The years 2022 and 2023 saw mass layoffs in the IT sector. Meta, Amazon, Salesforce, Twitter, Tesla, Shopify, Microsoft, Netflix, and many other tech giants all cut their staff by 10-15%, leaving the world of IT employees confused and amazed at once. Layoffs.fyi reports that around 152,000 employees were laid off in 2022 from more than 1000 tech companies. It is, therefore, the highest year-to-date job cut tally for the IT sector since 2002, after the collapse of the dot-com bubble.
The reasons are multiple, with most observers focusing on the ever-toughening economic conditions as a result of the Russian-Ukraine war. The world recession is a real threat. Supply chains are being disrupted, interest rates and fuel costs rise, and headwinds of inflation have picked up. Tech companies aren’t the only ones that suffer the consequences: plenty of non-tech companies have experienced mass layoffs, including the giants like McDonald’s and Goldman Sachs.
However, the IT sector is at the media frontline: its level of cuts is unmatched and unprecedented. Of course, there are factors that apply to individual tech companies: for example, the chaotic life of Twitter and the multiple moonshot projects of Meta and Alphabet, none of which have worked out in quite a long time. But to the large extent, the overall explanation for the massive cuts and layoffs disrupting people’s lives is not that dramatic. Tech companies are coming off a period of outsized growth during the COVID-19 pandemic. Now that people don’t spend all their time locked at home with nowhere to look besides inside themselves and at their multiple electronic devices, tech companies need to make a correction for overhiring and overpaying during the years of lockdowns and tech boom.
What awaits the IT sector in the nearest future?
Layoffs, hiring, and salaries
It’s a standard prediction that 2023 will see more layoffs, and it won’t be just the IT giants. Startups will also be affected. Experts predict that startups that raised capital at inflation valuations in 2021 will likely need to conduct layoffs in 2023. Companies likely won’t be able to grow into their new valuations and in 2023, and venture firms are being more selective about investments, even at lower valuations.
So the layoffs aren’t going anywhere. Is there good news?
The market for IT is still booming. In the US, there are four times as many job openings as there have been layoffs recorded in the Crunchbase database this year. According to Revelio Labs, 70% of laid-off U.S. tech sector employees since March 2022 found a new job within three months, and in October, already 75% of laid-off workers found a new job within three months. So the demand is not going anywhere.
Another common fear is that after the unbelievable growth of the average tech salary between 2020 and 2021 (6.9% year-over-year increase, according to Dice data), there will be a significant decrease in this regard. Logical as it may be, it doesn’t seem to be the case. Revelio Labs reports that 52% of laid-off workers have found a new job with a higher salary. This doesn’t only apply to engineers, as you might expect, but also to sales and marketing. The situation is harder for HR and communications, which are getting paid less and taking longer to find a job.
It’s also the case that some companies overdo it with layoffs and hire some of the employees back, like what happened with Twitter. Many had prepared for the worst-case scenario, and others, again, like Twitter, simply miscalculated, and now have to correct their mistakes once again.
The simple truth is that skilled IT workers are still in high demand. Enterprise technology projects which have been started earlier are still to be completed across multiple industries. The demand for skills is only growing, with the loudest ones being cybersecurity, cloud computing, artificial intelligence, Python, and Rust. The highest-paid technology jobs still are:
- DevOps Engineer
- Product Manager
- Computer and Information Research Scientist
- Software Developer
- Computer Network Architect
- Artificial Intelligence (AI) Architect
- Information Security Analyst
- Mobile App Developer
- Data Scientist
- Full-Stack Web Developer
Remote work
Remote work is also not going anywhere. While some companies went for back-to-the-office policies, the idea was met with resistance. According to Owl Labs’ State of Remote Work Report, “1 in 2 people won’t return to jobs that don’t offer remote work after COVID-19.” People got accustomed to the benefits of working from home and are choosing to stay fully remote or opt for the hybrid model. In 2023, a lot of candidates wouldn’t even consider a job offer if it doesn’t offer remote work at least to some extent. At the moment, 74% of U.S. companies either are currently using or plan to implement a permanent hybrid work model, and research by Upwork states that by 2028 73% of all departments are expected to have remote workers. So if COVID has brought us anything, it’s this: the appreciation and the possibility of working from anywhere.
Talking about “anywhere”, the future of IT is also about to become more worldwide and more inclusive. Again, we have remote work to thank for that. Companies can now attract and hire top talent from around the world, making sure their team benefits from diverse talent and backgrounds. The market has become virtually limitless, encouraging competition and growth all over the world.
What will change in 2023?
So what is it that will actually change in the near future as a result of the 2022 and early 2023 mass layoffs, economic instability, and general uncertainty?
Turning away from FAANG
With mass layoffs mostly coming from FAANG companies and media reporting almost exclusively on them, 2023 may see the shift of attention from tech giants to traditional industries embracing tech and fledging startups. Now some experts, like Charlotte Howard from The Economist, predict that traditional, blue-chip companies like Caterpillar, Hilton, or Procter & Gamble will have the opportunity to attract IT talent. While FAANG cutting back, traditional industries adopt the latest technologies and require more and more IT specialists.
For startups, 2021 was a groundbreaking year, which saw investments and growth like never before. 2023 won’t be anything like it, but the predictions are still quite optimistic. First, there are a lot of public-market candidates for when the IPO markets open back up. Second, next year will likely see continued investment in fintech companies ― excluding the crypto market in the wake of FTX’s collapse. Third, biotech is looking to be “the next big thing”. And of course, this is just some of it. Investors and buyers are still looking for novelty, disruptors, and fresh perspectives, and only startups have proven to live up to these expectations.
Getting more considerate
With the COVID aftermath and everything else that has happened in the past three years, companies are talking more about keeping a work-life balance, mental health, and approaching their employees with care. Managers are encouraged to check on their teammates and make sure the latter has everything they need to work productively. Long-term challenges have left many people in need of doctor’s visits and therapies, and it’s time to address this globally.
In 2023, individual tech workers will need to prioritize self-care and personal finances, and think carefully about their next move. Many will think twice about quitting their current job and consider companies they haven’t considered before while turning away from companies that used to mean security and tons of benefits. The changes are coming, however, they don’t seem to be as dramatic as what the year 2022 would have you believe. Let’s wait and see!
