In the aftermath of the COVID-19 pandemic, it seems that no one is safe from the strain of inflation, economic downturn, and a loss of job security. The instability of the current economy has become a proverbial dark cloud hanging over businesses and employees alike.
Most prominently, the technology industry has felt this tension as it finds itself on the other side of the massive influx of hiring that the pandemic encouraged.
Now with the sheer magnitude of tech layoffs making headlines, technology professionals are left to scramble and fight to find new opportunities in the field.
Jake Cooper, CEO and co-founder of the tech-enabled mental health provider Grow Therapy, explained that these layoffs are an unforeseen consequence of the rapid growth that the tech sector experienced at the beginning of the pandemic.
“The most obvious change that was precipitated was the transition of services from in-person to virtual, and we also saw the transformation of advertisements from subway ads to digital ads,” said Cooper. “That really gave temporary tailwinds to many tech companies that these companies assumed would be more permanent in nature.”
This led to mass hiring by tech companies in order to meet the heightened demand for virtual services. However, now that things are settling into a more normal state, these companies can no longer sustain this hiring acceleration.
Slowing demand led to layoffs
Kalani Leifer, founder and CEO of the nonprofit company COOP Careers, emphasized this point, explaining that in the first year of the pandemic, tech companies became overzealous because they believed that this spike in demand would be a long-term state for the industry.
“Unfortunately the thing about capitalism and publicly traded companies is when push comes to shove, they’re going to lay off who they have to or who they believe they have to,” Leifer said. “It’s striking that a lot of people went towards tech because tech could pay so much more, but tech was not committed to them in any meaningful way. So, once that intense consumer demand started to level off… they let them go.”
Cooper also cited a transition in the way employers are looking at their teams and considering the current trajectory of the market. He said that he believes this has had an even bigger impact as the massive correction in the capital markets has led to a total mindset shift for the tech industry.
He explained, “For companies that are high growth and now losing money, their valuations in the public markets have declined 70-80%.” He expanded on this, saying that this has caused organizations to reassess their cost base significantly.
In the presence of a less forgiving market, the mindset of tech companies has flipped from the desire to add more talent to encourage further growth, to the reverse of that, leading to organizations laying off team members that they view as non-essential.
“The reality is, much like everyone rushed to hire when the going was good, they are now quick to fire because the going is not as good,” said Eric Riz, founder and CEO of the data analytics firm Verified.
According to Riz, the way that governments were quick to hand out loans through the pandemic along with the misspending and mismanagement of those loans have also played a hand in the current state of the tech industry.
He explained that, while these loans had good intentions, they also led to a fair amount of fraud and mishandling of the money.
“Businesses were doing great because it is a circular relationship and when consumers have money, they’re spending money… and now that cash just isn’t there and because of that circular relationship it comes back around to the companies and the employees,” Riz said.
How diverse, low-income, and first-generation grads could be affected
While layoffs pose a pretty equal threat to tech professionals across the board, Kalani Leifer, founder and CEO of COOP Careers, believes that the playing field for finding new opportunities after the fact may not be as even.
He explained that because so much of finding a new job comes down to who you know rather than what you know, the starting line can often be much further back for diverse, low-income, and first-generation college graduates.
“I think it is deeply dependent on huge socioeconomic forces… It doesn’t matter what you know if you don’t know someone who can get your resume on the top of the pile or give you a referral or get you an informational interview or even tell you that an opportunity exists,” Leifer said.
He continued, saying that because of this, first-generation college grads who come from a lower-income family may be feeling a disproportionate impact from these layoffs.
According to Leifer, most of these cases involve people who attended public colleges, worked while in school, and opted to commute over on-campus boarding. With that comes a reduced network of friends and peers with industry connections who can help them out when it comes to finding their next role.
“I think the ability to bounce back is entirely dependent on social capital, which is really unevenly distributed in the United States,” Leifer said.
Because of this, he touted peer connections and interpersonal communication as key skills for tech professionals to foster when trying to bounce back from a layoff. He explained that, particularly for underserved communities, seeking out peer groups to learn new skills and grow with could be immensely helpful.
Once these connections are made, Leifer said there is a very good chance that jobs will be found through that person or their connections.
“Doing this journey together, even if it is organized around skill building, is in fact a relationship-building endeavor,” he said. “So, when you focus on personal growth in partnership with others… you get the skills, you get the relationships, and you get their connections without really doing any artificial networking.”
The misconception around hiring
Cooper continued, saying that another reason behind these layoffs is the misconception that hiring more people automatically equals faster growth and heighted development.
He explained that organizations are now realizing that there is not only a diminished marginal utility for each new hire, but also that they could harm productivity if they are not integrated properly into the existing team.
“If you don’t position them well to succeed, if you over hire, if you don’t have properly skilled jobs, there is a negative impact on your ability to actually get things done,” Cooper said.
With more employees comes heightened cognitive overhead, increased communication challenges, and a decrease in defined ownership over different problem areas. Therefore, Cooper explained that when additional employees start to cause more trouble than they are worth, companies are quick to lay them off.
Finding new opportunities
As far as where tech folks can go to find jobs, Riz cited health care and insurance as spaces where he has seen opportunities arise in recent months. Additionally, he said that seeking out new startups looking to hire will most likely yield positive results.
Cooper also said that the health care space is one full of opportunities because there has been no decrease in the demand for quality care; if anything, it has only increased.
“For certain sectors like ours, we have seen no decline in the amount of clients looking for a high-quality and affordable mental health provider and we have seen an increase in demand for providers looking for more meaningful professional opportunities,” Cooper explained. “And because of that, our growth and hiring plans have really not been impacted.”
According to Leifer, finance is another area that tech professionals could explore to find exciting new opportunities.
He explained that if you take away the industry and just read the job descriptions, many jobs in the finance sector resemble tech jobs in a lot of ways.
“And I think that it is really exciting for people who want to build careers in tech that they can take their skills and their curiosity and their ambition really into any field and any application, and I think that finance is a big one,” Leifer said.
Riz also stressed the importance of seizing the opportunities that are in front of you. Technology is a constantly evolving field, lending itself to frequently finding new problems to solve, and with that, new positions open up.
Cooper agreed, saying that while tech layoffs are a very real thing, assuming there are no jobs left in the industry is a mistake.
“I think it is underappreciated how many companies are still hiring. Maybe not at the euphoric pace they were during COVID, but there are many tech companies who are still hiring,” Cooper said. “We have seen a fair amount of tech workers find new opportunities within a two- to three-month period at other tech companies.”