Understanding Staffing Turbulence in the Tech Sector

This article is authored by Bruno Fiorentini, SVP, Global Industry Lead — Technology

Technology companies have been in the news lately for staffing turbulence, more specifically with layoffs. For instance, in the United States, more than 91,000 workers have been laid off in 2022, according to a Crunchbase news tally.

There are several reasons why this is happening and how companies can handle the turnover and reassure existing talent with mobility and upskilling—two trends that we’ll see continue throughout 2023.

Here’s a hypothesis for tech layoffs

During the pandemic, tech companies served a wave of people going into digitalization—mainly remote work and hybrid models. Digital social distancing also meant that people connected to their families and friends through digital, too. That generated a spike in the consumption of everything tech.

When this happened, hiring increased and there was a natural inflation of resources in those companies that needed to accelerate their roadmaps to deliver more products. That lasted two years to two years and a half, at least. Many companies invested in some areas that they are re-adjusting to now by returning to pre-pandemic staffing needs. It’s not uncommon to see these adjustments in tech companies.

If you look at the giant ones like the Alphabets or the Microsofts or the Apples, they have initiatives on many different fronts—depending on which initiatives work best, you start redeploying resources.

Then, there’s turbulence such as at Facebook and Twitter. For instance, when Twitter was acquired by Elon Musk, it became a private company again and layoffs followed. They’re probably going to pass through a turbulent period; they’re probably in a hiring phase.

How companies can handle turnover and reassure existing talent to stay

During times of ambiguity which will always occur in the tech sector, companies need to invest in long-term education with constant upskilling and reskilling.

In a moment with too much ambiguity, top talent is always the most vulnerable to leaving the company because competition is trying to get them. Top talent is hungry for knowledge—the answer resides in companies providing a pipeline of different projects.

A new generation isn’t necessarily expecting to have that unwritten social contract to spend a long time in their career at one company. They’re looking for different and exciting projects.

Companies with a lot of innovation need to provide internal mobility to workers so talent can jump from project to project. It’s almost doing matchmaking of talent and projects where the talent can feel like they are also choosing.

When someone gets picked to work on a project, the most effective way to manage talent is to allow the worker to say, “I’m looking at my options and maybe I don’t want to go on that project. I want to go to project B in company C.”

Digging into the latest trends

Workers want the flexibility to work anywhere on a variety of projects. Part of that flexibility focuses on work-based outcomes—it doesn’t matter if you put in a dozen hours.

Interest in worker flexibility triggered tech companies to work with their workforce suppliers and outsourcers to be more outcome-based than headcount-based. Instead of thinking about the number of people to hire, employers shifted to focusing on the job that needs to be done.

Imagine that you are a company that has a map application. In the past, you would have said, “I need 20 people to cover Washington state.” Now, you first think about the job output and say, “I need you to cover 100 km a day. How are you going to do that? If you’re going to do that with self-driving VR-driven cars or with 50 people on top of horses, I don’t care. I just need you to cover those kilometers.”

This isn’t limited to the tech giants—every company is a tech company with some technology embedded. Big tech companies are competing with other companies for the same resources. To say, “I’m an engineer and my dream is to work for Google,” is in the past. Now, maybe my dream is to work for a small eCommerce company doing something different or an old-school company that’s trying to make all things digital.

Another trend involves training managers on how to manage from a distance. We know that talent stays with companies because of their managers. Managers need to be equipped with skills to manage distributed teams in remote places with challenges like different time zones.

For example, I have teams in Asia, Europe, the west coast, and the east coast. I vary my meetings—one is Monday at 7 a.m. another one is on Thursday at 9 p.m. We all need to be flexible.

Another trend that’s impacting the industry is the no-code movement. When we talk about hyper-automation, it’s about automating any process starting with very simple ones. The mindset is that everything can be automated. As you automate, you can put more effort into more creative tests or in other areas where you need more of a human touch.

With no-code, we can use applications to build things without being trained in tech. If you’ve heard of Wix, you can build your own website without knowing how to code. With Shopify, you can build an eCommerce store.

In big companies, instead of going after top software engineers, they can onboard entry-level engineers. Even people that don’t go for tech careers can get skilled in one or two weeks depending on the project's complexities. Companies can find new pools of talent outside of tech careers that they pursue in universities. That’s a big revolution.

My Key Takeaways

Above all, ambiguity in tech companies is nothing new, but all companies need to consider themselves as tech companies as they are proactive in both hiring and retaining top-performing workers, most specifically during turbulent times.