The tech industry saw a significant economic shift in 2022. What does that mean for possible trends in 2023 for your business? Find out here.
Here's what you need to know:
- The tech industry has always been seen as a pioneer when it comes to perks, benefits, and fostering innovative company culture, and other companies have often followed suit
- Over the last year, nearly 100,000 people have lost their jobs in tech, and many companies have implemented hiring freezes across the board
- There are some changes we’re seeing that may impact how your company should look to adapt or adjust this year
- Work from home arrangements might see a shift, but if retention is top of mind for your company, it may be in your best interest to keep allowing your people to WFH when possible
- Hiring will be handled more conservatively, and people will be more selective when choosing an employer
- Spending will be curtailed (where possible)
The tech industry has always been seen as a pioneer when it comes to perks, benefits, and fostering innovative company culture. It’s common for large tech companies to implement a ritual or benefit, only for others to follow suit.
Times are changing, and the tech industry saw a significant economic shift in 2022. Over the last year, nearly 100,000 people lost their jobs in tech, and many companies have implemented hiring freezes across the board.
These shifts are significant because technology companies are seen as leaders when it comes to culture, benefits, and perks.
So what does this mean for the year ahead, amid a recession? And what should your company keep in mind while hiring, recruiting, and finding ways to keep your people happy?
Below we explore what has changed, and possible trends for the year ahead.
A (brief) recap of the technology industry in 2022
A lot has happened in 2022 in the technology sector. The industry lost a massive $7.4 trillion in just 1 year.
Some reasons for this include overspending on talent (both because of overhiring and inflated salaries), IPOs underperforming, and the rise of the “buy now pay later” model.
A rise in layoffs
Some notable companies that cut jobs include:
- Netflix: The streaming platform laid off 300 people
- Meta: Facebook’s parent company laid off 13% of their staff
- Shopify: The eCommerce giant cut about 10% of its workforce
The tech industry is now correcting and recalibrating. Perhaps the most high-profile layoffs occurred at Twitter, after Elon Musk took over the company. In his first few weeks, he cut 50% of their workforce!
Tech giants want their people back in the office
Amazon mandated that workers return to the office full-time, and then adjusted its policy to also be a 3-day-a-week model. Calling employees back to the office is a notable change, as the tech sector was first to embrace remote work.
What should we expect in tech and related industries in 2023?
There’s sure to be a shift in the year ahead in both tech and related industries. Below we take a look at some changes we’re seeing, and how your company should look to adapt or adjust.
1. Work from home arrangements might see a shift
Many tech companies are now mandating that people return to the office part-time, shifting to a more hybrid work model. Executives worry about productivity and morale and believe the hybrid model is the way forward.
That being said, there is a major disconnect between what executives and employees want: 44% of executives want a full-time return to the office, compared to only 17% of employees!
What this means looking ahead
Should your company follow suit? The answer is: tread lightly.
While executive views about WFH have shifted, workers want to keep working remotely. This request ignores very clear data that people want to keep this flexibility in place, according to Forbes.
In fact, “workers were 22% happier working remotely than in an onsite office environment, leading to longer tenures.”
If retention is top of mind for your company, it may be in your best interest to keep allowing your people to WFH when possible.
2. Hiring will be handled more conservatively
Following a slew of layoffs in the tech industry, companies will be more cautious about hiring. Many tech companies are even mandating a hiring freeze or have seriously scaled down recruitment.
What this means looking ahead
So how will companies bridge the gap between scaling down hiring, while still looking for the right people to join their teams?
- Upskilling in-house talent: If your company is currently facing a hiring freeze or slowdown, it might be worth investing in training to fill the knowledge gaps in your workforce.
- Streamlining the hiring process: Hiring is expensive and time-consuming. Tech companies will look to be more efficient when looking to fill positions. This means implementing a faster hiring process and perhaps even using specialized recruitment agencies. You should ensure:
- Your recruitment process is as lean as possible
- Your processes get the right people through the door as quickly as possible
- Offshoring and using contractors: Hiring contractors and using offshore agencies has always been part of the tech industry. This is a cost-saving tactic since independent contractors usually aren’t eligible for company benefits, and offshore agencies can be less expensive than hiring in-house. This type of decision would be entirely business-dependent, and you’ll need to weigh the pros and cons.
3. People will be more selective when choosing an employer
While companies will be more selective about what roles to open and fill, candidates will be equally prudent about what companies to join.
The mass layoffs of 2022 have left employees worried about job security. According to 1 study, a mere 9% of workers in the tech industry feel confident in their job security.
That being said, these same workers are often not struggling to find work, typically finding work in a matter of weeks.
What this means is that candidates will be very selective and considerate before accepting their next job. After witnessing layoffs and experiencing a recession, stability will be a top priority for many job seekers.
What this means looking ahead
Given that job security is at the forefront for job seekers, your company should look to do the following:
- Before making someone quit their job, make sure the position you’re hiring them for is mission-critical. Netflix faced heavy criticism after hiring people, only to lay them off a few months later.
- Highlight real training and development opportunities to candidates, so they see how their role can evolve.
4. Spending will be curtailed (where possible)
Facing a recession, companies are expected to cut spending where possible.
For example, Google instructed executives that business travel will be only permitted if it’s critical, and social functions and team offsite meetings would be scaled back.
Meta found a way to save on costs by limiting the window for free office meals, and removed laundry services it used to offer.
That being said, it appears that most tech companies have cut costs mostly through hiring freezes, or by pausing large projects, like Amazon.
What this means looking ahead
Aside from hiring freezes and pausing large projects, it’s unclear what other ways tech companies will go about saving money.
Any cuts to perks and benefits that employees have become accustomed to would likely have an impact on company morale, and low morale can be very expensive.
Any cuts to perks and benefits that employees have become accustomed to would likely have an impact on company morale, and low morale can be very expensive. The goal should be to cut spending where it will be felt the least by your current workforce.
Final thoughts: Some benefits are here to stay
While there have been notable shifts in the tech industry, some benefits aren’t going anywhere.
- Flexible working arrangements: While some workers are being asked to return to the office part-time, it will be nearly impossible to demand full-time office presence without losing talent, and demoralizing your team. Workers have been benefiting from the flexibility work from home provides, as well as the cost savings.
- Work-life balance: People still deeply value having balance in their lives.
Times are tough for everyone right now as we face a recession. It’s important to keep your specific company and workforce in mind while making changes and adapting to an evolving economy.
That might mean being selective about what roles you fill in the new year, and perhaps implementing a hiring freeze in order to keep your current staff. It might also mean reconsidering asking people to return to the office if WFH is popular among your employees.
Companies will need to find the right balance between cost savings to protect your workforce, while keeping morale and engagement intact.