For enterprise IT leaders with an eye on their talent needs, the layoffs in the technology startup world could present a hiring opportunity.
Companies have laid off nearly 37,000 tech sector workers thus far in 2022, according to Crunchbase data analysis. Layoffs.fyi, an online tracker of layoff activity, found 68,642 startup workers have been laid off this year, the bulk of which came during the second and third quarter of 2022, after a relatively calm 2021.
Layoffs have been focused on specific areas of technology, said Thomas Vick, regional director at Robert Half Technology. But as some companies slow hiring or lay off workers, others are going full steam ahead.
"We've got tech companies that are still hiring from us at a very quick rate, and they're trying to find talent as quickly as they can," said Vick. "They're using this opportunity to try to hire for that particular talent."
Whether layoff activity will translate to a significant influx of tech talent into the enterprise realm remains to be seen, but enterprise IT can benefit from welcoming workers in high-demand fields who are suddenly looking for their next opportunity. Enterprise leaders will need to adapt to the needs of incoming talent and put in place strategies for attraction.
There are instances where layoffs bring people with desirable skills back to the job market. At Chipotle, after an AI vendor did a round of layoffs, CTO Curt Garner says Chipotle began to see candidate flow from people affected by those layoffs who now wanted to work for the restaurant chain.
"But that's a very hyper-localized situation," Garner said. "I haven't seen a significant trend in any way as it relates to candidate flow. Because, again, there's still such a shortage."
Unemployment in IT professions has consistently trailed general unemployment, and reached 1.7% in July — less than half a percentage point above the all-time low level of 1.3% first recorded in May 2019, according to CompTIA stats.
Nuance in layoffs
The recent string of layoffs is happening at a time of low unemployment and high demand for talent overall.
Layoffs at startups doesn't necessarily mean there's a direct impact to technology employment. When layoffs happen, it's not always entirely clear if the staff being let go will be in marketing, sales or technical staff, said Tim Herbert, chief research officer at CompTIA.
"Despite some of the layoff announcements and some of the other concerns, it is still an extremely tight labor market for tech talent," Herbert said.
U.S. employers cut 25,810 jobs in July, down 21% month-over-month, according to a Challenger, Gray & Christmas report. However, job cuts are still elevated compared to July 2021.
"Every big tech company has lots of diverse roles," said J. P. Gownder, VP and principal analyst at Forrester. "Marketers, salespeople, designers alike. They're not going to be the people that you're looking for necessarily as a tech leader in an enterprise organization."
One way to appeal to layoff-impacted workers is to consider adding them on a contract or temporary basis, as many would be looking for those kinds of opportunities.
"Building your strategy around not necessarily hiring them as full-time employees, but maybe hiring them as freelancers may be more successful," said Gownder.
In an uncertain economy, executives are turning more frequently to outsourced service firms for critical projects.
"When I talk to peers, some of the things that we're seeing or expectations are that short-term talent like contractors will be easier to find," said Garner. "A lot of companies are starting with reducing their contractor workforce, which doesn't necessarily hit the news as a layoff. But now, some of those contract agencies have more people available than they have for the last couple of years."
In the long-run, employers must stay aware of the macroeconomic conditions if a larger, long-lasting recession sets in. It could reshape the labor market as it currently stands, including further layoffs in technology.
"Everybody's fair game at that point," Gownder said.