Despite tech layoffs, hiring remains a challenge
Prima facie increased layoffs would cool the talent market and make it easier for companies to hire talent however that is not the case, here is why
Layoff are at the forefront of the news cycle
The biggest development in the tech world (besides the GPT3 and Bard) has been the news of large and small tech companies laying off people.
In India so far, ~21,000 employees have been laid off by 65+ startups, including unicorns BYJU’S, Chargebee, Cars24, LEAD, Ola, OYO, Meesho, MPL, Innovaccer, Udaan, Unacademy and Vedantu. (Source: Inc42). While in the US more than 77,000 workers in U.S.-based tech companies have been laid off in mass job cuts so far in 2023, according to a Crunchbase News tally.
Despite this there is still enough demand for tech talent among
- Companies from traditional industries (aerospace/defence, ITeS, automobile etc)
- Start-ups which have raised growth capital in the last year (that require them to meet targets)
Despite notional supply of tech talent increasing, and demand remaining strong — time to close open roles and cost of talent has not changed significantly from the levels in 2021/22. This is driven by 2 major factors:
1.) Available talent pool has not expanded significantly
Counter-intuitively, more layoffs are shrinking the ‘talent pool’ of promising recruits. Till 2021, candidates were on the move, and the pool was larger with all the voluntary attrition. The layoffs in 2022 have made the employees less adventurous when it comes to changing jobs. They have gone back to making cautious career moves.
- The tech talent layoffs are a fraction of the pandemic hires which has not substantially increased the available talent pool
- Talent which has been laid off, is often not the most attractive for other companies to hire from
It is seen during the layoff rather than targeting the talent that has been laid off hiring companies target the talent which is not laid off as there is uncertainty and fear among the ranks. This ‘settled’ talent does not want to leave unless the counteroffer gives them a sense of security. And in the current environment employees are evaluating their career moves very carefully
2.) Attracting talent continues to remain a challenge
Companies are facing challenges in attracting the right talent driven by the increased cost and cash constraints
- High cost of talent
Many candidates are unaffordable for companies. Thanks to dizzying pay packages doled out during the hiring frenzy in 2021 and early 2022. SDE 3 salaries for top talent is now north of 90L and that talent is now unlikely join at a company for 60–70L.
- ESOPs are loosing their sheen
Companies are conserving cash which means they are using bigger ESOPs cheques to attract talent. However with the funding bubble bursting and start-ups even raising down rounds — employees now see them only as paper stock and wonder if they will ever see them materialising in their lifetime. Companies have to get creative in offering compensation during a time when cash is in short supply.
Conclusion
As hiring talent continues to be difficult it is important for companies to look at internal skill mapping and talent development. Building a strong employer brand coupled with the right talent pipeline can allow companies to navigate the tough hiring cycles.
The hiring cycle will bounce back with vengeance once the economy is over the current downturn and for companies to be prepared for it is important to invest in the right activities.
Are you seeing this trend play out?, share your thoughts with me on LN — Amatya Agarwal
