What has Changed this Time with the Downturn in Technology Hiring?

Online games, software e-commerce, and pretty much anything else involving the name cryptocurrency saw an increase in demand during the pandemic. As a result, tech companies hired new employees quickly. But times are changing right now. Economic growth is slowing due to high inflation and ongoing supply chain problems.

Along with hiring, the cryptocurrency exchange Coinbase got rid of 18 employees in the most recent few months. Tesla fired 200 workers. In addition to Amazon, Facebook parent Meta, and Google parent Alphabet all announcing they will pause hiring plans, Netflix announced a 3% personnel decrease. In addition to the layoffs at firms. 

Does this portend the end of the tech labor market? Today's guest says it might not be. IVP Venture Capital's chief talent officer and partner Zeta Howard.

IVP Strategies

The company has invested in businesses like Dropbox, GitHub, and Snap. Discord and Grammarly are currently part of its portfolio.

IVP's role is to support the employees in our portfolio firms' organizations in all matters relating to talent and human capital. Sometimes it involves assisting in the hiring of senior-level executives. Sometimes the challenge is figuring out how to handle a global pandemic. Sometimes it involves considering tactics for handling returned mail, hiring practices generally, or almost anything involving their staff.

The Current Hiring Situation in Technology

Numerous layoffs and hiring freezes are being reported. The intriguing thing about that, in my opinion, is that it differs greatly from layoffs or hiring freezes in the past. In contrast to what we observed in 2001 during the technology and dot-com crisis, where really desperate businesses were closing their doors, I would describe this as a planned cutback or freeze.

If they didn't make some of these cuts, or even if you consider 2008 and 2009, they wouldn't have even existed. The global financial crisis is considerably different from this one in that businesses have been considering their runway for the future and ways to protect the money they have raised over the last two to three years throughout this year and throughout 2022.

As a result, they are forced to make very difficult decisions regarding the personnel in their businesses. They may be examining recent efforts they launched and eliminating those that won't be effective. They are considering expansion much more critically. I believe that in recent years, the emphasis has been on growth at any cost, which means employing as many people as you can at the pay you can afford.

While organizations may be cutting staff or even putting on hiring freezes, there are still critical positions for which they are hiring, and there are still positions available in the technology industry, in my opinion. 

But why the retreat, and why does tech, in particular, find itself in this situation?

Tech especially is in this position because the growth during the pandemic has been so enormous. If you consider the number of people who had heard of Zoom and understood what it meant in January 2020.

We accomplished it as a group. Compared to August 2020, we were using Zoom for meetings and other purposes, but not to the same extent. It is now a verb, pervasive in everything we do, and permeates technology in a wide variety of ways. You need to consider how your organization is protected from a security aspect. You need to consider your collaboration as a team when working together. There are so many various approaches and user experiences.

To be completely honest, the pandemic has actually helped technology. In ways that were previously unanticipated, and this cannot go on forever. So, even though it is natural for things to slow down and fall back down because the highs were so high, it feels like the lows are so low.

Because of how high things have been, it seems like a lot of CEOs are saying things like, "You know, we overhired, we extended ourselves too much to an extent, or something along those lines," and they believe it's not their fault because they are employees. That sounds like poor management, but the people are ultimately left to deal with the consequences.

The consequences are ultimately dealt with by people. It's simple to blame poor management, and in certain cases, I believe that's a contributing factor. Furthermore, nobody can truly forecast the future with absolute confidence.

There are certainly CEOs who have done a better job of comprehending their market and who may, for better or worse, have been more cautious in their growth strategies. They may have been more cautious in how many people they hired and how they brought them on, but they may have also missed out on some of the market shares they should have been gaining.

And even though now that they're looking back, they might appear to be smarter because they're making fewer cuts. On the other hand, some were very aggressive and may have done better at raising money at higher evaluations and growing even faster, but as a result, they had to make even bigger swings in the opposite direction.

I think it's vital to keep in mind that this is only a point in time, a marker, even though it's challenging to know that hindsight is always 20/20 on these kinds of things. There was a moment when each company was on a high; there was also a time when they were on a low or in the middle if you used that marker for every single company.

The topic is still being discussed,  that the people who suffer the most from these issues are the employees.

When the CEOs of these major internet businesses come out and say things like "If that's not good enough, then maybe you should decide to quit," it seems a little too specific to the current state of affairs.

What effects on the market does that kind of strategy have on our startups and smaller businesses?

This is just my personal perspective, but I haven't heard some of the CEOs in our portfolio use language like "if you're not good enough, etc." I believe that in certain larger organizations—say, those with 10,000 or more employees—there may be a bit more room for hiding and riding on the success of others, so you may not always need to be in the top ten or five percent.

If you will, the bell curve is greater. When you work for a smaller business with 200 workers or when there are only five customer success representatives, you are typically performing at a high level since there is nowhere to hide and there is a lot of work to be done with few resources. I'm not sure if it follows the same logic.

That concludes the latest information on tech hiring.