech talent is more reticent to perhaps have a conversation with you because of the uncertainty in the market. It’s even harder potentially to get people interested due to that fact of ‘I’m better off where I am’ perhaps.”
Workers who were given high salary packages from Big Tech firms may expect a similar salary when moving on to other firms. It has created a culture of big payoffs in tech industries, but start-ups may not necessarily have the budget or resources to offer big pay packages to workers – like Facebook and Amazon can. “The big tech companies have a lot to answer for really because they inflated the market in that specific layer of talent,” Snover explained.
“These people have gone on to live their lives live within their means of those really high inflated salaries. We’re a startup and we can’t pay the same salary that you had on Facebook or Twitter or any of those other big companies, so even though you’re great and you would have a thriving career here, we have to meet somewhere in the middle. It’s going to take a little bit longer for those people to either get used to or find a way to move forward and find a way to settle back into a different type of work.”
Some businesses hire their tech teams remotely and outsource talent abroad. Antoniou hires workers from across the UK – and even as far as the Philippines. “Most of our tech team are over in Manila, Philippines and that works really well for us, and they work from home mainly. One of the things that Covid’s done for us is that tech teams often work remotely, and they are often really inspired to work for businesses because they can have that autonomy and work from home. It’s made it easier to connect tech teams. We have people in Edinburgh and Birmingham also along with the Philippines. It’s a relatively small texting but all over the place and it works.”
However, some businesses prefer having their staff in the office some days during the week in a hybrid working model. Some firms believe in investing in state-of-the-art spaces to create a collaborative culture where employees can come together and work as a team, and also enjoy their time in the company and create a productive workforce. “During Covid, we didn’t have a facility, so everyone was working remotely,” Hale said. “Our policy was that you could work up to three months at a time in any one place that does that the location of your choice. When we open the office after the pandemic, we had lots of people who wanted to come to the office. As a company, we invest quite a bit in our offices.
“For our offices in Tel Aviv, we have a football pitch and a spa, we invest a lot of money in it because we believe a lot in being around people in the workplace. We’re now doing three days a week in the office together as a collective. We had a dilemma at first deciding if we should get a small office or a bigger office based on our plans to see if people wanted to work in the office. We went for the smaller office in London as the safer bet but we were oversubscribed. Within six months, we had to move to a new office which is now 12,000 square feet spread across two floors because people wanted to come in.”
However, not all businesses believe in dishing out the perks. Makwana outsources his staff instead of hiring employees full-time, bootstrapping resources and spreading resources more efficiently – and skips out on free lunches and gym memberships. “We don’t have pools of cash to go through recruitment, we don’t have the facilities to be able to give them football or free beer at 6 o’clock or whatever it is going to be,” Makwana explained. “As an entrepreneur and business owner, I need results fast. I’m always into agile teams and outsourcing work. The great thing about outsourcing is that I can change my teams whenever I want, I can contract them in and contract them out, and I don’t have to worry about recruitment because I’m not a recruiter.
“I can let them handle that part of it and I can also right off a lot of tax with the payment of where it goes so. I don’t think there’s anything wrong about using recruitment to build tech, but it depends on what business you’re in and where your business is in the stage and size… It’s more project management than leadership management. You set the expectations and make sure they meet them which they are contractually obligated to deliver these particular results. If they don’t deliver results, they don’t get paid. If you employ someone, it takes them six months to get into the role, you’re going to provide them breakfast lunch and dinner, football pitches and spas, and it takes them 30% of the cost of their salary to exit them out of the system. You’re probably paying them double.”
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