5th December 2022

Market forces: Tech redundancies are a jobs market ‘correction’


The bubble has popped for tech… well for now anyway

The principle of ‘market forces’ is a pillar of capitalism. The theory suggests that market forces are a bit like a natural law. When market aberrations or distortions occur, market forces provide a natural means to correct the problem.

For recruiters, the shortage of tech skills was well established, long before Covid, the massive hikes in fuel prices and the cost of living crisis. The continuing growth of the technology sector created huge demand.

Covid and the growth of remote working only exacerbated the situation, as service providers needed to meet the demand for internet communication and collaboration technologies and employers needed to boost their own internal remote working technologies and recruit other roles that support their core businesses.

However, that bubble has well and truly popped! And it seems that a market correction is in progress, releasing a significant amount of talent back onto the books or recruitment agencies to help address the talent gap for tech skills and expertise.

Widespread mass layoffs worldwide

According to True Up Tech, a hub for tracking technology companies and jobs, so far in 2022, there have been 1,330 layoffs worldwide at tech companies with 213,016 people impacted.

This includes layoffs across top startups, big tech and tech unicorns, privately held startup companies with a value of over $1 billion, the darlings of the venture capital industry.

Digging beneath the headlines, it seems that in November alone which saw nearly 60,000 layoffs, over 29,000 (50% give or take) were from the tech leaders Amazon, Twitter and Meta, the parent group of Facebook, Instagram, and WhatsApp.

Some companies that have really grown because of the continued growth of online purchasing and payment, have also been compelled to act. This includes Shopify, the eCommerce platform, as well as PayPal and Stripe, the payment processors, which have binned thousands of roles, indicating a significant desire to cut costs and perhaps reflecting a slowdown in the growth of online purchasing.

And of course, the losses are not restricted to technology roles within these businesses. Amazon, which hired 700,000 between Jan-Sep 2021, has of course a huge warehousing and logistics operation. In November, it started widespread layoffs within corporate ranks.

As a side note, in another expression of market forces at work, up to the end of October 2022, short sellers had pocketed $22.6 billion by betting against the share prices of Meta, Amazon, Microsoft, Apple and Alphabet, Google’s parent group.

What it means for recruiters

With so many tech skills being released back to the jobs market, there are significant opportunities for recruiters to fill roles that may have been hard-to-recruit in recent times.

But this opportunity is not just for open positions at established companies looking to acquire the skills to take them forward. It is also for new positions being created by ambitious startups.

Navin Chadda, one of the world’s top-rated tech investors positioned at number 5 on Forbes ‘Midas List’ said: “This is the best time to start a company because by the time the markets turn around, you will be in the market with the product.”

Expect renewed interest in interim, contract and freelance as well as permanent tech job opportunities as 2023 comes around!

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