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Hiring or firing? Why job cuts at big tech don't always show the full picture

Despite doom and gloom at big tech, the hiring market remains strong for software developers and skilled IT staff.
Written by Owen Hughes, Senior Editor on
A business woman working late in an empty office - stock photo
Image: Getty Images

With Twitter, Meta and Salesforce axing large swathes of their workforces, tech workers will understandably be concerned about whether their jobs are safe from the squeeze of a recession.

But while a number of big tech companies have taken action to slow, freeze or even reverse hiring in pre-emptive efforts to save costs and streamline,  the outlook for the tech industry as a whole looks a lot more optimistic – at least, for now.

Also: Less is more: Why the four-day week is rocking the world of work

CompTIA's latest Jobs Report, for instance, found that tech companies added 20,700 workers last month, making October 2022 the 23rd month of consecutive jobs growth.

CompTIA's analysis, which is based on data from the US Bureau of Labor Statistics, found that overall employment in tech has grown by 193,900 workers in 2022 so far – a healthy 28% higher than this time last year.

The number of new job postings are also going up: following a five-month slide, there were nearly 317,000 new job openings in October, an increase of more than 10,000 compared to September. Notably, positions for software developers and engineers led demand, with 85,796 roles posted in October.

The UK job market presents a similar picture: despite sharply rising inflation and a cost of living crisis, technology spending is reported to have grown at its third-fastest rate in more than 15 years.

The Nash Squared Digital Leadership Report, which surveyed almost 1,800 digital leaders in 82 countries between July and October 2022, found that 53% of digital leaders in the UK expect their technology budget to rise over the next year, while just one in seven expect their budget to fall.

The recruitment and technology firm's report found that business leaders increasingly view technology "as a tool for competitive advantage" and essential for helping companies build resilience and adapt to sudden disruption – as 2020 plainly demonstrated.

Also: Employers want tech skills, but you don't have to be a developer to get a better job

KMPG also found that tech executives remain confident to continue digital investment.

In a survey of 2,200 tech executives, two-thirds (67%) agreed that spending on emerging tech would continue for the next two years, regardless of market conditions, while three-quarters (75%) told KMPG that their technology debts would not inhibit their firm's future IT investments.

Ian West, head of technology and alliances at KPMG UK, said: "The findings from our new survey indicate that despite global headwinds, businesses still see it as critical to invest in new and emerging technologies to drive transformation and growth in their businesses."

Clearly, technology is seen as central to business growth, and with the Covid pandemic having fast-forwarded digitization across almost every industry, investment in technology – and the people who make it tick – is needed more than ever.

According to Nash Squared, the ongoing shortage of cyber talent presents a significant issue for digital leaders. A 2021 report by the UK Government's Department for Digital, Culture, Media and Sport (DCMS) found that the UK's cyber security recruitment pool has a shortfall of 10,000 people a year. As a result, just 32% of digital leaders in the UK feel confident they are adequately protected from cyber risks, reports Nash Squared.

The broader battle for tech talent and the associated costs are also emerging as a major challenge. Nash Squared found that 68% of digital leaders in the UK report that a shortage of tech skills prevents them from keeping pace with change. A remarkable 57% believe they will never have enough technology staff, while almost two-thirds (63%) feel salary demands have become "unsustainable" given inflation and the rising cost of living.

Also: Bosses say they're serious about cybersecurity. It's time for them to prove it

Contrary to recent moves by some tech companies to reduce their headcount, Rhona Carmichael, regional managing director at Harvey Nash, said businesses considered technology skills as critical to getting them through an economic downturn "in the best shape possible".

Carmichael told ZDNET: "Our report shows that many are planning additional technology investment next year as the number one board priority is to be operationally more efficient to help 'recession-proof' their business. In short, technology is still seen by many as a way of reducing operating costs even in the face of rising inflation."

Remote work hiring trends upward

Remote working also looks set to continue for those with the skills required to do their job at home – or those with the bargaining power to demand it from employers.

CompTIA's data found that job postings for tech positions that specify remote work or work-from-home options rose to 34% in October, compared to 27% in 2022 and 22% in 2020. Recent research by LinkedIn indicated that the number of remote job roles across all industries had declined since the beginning of 2022, suggesting that the tech industry remains a bastion of remote-working opportunities.

Meanwhile, Nash Squared's report concluded that "hybrid working is now commonplace in tech", with most employees using the office two to three days a week. This is starting to help have a positive impact on the number of women in the UK's tech sector, according to the report: 15% of UK tech leaders are now women, compared to 12% in 2021, while 23% of the tech team is now female, and 27% of new hires in the last two years have been women.

The progress is slow, but promising, said Nash Squared CEO, Bev White: "The industry is inching towards the better gender balance it so badly needs."

Also: Tech jobs are booming, and hybrid working sees more women join the industry

The general consensus amongst those peering into the future is one of cautious optimism, and that stories of mass layoffs and rescinded job offers at a select few big tech companies is not representative of the wider tech-hiring market, which remains strong. 

Tech and tech workers are by no means entirely immune to the impact of economic headwinds. While it might be one of the most well-protected sectors, it is impossible to predict if, how or when companies will be impacted by a fiscal challenge in the year ahead. Tim Herbert, chief research officer at CompTIA, said that while tech hiring remained steady, "there are undoubtedly concerns of a slowing economy." 

Nash Squared's White also offered caution to tech leaders in the year ahead, though her warning was directed more towards the need to figure out and solidify new workforce models before entering uncertain economic waters. "Amidst so much change, it will inevitably take time for UK organisations to find the optimal model for their people proposition and talent strategies," said White.

"This all means that employers must continue to really think hard about their working models, to find the right balance between the flexibility of remote working and the in-person creativity and engagement of asking people to be in the office."

Job cuts at big tech companies are understandably worrying for anyone working in tech, and job cuts are a terrible ordeal for those that have to go through it especially if the process is not handled with sensitivity and compassion. But big tech is not the whole tech industry, which is still a source of opportunity for many.

ZDNET'S MONDAY OPENER  

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