How will the recession effect the tech space?

Many are happy to see the back of 2022 after the shock of the tech crash. Nerves have been high as we saw the downfall of crypto, major tech companies announced huge layoffs and not to mention Twitter…

What’s happened?

Derek Thompson wraps up the drama in his newsletter for The Atlantic :

Almost every major tech company has announced double-digit percentage-point layoffs in the past few months. The stock valuations for many of these companies have fallen more than 50 percent in the past year.

This period has also been described as “a midlife crisis” and to be completely honest, I agree. I question if we’ve become too complacent with rapid developments thrown our way over the past few years such as AI and Web3, or whether we’ve been in a post-COVID utopia.

Despite this, we’re thankfully not at the point where jobs have become completely obsolete. However, the evolution of tech has led team sizes to diminish as smaller teams can complete work that required larger teams in the past. Nevertheless, others are more optimistic. Factors such as baby boomer retirements could slow down the layoffs with certain employers.

What do we think as a tech recruitment agency?

The main redundancies have been amongst larger tech companies, rather than start ups and smaller companies. This brings hope. Could this be down to over hiring due to the pandemic? On the other hand, startups have tighter margins so they haven’t over extended. Is this the exception to the rule, where smaller is better? ??

But every chapter has to come to an end at some point, right? Saying this, tech has become embedded into almost every sector and with the rise of Meta and AI recently, I certainly don’t see this being the end of the ‘Information Age’.

So… What do we do now?

From a very human perspective. I get it - you’re going to be mad (or insert any other negative emotion here). Especially if you have graduated in the past four years, having to deal with the setbacks of COVID and now it appears your sector is crumbling. As someone who trained in the Arts, trust me - I hear you. However, this will pass and you will catch your break.

First of all, give yourself some time to grieve, but then it’s time to get back in the saddle and think from another perspective. A negative mindset will get you nowhere.

As James Caan CBE eloquently puts on LinkedIn :

• Be focused and relentless
• Be proactive in reaching out to companies who’ve hired people you know, or are competitors to where you’ve worked before
• If you don’t hear back after an application, follow up with a call

As with everything in life, success and growth is never linear. This is just a bump in the road.

From the employer’s perspective, this is where strategic hiring comes into play. If you want to avoid being swept up in this recession, recruitment needs to be more than headcount. Remind yourself of the following questions before you sit down to interview for your next hire:

• What’s our budget? You need to know your financial budget before you can start building people’s resources.
• What are our strategic initiatives?
• What are our company goals for the year ahead?

Nevertheless, don’t lose sight of who you’ve got in front of you. As much as we’ve had a tech recession, we’ve also experienced “the great resignation” with a record high of silent quitting. Are you listening to what your team wants and needs? A simple refresh of your benefits and salary bands goes a long way.

Remember, you are only as strong as your weakest link, so make that ‘weak link’ strong!