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The tech industry is facing some inclement weather. What began as April showers—a smattering of layoffs at companies like Netflix, Better.com, and Noom—morphed into blustering storms by May, with reports of layoffs and hiring freezes increasing, according to an analysis of news articles conducted by Crunchbase.
This spring, the bombogenesis of high inflation, VC investment slowing, and higher interest rates are seemingly leading some tech companies to tighten their purse strings. But the skies are not completely dark. Matt Maley of Miller Tabak + Co told Yahoo Finance that the number of open tech positions is higher now than it was this time last year.
Maley said that even in the most turbulent economic climate, “the war for talent” in tech won’t suddenly end, but it will likely shift.
Catch up. If you follow tech and startup folks on Twitter, you might have noticed they’ve been a little more doom and gloom than usual. According to layoffs.fyi, a publicly sourced tracker of tech layoffs created at the beginning of the pandemic by entrepreneur Roger Lee, more tech companies laid off workers in the first three weeks of May than in all of April. According to data compiled by that site, 23 US-based companies, including Carvana, Vroom, and Cameo, laid off at least 4,894 US-based tech workers since the beginning of the month. And Crunchbase reports that the number of “layoff signals” it observed in the first week of May was the highest since September 2020.
Lee told HR Brew by email that he expects layoffs to continue into June “as companies continue to assess the impact of the [Federal Reserve’s] interest-rate hikes alongside the broader economic and geopolitical environment.”
Companies that aren’t laying employees off aren’t necessarily growing either. Earlier this month, Meta, Uber, and Wayfair told recruiters in some form to put a pin in it. Meta told recruiters they can circle back to hiring at the start of next year, Wayfair recruiters will reportedly have the green light to hire again in 90 days, while Uber’s CEO said the company will generally be more selective when hiring in response to a “seismic shift” in the tech investor world.
Hold your horses. Maley told Yahoo Finance that even in tough economic times, companies will be sure to keep funds allocated toward being competitive in the talent space. Microsoft, for example, announced it would double its budget for merit-based raises and increase annual stock compensation by at least 25%.
“The war for talent, it never goes away in the tech area,” Maley told Yahoo Finance. “[Companies are] going to say, ‘We want to make sure we have enough money to keep our very best people.’”—SV
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