Some of the biggest tech companies in the world announced a wave of layoffs this week, eliminating tens of thousands of jobs as they reverse course after years of expanding.
Google’s parent company said on Friday it would cut 12,000 jobs. Microsoft and Amazon eliminated a combined 28,000 jobs on Wednesday. All told, tech companies have shed more than 200,000 jobs since the summer.
But “this was largely expected,” said Alex Zukin, the managing director at Wolfe Research.
“I think that many companies are right-sizing their staff.”
He says most of the big-name tech companies expanded dramatically through the pandemic. They made big bets that the way people and businesses behaved during the Covid restrictions in 2020 was a permanent shift to a more online way of living.
Microsoft CEO Satya Nadella said in an email to employees that customers were, in fact, also adjusting to a slowing economy and trying to “optimize their digital spend to do more with less.”
Zukin says Microsoft is a perfect example of a company that expanded too much too quickly.
Nadella took the company “from 60,000 employees to 220,000. So, they are cutting back on 10,000, which is not too surprising,” said Zukin.
Earlier this year, Canadian tech giant Shopify went through a similar reckoning. During the pandemic, CEO Tobi Lütke made a big bet that e-commerce would “leap ahead by five or even 10 years.”
Shopify doubled its headcount from early 2020 only to be forced to lay off 10 per cent of its staff this summer.
“Ultimately, placing this bet was my call to make and I got this wrong,” he told staff in a memo. “As a consequence, we have to say goodbye to some of you today and I’m deeply sorry for that... For a company like ours, this news will be difficult to digest.”
Since then, the biggest names in tech have followed suit.
But economists tracking employment levels have found those laid-off workers seem to have had little trouble finding new jobs.
“Through December, it looks like a lot of tech workers that were laid off early in the cycle have found new jobs relatively quickly,” said Aaron Terrazas, chief economist with the job search site GlassDoor.
“The tech skill set, be it engineering or data science, is incredibly valuable, and so to some degree, we are seeing tech become a little bit less techie and traditional companies become a little bit more techie,” he said.
In fact, Canada’s technology sector played a leading role in job creation last month, when professional, scientific and technical services companies added more than 100,000 jobs.
And still, Anurag Rana, a senior technology analyst with Bloomberg Intelligence says there’s a dire shortage of skilled tech workers in the market right now.
He says a big reason is it’s not just traditional Silicon Valley companies that are looking to scoop up tech talent.
“Look at what happened in the U.S. with Southwest Airlines, their systems are pretty old. They just said they’re going to spend a billion dollars in new technology,” Rana said in an interview this week. “So I’m not concerned that the technology trend is going to stop here or technology spending is going to stop forever. It’s just a temporary pause.”
Even as the giants of Silicon Valley lay off thousands of workers, smaller companies are struggling to find and retain tech talent.
Jennifer Reed is the senior director of talent acquisition at a software firm called Docebo, which is headquartered in Toronto. She scours the world for skilled workers to come build software that helps companies train and bring on employees.
“Even with the layoff climate that we’re seeing, it’s always competitive. The supply is too short for the demand,” Reed told CBC News.
The company has dozens of positions open right now ranging from product engineering to software development.
When one of the bigger companies announces its laying off staff, email and text chains start buzzing.
“You’ll see our Slack channel light up when we see a layoff, to make sure our hiring team knows so we can pounce on them,” said Ronda Morra, Docebo’s global director of public relations.
That means laid-off workers have plenty of options.
Evelyn Watts was laid off from an Ottawa-based tech firm in December. She’s seen this cycle play out before
“I have been in tech for 20 years, so I have been through some booms and busts. This is not my first layoff,” she said. But Watts knows some workers will be going through this process for the first time.
“For some folks, who it’s their first time, it’s a little jarring. But honestly, tech changes constantly. Businesses change and there’s always going to be new opportunities.”
It may be counterintuitive to think of this as a time of opportunity in the tech sector. But the sector is cyclical. And as technology has seeped into every aspect of our lives, the number of companies hiring tech workers has exploded.
So, even in the midst of this wave of layoffs, tech workers have more choices and more opportunities than almost any other time in the industry’s history.