Whether Elon Musk actually cuts half of Twitter’s staff — and thousands of contractors — has clear ramifications for the company’s workforce. It may also impact platform users and even the baristas at the coffee shop inside 1355 Market St., the company’s San Francisco headquarters.
But downsizing at one tech business is not likely to create an immediate talent pipeline for companies outside of the tech sector who still need cyber specialists, cloud engineers, data scientists, programmers and other hard-to-find talent.
It was a rough quarter for major tech companies Amazon, Google and Microsoft — worse still for Facebook parent company Meta.
With earnings down, revenue growth stalled and rising interest rates battling persistent inflation in the background, Amazon announced a companywide hiring freeze earlier this month and is now planning approximately 10,000 layoffs, according to the New York Times.
At Meta, more than 11,000 jobs were cut last week. Microsoft and Alphabet had already signaled hiring slowdowns during quarterly earnings calls on Oct. 25.
Tech sector layoffs present a potential opportunity for CIOs who have struggled for months to fill open IT positions. But don’t expect a miracle cure.
“It's easy to read the headlines and think you’re going to be able to get talent, and at cheaper rates than it was before,” said Thomas Vick, Dallas/Fort Worth regional director for human resources consulting and recruiting firm Robert Half.
“That is not the case,” he said in an interview with CIO Dive. “If you’re not making competitive offers, you're not going to take talent away from where they are now.”
Just because tech companies are conducting layoffs does not necessarily mean they're laying off tech workers. The cuts at Amazon, for example, are reportedly across its devices, devices and human resources divisions.
It’s also unclear how many technologists will be affected by these moves or by broader tightening trends in the tech sector, where more than 50,000 jobs have been lost this year, according to Crunchbase. Layoffs.fyi’s running tally for the tech sector counts more than double that number of layoffs across nearly 800 companies.
Not all tech sector employees are technologists
Much like other businesses, tech companies employ professionals in marketing, sales and many other non-technical roles. Technologists aren’t necessarily the first to go in a round of layoffs.
Even if all or most of the layoffs Crunchbase reported were tech workers, it still wouldn’t be enough to cut into demand, according to Art Zeile, president and CEO of DHI Group, the parent company of the tech career marketplace Dice.
“To put it in perspective, that number accounts for much less than 1% of the tech employees in the United States,” Zeile said in an interview with CIO Dive.
The total tech workforce in the U.S. was estimated to encompass 5.8 million jobs in 2021, according to CompTIA, an increase of just over 50,000 from 2020. It is expected to increase by more than 100,000 this year.
“All these layoffs don't make a dent,” Zeile said. “Anecdotally, what we hear is that a lot of people that are laid off find a job within a week — it just depends on whether or not they want to take time off."
"Otherwise, they can turn around and find a job almost instantaneously,” he said.
A structural talent deficit
The unemployment rate for tech occupations rose just tenth of a percent to 2.2% last month, less than a point above the historic low of 1.3%.
Zeile estimates a much lower rate for the most in-demand roles. “For certain occupational areas within tech, like cybersecurity, data science and cloud engineering, it's practically zero,” he said.
To test his theory, he maintains a candidate profile on Dice, where he receives alerts for open data science positions.
“There are roughly 1,200 data science positions open this year in Denver alone,” he said. “And there’s just not that many data scientists in Denver — there’s just going to be a structural deficit forever.”
In Texas, the region Vick covers, employers need to look past the flashy headlines about a tech giant like Amazon.
“It’s a highly competitive talent market, where candidates still have the upper hand,” Vick said. “That's something employers are having to wrap their heads around. The reality is, if you're not making competitive aggressive offers, you're not going to attract people and you're also not going to retain your people, and that becomes a storm that’s hard to control.”