Home Technology The Big IT Cuts – Foreshadowed, Not So Scary

The Big IT Cuts – Foreshadowed, Not So Scary

The Big IT Cuts – Foreshadowed, Not So Scary

After the hyper-growth during the pandemic and the hiring of many new staff, it is now time for the IT industry to reduce the teams (photo: CC0 Public Domain)

For nearly 15 years, many people around the world believed that being a programmer was a sweet, well-paid profession, for which there would always be work and the demand would only grow. The massive IT layoffs in Silicon Valley in recent months have shown that we may have been misreading the outlook for this profession.

While mostly occurring in the world’s highly developed IT hubs, these layoffs are affecting IT businesses worldwide. Still, the release of tens of thousands of IT personnel is not such a terrible phenomenon, experts say.

Changing priorities

The latest round of layoffs at Facebook’s parent company, Meta, affects key technical positions such as data scientists and software engineers. These are all roles that until recently were considered invulnerable.

The trend represents a stark reversal in an industry that never ceases to speak flatteringly of cadres as “technical talent”. For years they were subject to coddling that is unthinkable in other industries.

But software engineers are now the most common position among layoffs in the first months of 2023. That’s the first time it’s happened, according to data from labor market analysis firm Revelio Labs. Last year, when the big tech layoffs started, I was the hardest hit recruiter. Now, however, software engineers are on the cutting edge.

“The first layoffs were dominated by recruiters,” said Revelio senior economist Reyhan Ayas. “In 2023, we are moving to engineering majors, and software engineering in particular, which signals a shift in the focus of current business priorities.”

A blow to the core product

In other words, tech companies are now not just “scraping the fat” by laying off people they could do business without, such as salespeople and massage therapists. Now layoffs are mostly seen in people involved in the creation of the core products – those for which the companies are known. Until now, these engineers were considered a kind of core that could not be touched.

Software engineers are still important, but they no longer have the power they once had.

“It used to be just ‘the more, the more,’ doing whatever it takes to hire the best talent,” Daniel Keum, associate professor of management at Columbia University’s business school, said of tech companies. “Now they’re cost conscious, they want to be streamlined and economical.”

The swing of the pendulum

Tech companies have grown quite rapidly during the pandemic. Back then, people were at home and needed all kinds of technology to carry out their daily duties. Video conferencing software, webcams, audio technology and a number of other niches have literally flourished during the pandemic.

But now much of that demand has subsided. Meanwhile, tech companies that greatly expanded their teams during the pandemic are now returning to normal growth rates and don’t need as much workforce. And at the same time, they fail to come up with the next “big thing” to justify the large number of employees. This means that they have no new sources of significant revenue to draw on, therefore they are forced to go from growth mode to maintenance mode.

Meanwhile, the economy is not as strong as we would like. The rise of AI in the workplace also matters because it allows programmers to be more productive and potentially allows employers to do the same work as before but with fewer workers.

Swinging the pendulum to both extremes is normal, but it has its side effects. After all, layoffs spell bad times for IT businesses, reducing motivation and productivity and making it harder for companies to grow in the future when the economy improves.

Well, it’s not that bad

For software engineers and other technical workers, however, a series of IT layoffs doesn’t mean the end of the world. They are still in high demand! It’s just that their bargaining power and ability to demand superior bonuses and wages has cooled.

The latest monthly jobs report from technology industry association CompTIA found that while employment at technology companies (which includes all roles at those companies) fell slightly in March, employment in technical occupations across industrial sectors actually increased by nearly 200 000 positions. So even as tech companies cut tech jobs, other industries are snapping them up like hot cakes. These specialists are wanted. They will just have to change their expectations – they will dive into some industry other than IT.

“If you’re a tech guy, you used to only think of working in Silicon Valley and the top five IT firms,” ​​Keum said. “Now IT talent has to think, ‘okay, maybe it’s not bad to work in an industrial company.’ It’s time to look at employment a little more broadly,” he said.


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