Reading between the lines of tech sector job cuts

Reading between the lines of tech sector job cuts

News of tech sector layoffs arrived on an almost daily basis this week. On Monday it was Dell.Zoom’s announcementlanded Tuesday.GitHub and GitLabboth made headlines Thursday.

The cuts build on a downward trend in technology. The January jobs report marked the first net loss of jobs in the technology sector in more than two years, Tim Herbert, chief research officer at CompTIA, told CIO Dive.

Tech companies eliminated nearly 2,500 positions in January, according to CompTIA’s analysis of U.S. Bureau of Labor Statistics data.

But contrary to the cuts, which have impacted more than 100,000 tech sector employees so far this year,according to Layoffs.fyidemand for technologists remained steady and strong in January. Job postings were up, and tech worker unemployment rate was down to 1.5%.

Mixed signals revealed an underlying reality about the resilience of the tech workforce.

Technology’s pervasiveness throughout the economy and the push to digitally transform businesses created a pent-up demand for coders, software developers, cloud engineers, data scientists and other skilled technicians.

Even as layoff numbers increase in Silicon Valley, impacting tens of thousands of workers and their families, elsewhere the need for tech skills persists. And not all tech sector jobs are in technology.

Tech sector workers include anyone technology companies put on their payroll, Seth Robinson, VP of industry research at CompTIA, told CIO Dive, not just engineers and developers. Salespeople, marketing staff and others not engaged in tech work are also part of the equation.

The 18,000 workers let go by Amazon in Novemberwere primarily in Amazon Stores and the company’s People, Experience and Technology Solutions division, not in the company’s core technology businesses.

Even when Amazon announced a companywidehiring freezein November, it continued hiring for AWS, its profitable cloud division. The company also said it would backfill roles to replace employees that left, in a note from Beth Galettisenior vice president of PXT Solutions at Amazon.

The PXT Solutions group focuses on internal workforce innovations, not on technologies central to Amazon’s business.

“The reality is a lot of those layoffs aren’t even tech people,” Keith Waddell,vice chairman, president and CEO at Robert Half, the talent recruitment firm, said during the company’s quarterly earnings callin January.

“They’re recruiters, HR, back-office people at tech companies,” Waddell said. “Those that are getting laid off, typically are finding new positions fairly quickly. And so, we would say that the tech market, in fact, is stronger than the perception that’s being led by big tech, which has very specific, in many cases, company-specific circumstances.”

Perception can tug on reality

Layoffs in the tech sector have become contagious. As one company moves to reduce its workforce, other companies may be compelled to do the same.

Sentiments are somewhat viral in the tech industry, J.P. Gownder, VP and principal analyst at Forrester, said in an email.

Tech companies are also shifting priorities in response to economic uncertainty and changes in demand.

Microsoft announced 10,000 layoffs in January and GitHub, which is owned by Microsoft, plans to reduce its workforce by up to 10% this year. At the same time, Microsoft is investing billions in ChatGPT developer OpenAIand there are postings for hundreds of tech jobson its careers site.

You have to “read between the lines” of layoff announcements, said Thomas Vick, Dallas/Fort Worth regional director for human resources consulting and recruiting firm Robert Half, pointing to Google’s recent 6% workforce reduction.

The announcement, by Google parent company Alphabet’s CEO Sundar Pichai, “seems to suggest that they’re going to be hiring more tech workers — that they’re not pausing hiring, just reallocating their resources,” Vick said.

Google had over 650 open engineering and technology positionslisted on its careers site Friday.

Capital One, a financial services company with an in-house technology division, is another example of a company that reduced workforce in one area while hiring for other roles. The company cut 1,100 tech jobsin January, a month in which it also had a high volume of technology job postings, according to CompTIA’s analysis of Lightcast labor market data.

“Capital One remains committed to recruiting top talent, including continued investments in recruiting new professional and campus hires,” a Capital One spokesperson told CIO Dive. “Our tech organization is actively recruiting for a range of positions, including engineering roles focused on cloud, data, machine learning and cybersecurity, as well as product managers.”

Capital One’s layoffs impacted an Agile development teamnot its core IT functions.

“They continued to hire technologists in areas that are more critical for day-to-day operations,” CompTIA’s Robinson said.

Citigroup, Lockheed Martin Corporation and Elevance Health are three other companies outside the tech sector that had a high volume of job postings for technologists in January, according to CompTIA.

Even if an acute economic downturn forced companies to restructure their tech workforces, it would not impact the long-term modernization trendline, which requires businesses to add tech workers to achieve strategic goals, Robinson said.

Day-to-day operations that rely on technology are hard to curtail as well.

“It’s very difficult for a company to say, ‘we’re going to turn off our cloud infrastructure or stop investing in cybersecurity,’” Herbert said.

Read More