Mass layoffs in the IT industry
Probably everyone from our industry has heard about what is happening on the market (?!)...
Hundreds or even thousands of IT experts are fired by large corporations. Why? What's behind it?
Since July 2022, big Companies (called BigTech) such as Meta, Tesla, Netflix, Amazon, Twitter, Snap, Salesforce, Lyft, Strpe and many others have put on the card of mass layoffs. According to Forbes*, over70% of IT specialists lose their jobs, the most numerous group of dismissed Experts includes:
IT Software Engineers -38.6%
IT Software Engineers - Managers positions, also Team Leaders - 4.4%
Product Managers - 7.9%
Date Engineer - 2.5%
Date Scientist - 2.1%
Will it get worse? Will things normalize?
Due to the pandemic, the IT sector has had abull market around the world. We have adapted to greater time efficiency and work on HomeOffice . Since the outbreak of the pandemic, profits and revenuesin the IT sector have increased. The US market has grown by over 2.7 million jobs. This contributed to a huge drop in unemployment (3.6%), similarly in Poland (4.9% recorded in June). So what's happening? Inflation? War? Employers decided to make real and adapt real needs. Fortunately, the macroeconomic data is much better, and Investors anticipate the approaching end of such a large increase of inflation.
Wojtek and Mariusz - the founders of IT Lumier will speak little more about this topic.
Gentlemen, what do you think? Are the layoffs just due to the increase in inflation, or do you think there is something behind it as well?
Mariusz:
It's not amatter of inflation, or rather not just inflation. We are currently experiencing a global economic slowdown, which is influenced by many factors - pandemic, political turmoils, economic uncertainty and the war in Ukraine. In addition, there are very poor financial reports from companies such as Meta, which simply overestimated and overinvested in the development of its metaverse, FTX scams or individual investor decisions, as in the case of Elon Musk (redundancies in Twitter and Tesla and a huge sale of Tesla's own shares). Big players are followed by other companies that evaluate their investments from the last two years, where a lot of initiatives and projects have been created due to COVID, which are just ending or have already been completed, and from a business point of view there is no need to have large IT teams.
Wojtek:
From the point of view of human resources in organizations, in many cases it seems to be only a realization of current needs and those resulting from plans for the coming months. Looking at thecross-section of different industries, one can feel a lot of anticipation in relation to the situation on the markets. Recent quarters have been characterized by exceptional growth dynamics, both in terms of recruitment and increased financial expectations in the industry. Time for stabilization or a slight correction, but the medium and long-term trend should not change.
Do you anticipatethat the situation will normalize in the near future, or on the contrary?
Mariusz:
It's already kind of normalizing. Let's remember that there is a shortage of ITspecialists all the time, some companies are laying off, others are hiring, and there will always be a demand for good specialists and experts - for example, in Europe alone there are over 100,000 advertisements for IT specialists that hang in the air and will never be closed. In the United States, there are overa million IT specialists looking for, and just like in Europe, these recruitments will not be closed, because there are simply not that many others people.
Wojtek:
I am also an optimist, similarly, at the beginning of the lockdown, many companies made nervous decisions and there was talk of a great slow down or even a crisis. We expect a slight correction on the market, a temporary calming down of the situation, so that after a while everything will return to normal. The sector of IT specialists is the future for almost every industry, we already have great shortages today, and it will only get worse, that is better.
Do you think that, just like during the pandemic, when many industries had their crisis, now is the time for an IT sector crisis?
Mariusz:
IT is not only Big Tech. Currently, every company needs technological support, even if technologies are not the core of their business or do not bring a direct competitive advantage. As I said before, some companies are laying off, others are hiring and are constantly looking for new IT employees. The differences maybe in the technologies (or their versions) and the salaries themselves, but it is up to the candidates to decide what they care about and what their priorities are.
Wojtek:
The market is very flexible and, fortunately, even more absorptive, smaller or larger movements are natural, but global trends are optimistic. After a short period of anticipation and uncertainty, we expect the race to continue for the best tech talent.
*post from 10.11.2022